Court affirms decision on company petition, emphasizes judgment alteration before signing

The court upheld the trial judge's decision to admit the company petition and order advertisement, finding that the appellant was unable to pay its debts. The court dismissed the appeal, concluding that the judge had acted within his jurisdiction by allowing further arguments before passing the impugned order. The appellant's reliance on cases involving unsigned orders was rejected, and the court emphasized that a judgment could be altered before signing, provided notice was given to the parties. Consequently, the appeal and related petition were dismissed.

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Issues Involved:
1. Jurisdiction of the learned judge to review an earlier order without a formal review petition.
2. Merits of the company petition regarding the appellant's ability to pay its debts.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Learned Judge to Review an Earlier Order:

The appellant argued that the learned judge lacked jurisdiction to review the earlier order dated July 23, 1996, without a formal review petition. The appellant cited several cases, including *Surendra Singh v. State of Uttar Pradesh, AIR 1954 SC 194* and *Vinod Kumar Singh v. Banaras Hindu University, AIR 1988 SC 371*, to support this contention. However, the respondent countered by pointing out that the judge had not signed the order and had the authority to alter or amend it before signing, as long as notice was given to the parties and they were heard.

The court noted that the observations in *Surendra Singh* and *Vinod Kumar Singh* indicated that a judgment could be altered or amended before it was signed, provided notice was given to the parties. The court quoted from *Vinod Kumar Singh*: "After the judgment has been delivered provision is made for review. One provision is that it can be freely altered or amended or even changed completely without further formality, except notice to the parties and a rehearing on the point of change should that be necessary, provided it has not been signed."

The court found that the learned judge had acted within his jurisdiction by posting the matter for being mentioned after realizing that a material part of the guarantee document had not been considered. The judge allowed both parties to address further arguments before passing the impugned order on August 23, 1996. This was deemed an "exceptional circumstance" justifying the reopening of the matter.

The court dismissed the appellant's reliance on *K.K. Arunachalam v. K. Nallusamy [1995] 2 LW 456* and *Secretary, Selection Committee, Sabarmathi Hostel, KMC v. R. Rajesh [1996] 1 LW 77*, as these cases did not involve unsigned orders. The court also referenced *Sangam Lal v. Rent Controller Eviction Officer, AIR 1966 All 221 [FB]*, which supported the view that a judgment could be altered before signing, provided notice was given to the parties.

2. Merits of the Company Petition:

The appellant contended that it was a flourishing concern and that the trial judge wrongly admitted the company petition on the assumption that the appellant was unable to pay its debts. The respondent, however, pointed out that the appellant had defaulted on several instalments and had not responded to the statutory notice demanding payment.

The court noted that the appellant was treated as a principal debtor in the guarantee agreement and had defaulted on multiple instalments. The statutory notice addressed to the principal debtor also included a specific demand against the guarantor, stating that it should be treated as a notice under section 434 of the Companies Act, 1956. The appellant did not reply to this notice, nor did it make any payments subsequent to receiving it.

The court also referenced its order dated October 29, 1996, in C.M.P. No. 13246 of 1996, where it had suggested that the appellant pay the sum claimed if it was indeed a flourishing concern. The appellant had not complied with this suggestion, nor had it made any counter-proposals for payment.

Given these circumstances, the court concluded that the appellant was unable to pay its debts and upheld the trial judge's decision to admit the company petition and order advertisement.

Conclusion:

The court found no infirmity in the impugned order and dismissed the appeal, concluding that the learned judge had acted within his jurisdiction and that the appellant was indeed unable to pay its debts. Consequently, C.M.P. No. 11792 of 1996 was also dismissed.

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