1958 (5) TMI 32 - HC - Companies Law

Appealability of Winding-Up Petition Order and Proper Substitution of Respondent

The court held that the order directing the advertisement of the winding-up petition was appealable as it could have serious consequences for the company. ... Winding up – Application for and Appeals from orders Issues Involved:1. Appealability of the order under rule 751.2. Procedural propriety of the substitution order.3. Validity of amendments made pursuant to the substitution order.4. Proper presentation of the petition by the petitioner.Issue-wise Detailed Analysis:1. Appealability of the Order under Rule 751:The primary contention was whether the order directing the advertisement of the winding-up petition was appealable. The court referred to its previous decision in *Bachharaj Factories Ltd. v. Hirjee Mills Ltd.* [1955] 25 Comp. Cas. 227, where it was established that section 202 of the Companies Act provides an important safeguard, making every order and decision in winding-up subject to appeal. The court clarified that while procedural orders might not be appealable, substantive orders affecting rights, such as the refusal to dismiss a winding-up petition, are appealable. The court noted, 'There can be no doubt that an order advertising a petition may have very serious consequences for the company which is sought to be wound up. The advertisements may seriously impair its credit and affect its reputation.' Consequently, the court held that the order directing advertisements under rule 751 was indeed appealable.2. Procedural Propriety of the Substitution Order:The court addressed the substitution of Ishwarbhai Somabhai Patel in place of Mulraj Dwarkadas. The appellant did not appeal against the substitution order when it was made, and any appeal against it was now barred by limitation. The court emphasized, 'Having accepted the order of substitution by not preferring an appeal against it, in our opinion it is not open to the appellant in this appeal to challenge that order.' Thus, the substitution of the respondent was deemed properly directed.3. Validity of Amendments Made Pursuant to the Substitution Order:The amendments made to the petition following the substitution were scrutinized. The court found that the amendments extended beyond what could be considered 'consequential amendments' and should have been challenged at the time they were made. The court stated, 'The practice on the original side is well known that where an amendment is ordered the party amending amends the original proceedings and also amends the copies with the solicitors of the other side.' Since the appellant did not object at the appropriate time, the court did not entertain this grievance in the appeal.4. Proper Presentation of the Petition by the Petitioner:The petition was signed by the constituted attorney of the petitioner, Mr. Tijoriwala, under a power of attorney. The court needed to determine if this power of attorney was general or special. The court concluded that the power of attorney was special, as it was limited to specific shares and did not authorize general litigation on behalf of the petitioner. The court referenced *Vardaji Kasturji v. Chandrappa* [1916] ILR 41 Bom, 40 and *Ephrayim v. Turner Morrison & Co.* [1930] 30 Bom. LR 1178 to support its interpretation. The court held, 'If this was not a general power of attorney, then clearly the petition has not been properly signed.' However, the court considered this a curable irregularity and directed the petitioner to sign the petition in court, thereby rectifying the defect.Conclusion:The court determined that the order under rule 751 was appealable and the substitution of the respondent was properly directed. The amendments made pursuant to the substitution order were not consequential and should have been challenged earlier. The petition was improperly signed by a special power of attorney, but this was a curable defect, and the petitioner was directed to sign the petition in court. The appeal was adjourned to the next term for further proceedings on merits.