TaxTMI 
TaxTMI 
1965 (7) TMI 38
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....y leaps and bounds. The petitioner, one of the shareholders owning one share of Rs. 10,000, in despair, made the application for winding up. The grounds on which it is based as shown in the petition and vouched for in the affidavit are that the company is heavily indebted and is unable to pay to the various creditors the debts due which are to the tune of Rs. 2,00,000 and that the interest on such borrowings itself comes to nearly Rs 24,000, per year. Besides, there are sharp dissensions between the shareholders of the company regarding the management of the business and the affairs of the company. These disputes have assumed enormous dimensions. On account of the dominating influence of the managing director and the other shareholders belonging to this group, the business of the company could not run smoothly and this has affected the efficient management of the business of the company. The result is that the company has no assets except the site, the theatre and cine equipment and it is unable to pay the debts. The petition as filed was under section 439 of the Companies Act read with rules 95 and 21 (Part III) of the Companies (Court) Rules, 1959. It was advertised as per rules.....
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....rder ran thus : "It is, therefore, ordered that the company be wound up under the provision of the Companies Act of 1956; that the official liquidator do, as liquidator of the company aforesaid, forthwith take charge of all the property and effects of the said company; that the official liquidator shall cause a sealed copy of this order to be served on the company by prepaid registered post; that the petitioner do advertise within 14 days from this date a notice in the prescribed form of the making of this order in one issue of the Indian Express; that the petitioner do serve a certified copy of this order on the Registrar of Companies not later than one month from this date.............." Aggrieved by the order, 7 persons including the company and the managing director, the others being the wife of the managing director, his brother's son and three others, filed this appeal. It so transpired that the petitioner who had initiated the proceedings by filing the petition for winding up of the company at the stage of appeal decided to withdraw his petition and hence sought permission of the court for withdrawal. As per the rules the court directed that the withdrawal be advertise....
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....that for proceedings like these which need expeditious disposal affidavit evidence is more appropriate. No doubt even in case of affidavit evidence, which must be based as a rule on the personal knowledge of the deponent and not on his mere belief, it is open to the other party if he challenges the correctness of the statements made therein to request the court to summon the deponent for cross-examination. It is clear that the affidavit evidence is not only permissible in matters like this, but also is the most desirable way to effectuate the speedy disposal of matters justly and properly. It is open in such cases to the party to request the court for calling the witness for cross-examination. The court besides has always power to take oral evidence also in case the parties wish to lead the same. Indeed there is nothing in the Act which debars the party from adducing oral evidence. At the same time there is also nothing in the Act which would suggest that for the disposal of the petition oral evidence is a sine qua non and that the court cannot act upon affidavits alone and dispose of the case if it is satisfied that the averments in the petition have been substantiated and there a....
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....nows the facts. In case the petition is presented by a corporation the affidavit should be made by some director, secretary, or other principal officer thereof. The affidavit must be sworn after and filed within four days after the petition is presented. Such affidavit is sufficient prima facie evidence of the statements in the petition, unless fraud is charged, in which case the facts alleged to constitute fraud must be set out in an affidavit." The judicial opinion in India is in line with the English practice. In Seethiah v. Venkata Subbiah [1949] 19 Comp. Cas. 107 112, a Division Bench of the Madras High Court had to consider the question whether oral evidence under the Act was permissible in law or not. The learned judges observed : "There is no inflexible rule or practice prohibiting the adducing of oral evidence or the cross-examination of the deponents of affidavits in original petition before the High Court, such as for compulsory winding-up of companies. Where necessity suggests or expediency requires, it is open to the judge trying winding-up proceedings to allow oral evidence............. But where the applications for cross-examining the deponents of affidavit ar....