2010 (9) TMI 928 - HC - Companies Law

Company petition dismissed, respondent exempt; appeal rejected, pursue remedies elsewhere.

Jayalakshmi Versus Nair Service Society

The court held that the company petition under Section 433 of the Companies Act was not maintainable against the first respondent due to an exemption. It ... Whether the company petition is not maintainable for the reason that vide Ext.R1(c ), as far as the first respondent is concerned, section 433 of the Companies Act does not apply? Held that:- A company petition under section 433 of the Companies Act, namely, for winding up of the company can only be premised on the basis that the respondent is a company to which section 433 of the Companies Act would apply. This is a case where allegations have been made by the appellants against both respondents 1 and 2. The first respondent is undoubtedly a company. But having regard to Ext.R1(c) notification which as the learned Company Judge has correctly observed has not been challenged in any proceedings known to law, the first respondent is not governed by the provisions of section 433 of the Companies Act. In other words, we think it is clearly beyond the shadow of doubt that a petition under section 433 will not lie against the first respondent The complaint of the learned Senior Counsel for the appellants that the decision should be overturned as the matter was not posted for evidence cannot be accepted. In such circumstances, we see no merit in the appeal and it is dismissed. Issues Involved:1. Maintainability of the company petition under Section 433 of the Companies Act, 1956.2. Status and legal standing of the first and second respondents.3. Jurisdiction and applicability of the Companies Act, 1956 to the respondents.4. Orders and directions issued by the Company Judge.5. Contention regarding the necessity of posting the matter for evidence.6. Relevance of cited Supreme Court judgments and other legal precedents.Detailed Analysis:1. Maintainability of the Company Petition:The appeal was lodged against the judgment in C.P. No. 10/2007, where the petitioners claimed to be creditors of the second respondent and filed a company petition under Section 433(e) of the Companies Act, 1956, due to the second respondent's failure to return their deposits. The first respondent contended that the petition was not maintainable, citing an exemption under Ext.R1(c) from the provisions of Sections 433 to 483 of the Companies Act, 1956.2. Status and Legal Standing of the Respondents:The first respondent, the Nair Service Society, was registered under the Travancore Companies Regulations and later deemed a company under the Companies Act, 1956. However, it was governed by the Kerala Non-Trading Companies Act, 1961, and exempted from certain provisions of the Companies Act, 1956. The second respondent, a Karayogam, claimed to be a voluntary association, neither a company nor a registered body, and not a branch or unit of the first respondent.3. Jurisdiction and Applicability of the Companies Act, 1956:The learned Company Judge initially focused on resolving the disputes through mediation and conciliation. However, later concluded that the company petition was not maintainable due to the exemption provided by Ext.R1(c) and the fact that the second respondent was not a company under the Companies Act, 1956.4. Orders and Directions Issued by the Company Judge:The Company Judge issued orders on 26-6-2008 and 6-10-2008, emphasizing the need for an amicable resolution and appointing a Receiver to manage the assets and affairs of the Karayogam. These orders aimed to address the financial irregularities and ensure proper management of the Karayogam's assets.5. Contention Regarding the Necessity of Posting the Matter for Evidence:The appellants argued that the Company Judge should not have dismissed the petition without posting the matter for evidence. They emphasized the previous orders and the respondents' compliance, arguing that the dismissal was premature.6. Relevance of Cited Supreme Court Judgments and Other Legal Precedents:The appellants cited several Supreme Court judgments, including L.K. Verma v. HMT Ltd. and Babu Ram Prakash Chandra Maheshwari v. Antarim Zila Parishad, to support their argument. However, the court distinguished these cases, noting that they pertained to writ petitions under Article 226 and not to the jurisdiction of the Company Court under the Companies Act.Conclusion:The court concluded that the company petition under Section 433 of the Companies Act was not maintainable against the first respondent due to the exemption provided by Ext.R1(c). Additionally, the second respondent was not a company under the Companies Act, 1956. The court found no merit in the appellants' contention regarding the necessity of posting the matter for evidence and dismissed the appeal, leaving the appellants to seek appropriate reliefs before the appropriate court.