2002 (3) TMI 881 - HC - Companies Law

Court restores Company Petition, imposes conditions on petitioner. Compliance required within 30 days.

Virat Engineering (P.) Ltd. Versus Harleystreet Pharmaceuticals Ltd.

Virat Engineering (P.) Ltd. Versus Harleystreet Pharmaceuticals Ltd. - [2003] 47 SCL 107 (GUJ.) Issues Involved:1. Review of the order dated January 31, 1995, dismissing Company Petition No. 51 of 1990.2. Compliance with Rule 31 of the Companies (Court) Rules regarding advertisement and filing of an affidavit.3. Justification for the delay in filing the review petition.4. Impact of condoning the delay on third parties and subsequent transactions.Issue-wise Detailed Analysis:1. Review of the Order Dated January 31, 1995:The petitioner sought a review of the order dismissing Company Petition No. 51 of 1990 for non-compliance with Rule 31 of the Companies (Court) Rules. The original order indicated that the petition was dismissed due to the petitioner's failure to file an affidavit of publication despite being granted an extension until January 23, 1995. The court emphasized that the dismissal was due to non-compliance with the directions as to publication and filing of the affidavit.2. Compliance with Rule 31 of the Companies (Court) Rules:The petitioner had advertised the winding-up petition in the Times of India and Sandesh but failed to file the affidavit of publication. The court noted that non-filing of the affidavit could not be attributed to the petitioner-company itself, as this task typically falls to the counsel. The court acknowledged that the petitioner's counsel had not noticed the separated board, leading to the dismissal for want of prosecution.3. Justification for the Delay in Filing the Review Petition:The delay in filing the review petition was attributed to several factors, including the petitioner's office relocation to Bombay and the subsequent communication gap. The court found that the delay was satisfactorily explained as a case of inaction rather than willful omission. The court emphasized that the policy should be to condone delays to administer substantial justice, provided there is no evidence of mala fides or dishonest intention.4. Impact of Condoning the Delay on Third Parties and Subsequent Transactions:The court considered the potential prejudice to third parties and the respondent-company if the delay were condoned. It was noted that the restoration of the winding-up petition would relate back to the date of commencement of the proceedings. However, the court has the discretion under Section 536(2) of the Companies Act to protect transactions made during the period between the dismissal and restoration of the petition. The court decided to restore the petition on specific conditions to balance the interests of all parties involved.Conclusion:The court allowed the review application and restored Company Petition No. 51 of 1990, subject to the following conditions:1. The petitioner shall not claim interest at the rate of 20% from the date of dismissal until the restoration application was moved but shall claim interest at 9%.2. The petitioner shall not seek to void transactions made between the dismissal and restoration dates.3. The petitioner shall inform the company judge of these conditions if the winding-up petition is ultimately allowed.4. The petitioner shall pay costs of Rs. 5,000 to the respondent-company within 30 days.5. The undertakings regarding conditions 1 and 2 shall be filed within 30 days.Failure to comply with these conditions would render the restoration order ineffective, and the petition would remain dismissed as of January 31, 1995.