Winding-up petition notice requirement limits ex parte admission where a running concern faces prejudice and maintainability is disputed.

Rule 96 of the Companies (Court) Rules, 1959 gives the company judge discretion to issue notice to the company before directing advertisement of a winding-up petition, and that discretion should not be exercised routinely. Where the respondent is a running concern, ex parte admission and advertisement may prejudice goodwill and business, so notice to show cause is ordinarily the proper course, especially when maintainability and a bona fide dispute are in issue. An ex parte order admitting the petition and ordering advertisement was therefore set aside, and the matter was remitted for fresh consideration after hearing the company and receiving its objections.

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Issues: Whether a winding-up petition could be admitted ex parte and ordered to be advertised without issuing notice to the company before admission, and whether such order deserved to be set aside.

Analysis: Rule 96 of the Companies (Court) Rules, 1959 permits the judge, if thought fit, to direct notice to the company before giving directions as to advertisement of the petition. Though the company judge has discretion at the admission stage and may pass appropriate orders ex parte, such power is not to be exercised as a matter of routine. Where the respondent is a running concern, ex parte admission and advertisement of a winding-up petition can seriously prejudice its goodwill and business. The proper course, ordinarily, is to issue notice to show cause before admission, especially when maintainability and the existence of a bona fide dispute are in question.

Conclusion: The ex parte order admitting the winding-up petition and directing its advertisement was not justified and was set aside. The matter was remitted for fresh consideration after giving the company an opportunity of hearing and to file objections on maintainability.

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