2015 (5) TMI 90 - HC - Companies Law

Court denies application to recall order admitting Company Petition citing procedural errors

The court rejected the application to recall the order admitting Company Petition No. 20 of 2012, citing procedural mishaps and lack of sufficient cause ... Winding up petition - Recalling of order - Ex parte order of admissiopn of winding petition passed - Advertisement of petition already done - Held that:- I have considered the arguments advanced by the learned counsel for the parties and I have also considered Judgments relied upon by the parties. Considered judgements Anil kumar Sachdeva [1978 (11) TMI 125 - HIGH COURT OF DELHI], Kerala State Industrial Development Corpn. Ltd. [1987 (7) TMI 500 - HIGH COURT OF KERALA] does not support or help the applicant in any manner. The order of admission was passed on 21.03.2013. The advertisement was made on 19.04.2013. On 24.03.2013, the applicant through Advocate Shri Kantak had come to know that the Company petition was listed for admission on 21.03.2013 and order admitting and advertising the petition in terms of the rules came to be passed. Nothing had prevented the applicant from immediately moving the Court requesting to direct that the advertisement may not be made by informing the Court that they intend to file an application for recalling the ex parte order of admission. The applicant has stated that on 25.03.2013, the applicant sought for the information as to the date and time in the additional board on which the Company Petition was displayed and that such information was received by the applicant on 09.04.2013. From 09.04.2013 till 18.04.2013, the applicant had ample time to move the present application or at least an application to request the Court to direct that the advertisement may not be made as they were to file an applicant to recall the order of admission. As already stated above, the advertisement was done on 19.04.2013.The applicant filed the present application on 25.04.2013. There is no sufficient cause shown for such delay. The applicant has, otherwise, made various averments on merits running in at least 22 pages and has also produced various documents. In answer to that, the respondent has filed a detailed reply containing at least about eight pages on merits. The applicant has filed affidavit-in-rejoinder of 14 pages and one more document along with the same. The respondent has filed affidavit-in-sur-rejoinder and has produced the balance sheet. The learned counsel for the parties also made several submissions on merits. It can be said that there was prima facie case for admitting the petition. - Decided against the appellant. Issues Involved:1. Recall of the order admitting Company Petition No. 20 of 2012.2. Allegations of non-disclosure and false statements by the respondent.3. Procedural irregularities and representation issues.4. Merits of the company petition and statutory notice.5. Legal precedents and authorities cited by both parties.Issue-wise Detailed Analysis:1. Recall of the Order Admitting Company Petition No. 20 of 2012:The applicant sought to recall the order dated 21.03.2013, which admitted Company Petition No. 20 of 2012 and ordered its advertisement. The applicant argued that the order was passed ex parte due to procedural mishaps and miscommunication between their legal representatives. The respondent opposed the application, stating that the order was not a decree and that the applicant had ample opportunity to defend the petition but failed to do so. The court concluded that the applicant did not show sufficient cause for non-appearance and that the advertisement of the petition had already caused any potential prejudice.2. Allegations of Non-disclosure and False Statements by the Respondent:The applicant claimed that the respondent approached the court with unclean hands by hiding various facts and making false statements to recover money. The respondent denied these allegations and insisted that all relevant facts were disclosed in the company petition. The court did not find these allegations sufficient to recall the admission order, as the applicant could still contest the petition on merits.3. Procedural Irregularities and Representation Issues:The applicant detailed the procedural issues that led to their non-appearance, including the transition between their legal representatives and the miscommunication regarding the Notice of Change (N.O.C.). The court acknowledged these procedural issues but noted that the applicant had opportunities to address them before the advertisement of the petition. The court found that the procedural lapses did not justify recalling the admission order.4. Merits of the Company Petition and Statutory Notice:The respondent argued that the applicant had received the statutory notice under Sections 433 and 434 of the Companies Act and that the applicant's audited balance sheet acknowledged the debt. The applicant contended that they had a substantial defense and that the order of admission without their representation was prejudicial. The court held that the applicant could still file a detailed reply and contest the petition on merits, and thus, recalling the admission order was unnecessary.5. Legal Precedents and Authorities Cited by Both Parties:Both parties cited various legal precedents to support their arguments. The applicant relied on cases where courts had recalled winding-up orders or admission orders, emphasizing the court's inherent power to recall orders to prevent abuse of process. The respondent cited cases underscoring the limited circumstances under which such orders could be recalled. The court reviewed these precedents and concluded that the applicant's situation did not warrant recalling the admission order, especially since the petition had already been advertised.Conclusion:The court rejected the application for recalling the order dated 21.03.2013, admitting Company Petition No. 20 of 2012, and ordered its advertisement. The applicant was advised to contest the petition on merits by filing an appropriate reply. No order as to costs was made in the facts and circumstances of the case.