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Issues: Whether a winding-up order passed without admitting the company petition and without following the mandatory procedure relating to notice and advertisement under the Companies (Court) Rules, 1959 is illegal and liable to be set aside with a remand.
Analysis: Rule 96 contemplates posting of the petition for admission and directions for advertisement, while Rule 24 requires advertisement before the petition is heard. The mandatory nature of these safeguards was treated as a protection against abuse of the winding-up process and as a means to ensure that the company is heard before drastic orders are made. An order passed in violation of a statutory procedure prescribed in a mandatory form is illegal, and an appellate court cannot preserve the finding while curing the defect by partial remand where the very foundation of the order is contrary to the statute.
Conclusion: The winding-up order was illegal for non-compliance with the mandatory procedure, and it was set aside with a remand to the company court for fresh orders in accordance with law.
Ratio Decidendi: Where the statute and rules prescribe mandatory pre-admission and advertisement requirements before a winding-up petition is heard, failure to follow them renders the resulting winding-up order illegal and unsustainable.
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