Winding up and provisional liquidator appointment upheld where notice, hearing, and prima facie insolvency were established.

Where a company was served with winding up petitions, filed detailed affidavits and financial material, and was heard at length, the requirement of notice and opportunity under section 450(2) of the Companies Act, 1956 was treated as satisfied; on a record showing serious financial mismanagement, liabilities far exceeding assets, and doubtful receivables, the admission of the petitions and appointment of a provisional liquidator were upheld under section 443. Remarks made against the Reserve Bank of India did not amount to an adverse finding, so cross-objections under Order XLI Rule 22 CPC were not maintainable; the proper remedy was expunction before the Company Court.

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Issues: (i) whether the admission of the winding up petitions and the appointment of a provisional liquidator were vitiated for breach of natural justice, and whether the company had been given a reasonable opportunity of being heard; (ii) whether the remarks made by the Company Court against the Reserve Bank of India gave rise to maintainable cross-objections under Order XLI, Rule 22 of the Code of Civil Procedure, 1908.

Issue (i): whether the admission of the winding up petitions and the appointment of a provisional liquidator were vitiated for breach of natural justice, and whether the company had been given a reasonable opportunity of being heard.

Analysis: The record showed that the company was served with the petitions, filed detailed affidavits, furnished financial particulars and annexures, and was heard at length. The Court also noted that the material placed before the Company Court disclosed serious financial mismanagement, liabilities far in excess of assets, doubtful recoverability of receivables, and a strong prima facie case warranting protective intervention. In that situation, the requirement of notice and opportunity under section 450(2) of the Companies Act, 1956 stood satisfied, and the order appointing a provisional liquidator was supported by the Court's powers under section 443 of the Companies Act, 1956.

Conclusion: The challenge on the ground of breach of natural justice failed, and the admission of the winding up petitions as well as the appointment of the provisional liquidator was upheld against the company.

Issue (ii): whether the remarks made by the Company Court against the Reserve Bank of India gave rise to maintainable cross-objections under Order XLI, Rule 22 of the Code of Civil Procedure, 1908.

Analysis: The impugned observations were treated as remarks and not as adverse findings on any issue decided against the Reserve Bank of India. Since cross-objections lie only against an adverse finding and not merely against observations, the proper course, if aggrieved by the remarks, was to seek expunction before the Company Court. The directions relating to investigation were also held not to be without jurisdiction, as they were referable to the Court's powers in company proceedings and were not final findings of criminal liability.

Conclusion: The cross-objection was not maintainable and was disposed of.

Final Conclusion: The appeal challenging the winding up order and appointment of the provisional liquidator failed, while the cross-objection did not disclose a maintainable adverse finding and was separately disposed of.

Ratio Decidendi: Where a company is served, heard, and allowed to place its financial material on record, and the record discloses a strong prima facie case of insolvency or mismanagement, the Court may uphold admission of winding up proceedings and appointment of a provisional liquidator; cross-objections lie only against true adverse findings, not mere observations.

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