1999 (4) TMI 487 - HC - Companies Law

Court Upholds Petition Despite Procedural Defects, Emphasizes Good Faith

The court rejected the respondents' objections regarding the uncertainty in the outstanding debt amount and the validity of the statutory notice not being ... Winding up - Petition for Issues Involved:1. Maintainability of the petition due to uncertainty in the outstanding debt amount.2. Validity of the statutory notice not being addressed to the registered office.3. Procedural defects in the pleadings.Detailed Analysis:1. Maintainability of the petition due to uncertainty in the outstanding debt amount:The respondents argued that the petition should fail due to discrepancies in the debt amount claimed by the petitioners. They cited a decision reported in 1990(3) Co. LJ 322, emphasizing the need for certainty in the debt amount. However, the petitioners referenced the Supreme Court's decision in *Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd AIR 1971 SC 2600*, which held that minor discrepancies in the debt amount do not invalidate a petition if a substantial part of the debt is undisputed. The court concluded that the discrepancies in the present case were not significant enough to dismiss the petition, as the exact outstanding amount could be quantified through a simple process of reconciliation.2. Validity of the statutory notice not being addressed to the registered office:The respondents contended that the statutory notice was not addressed to the registered office, citing decisions in *ML. Mehta Cinema Enterprises (P.) Ltd v. Pravinchandra P. Mehta [1991] 70 Comp. Cas. 31 (Bom.)* and 1973 Co. L.J 200. They argued that strict compliance with the statutory notice requirement is mandatory, and non-compliance is fatal to the petition. The petitioners countered by arguing that the notice was addressed to an office where substantial administrative functions were handled and that the notice had effectively reached the registered office. The court upheld the respondents' position, emphasizing the necessity of strict compliance with the statutory notice requirement. However, the court also acknowledged that in rare cases where the notice is served in good faith on a significant administrative office and is promptly transmitted to the registered office, substantial compliance might be considered sufficient. In this case, the court found that the notice was served on an administrative office, transmitted to the registered office without delay, and acted upon, thus saving the petition.3. Procedural defects in the pleadings:The respondents argued that the petition contained procedural defects, such as improper verification and non-compliance with Form No. 3 and rule 18B of the Company Court Rules. The petitioners contended that the affidavit was in compliance with the rules and that the verification of exhibits was not required separately. The court acknowledged the procedural defects but deemed them minor irregularities that did not justify dismissing the petition. The court expressed concern over the laxity in adhering to procedural requirements and urged the Bar and the Office of the Court to pay more attention to these aspects in the future.Additional Considerations:The court also addressed the issue of potential outdated or incorrect information regarding the registered office address. It noted that if the petitioners acted in good faith based on reliable information, the petition should not be dismissed due to such discrepancies. The court emphasized the importance of good faith and bona fides in determining the maintainability of the petition.Conclusion:The court overruled the preliminary objections raised by the respondents and allowed them four weeks to file their objections on merits. The petition was to be relisted for admission on 16-6-1999, where the merits of the case would be further examined.