AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
1958 (3) TMI 22
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 397, 398 and 402. At the hearing of the petition the prayer for winding up was given up ; and substantially the controversy before Mr. Justice Coyajee was whether any directions should be issued under sections 397 and 398 of the Companies Act. A preliminary objection has been taken by Mr. Bhabha and that is that Mr. Justice Coyajee was in error in hearing the petition without notice having been given to the Central Government under section 400 of the Companies Act. Section 400 of the Companies Act provides that: "The court shall give notice of every application made to it under section 397 or 398 to the Central Government, and shall take into consideration the representations, if any, made to it by that Government before passing a f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s urged by Mr. Bhabha is that, as soon as a complaint is received by the court under section 397 or section 398, it is incumbent upon the court to give notice of this complaint to the Central Government and no action can be taken by the court on the petition preferred under section 397 or section 398 without such notice being given and the representations, if any, of the Central Government being considered. Now, in this case, what happened was this. This was a composite petition, as it were, both for winding up and for directions under section 397 and section 398. It came before Mr. Justice K.T. Desai and he admitted it and directed notice to be served upon the company. Pursuant to that notice the company appeared before Mr. Justice Coya....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y on the merits. Now it is necessary that that practice should be approximated to the practice which now must be laid down with regard to notice to be given to the Central Government under section 400 of the Companies Act. Turning first to the proper interpretation of section 400, two extreme views have been pressed before us-one by Mr. Bhabha and the other by Mr. Gupte. Mr. Bhabha's contention is, as we have already indicated, that as soon as a complaint is made under section 397 or section 398, which complaint takes the form of a petition, the court without more must issue a notice to the Central Government. The other view, which has been pressed for by Mr. Gupte, is that section 400 has no application at all when the court dismisses a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s or against the petitioners, in favour of the company or against the company, under section 397 or section 398 without giving an opportunity to the Central Government to put forward its views before the court. It is impossible to accept the view that Government's view should only be sought when the court is going to take one view of the petition and not the other; and the other insuperable difficulty in the way of accepting Mr.Gupte's contention is that the court cannot make up its mind at the stage of giving notice to the Central Government whether it is going to dismiss the petition or grant it. Therefore, according to Mr. Gupte, the question whether a notice was required to be served upon the Central Government or not would have to be d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 397 and 398 he would give such directions as the Companies Act provides, as we have just pointed out, after hearing both the company and the Central Government. If the petition is not a composite petition and is only a petition under section 397 or 398, we suggest that a similar practice should be followed. The judge may summarily dismiss it and the summary dismissal would arise under circumstances which we have already indicated in the judgment. But if he does not summarily dismiss it and admits or accepts it, then the office will immediately issue notice to the Central Government and the petition will come up for hearing after the Central Government has been served. In this particular case, Mr. Justice K.T. Desai did not summarily di....