2006 (10) TMI 238 - HC - Companies Law

Appeal granted due to improper notice service, overturning winding up order.

The court allowed the appeal, setting aside the order for winding up the company due to the failure to serve the statutory notice at the registered ... Winding up – Company when deemed unable to pay its debts Issues:- Failure to serve notice under section 434 of the Companies Act at the registered office.Analysis:The judgment involves an appeal against an order directing the winding up of a company under the Companies Act. The key issue revolves around the failure to serve a statutory notice under section 434 of the Act at the company's registered office. The company petition was initially filed without serving the required notice, which was later attempted through substituted service. The respondent/appellant argued that the lack of notice served at the registered office invalidated the winding-up application. The respondent's counsel contended that the respondent's subsequent actions in court, despite the defective notice, rendered the lack of proper service inconsequential. The court examined precedents from various High Courts emphasizing the mandatory nature of serving notice at the registered office under section 434(1) of the Act.The respondent/appellant relied on judgments from different High Courts, highlighting the mandatory requirement of serving notice at the registered office as per section 434 of the Companies Act. The Bombay High Court, Madras High Court, and Allahabad High Court decisions underscored the strict compliance necessary for serving notice under this provision. The absence of such notice was deemed fatal to the maintainability of a company petition, as seen in previous cases. The court noted that in the present case, the evidence presented by the petitioner remained unrebutted due to the respondent's failure to provide a defense despite opportunities granted during the proceedings.Ultimately, the court allowed the appeal, setting aside the order for winding up the company due to the failure to serve the statutory notice at the registered office. The judgment emphasized that the presumption of inability to pay debts under section 434 of the Act could only apply if the notice had been properly served, which was not the case in this instance. Consequently, the order passed by the learned company judge in the original petition was overturned, with no costs imposed on either party.