TaxTMI 
TaxTMI 
2014 (7) TMI 728
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....e Company. By an order dated 16.02.2009, the learned Company Judge admitted the winding up petition and ordered the Appellant Company to be wound up, simultaneously appointing the Official Liquidator as Liquidator of the Company and directing him to take over all the assets and records. The Court also directed the citation to be published in the relevant newspapers. 4. Aggrieved by the aforesaid, the Appellant filed a Company Appeal being Company Appeal No.19/2009 before a Division Bench of this Court. The Division Bench, vide its order dated 07.01.2013, allowed the said appeal, set aside the order of the learned Company Judge dated 16.02.2009 and remanded the matter to the Company Judge with a direction that the Company Petition be disposed of in accordance with law. Liberty was also given to the Appellant Company to move an application under Rule 9 of the Companies (Court) Rules, 1959 within 7 days for dispensing with the issuance of citation. 5. In order to appreciate the reasons which prevailed upon the Division Bench in passing the aforesaid directions, we reproduce hereunder the relevant extract of the order of the Division Bench dated 07.01.2013: "The short question that ....
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....reads: "Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court." The judgment of the Punjab High Court in Lord Krishna Sugar Mills Ltd. v Smt. Abnash Kaur, (1961) 31 Comp. Cas. 587 was approvingly noticed (subject to qualifications which are not relevant for our purpose) by the Supreme Court. In that judgment, the High Court had held that in an appropriate case the court has the power to suspend advertisement of a petition for winding up, pending disposal of an application for revoking the order of admission of the petition. The Supreme Court traced the power to entertain an application by the company that in the interest of justice or to prevent abuse of the process of the court, the petition for winding up be not advertised, to Rule 9 (supra), and observed that such an application may be made by the company even when there is an unconditional admission of the petition for winding up. It was observed that the power to entertain such an application is inherent in the court and Rule 9 only reiterates t....
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.... expressed by this court that the court must, as soon as the petition for winding up is admitted, advertise the petition. Rejecting the view, the Supreme Court observed: "Such a view, if accepted, would make the court an instrument, in possible cases, of harassment and even of blackmail, for once a petition is advertised, the business of the company is bound to suffer serious loss and injury." Recently, the Supreme Court had occasion to examine the question of issue of advertisement from the point of view of the company which is sought to be wound up, in IBA Health Ltd. v. Info-Drive Systems Sdn. Bhd., (C.A. No. 8230/2010, dated 23.09.2010) where it was held as follows:- "PUBLIC POLICY CONSIDERATIONS 26. A creditor's winding up petition, in certain situations, implies insolvency or financial position with other creditors, banking institutions, customers and so on. Publication in the Newspaper of the filing of winding up petition may damage the creditworthiness or financial standing of the company and which may also have other economic and social ramifications. Competitors will be all the more happy and the sale of its products may go down in the market and it may also....
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....ctor, a copy of which was filed before us. One Anil Koshal has in the letter informed the official liquidator that the company has closed down its manufacturing activities since March, 2003 and subsequently all business activities have come to a standstill and that the office premises are being used by him in his personal capacity for his own business in which the records of the company are also kept. This is something which, if the company judge thinks fit and proper, needs to be answered by the company if and when it moves an application before the company court invoking the inherent powers to dispense with the requirement of issuing a citation. The question before us is one of opportunity and fair procedure to be followed by the company court; we are not concerned with the merits of the claim of the company which would be for the company judge to decide. Moreover, the Supreme Court has observed in National Conduits (P) Ltd. (supra) that an application for dispensing with the citation may be made even when there is an unconditional admission of the petition for winding up. It appears to us that that right cannot be denied. 8. The appeal is allowed. The order of the learned singl....
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....ated 16.02.2009. As is evident from the discussion in the final judgment of the Division Bench dated 07.01.2013, the point which persuaded the Court to set aside the earlier Single Judge's order (dated 16.02.2009) was the rolled up procedure adopted by him in discussing the merits of the case, not advertising the proceedings and straightaway directing winding up. The Court did not, however, comment and decide the merits of the observations of the learned Single Judge which undoubtedly point to the fact that the petition needed to be admitted. In these circumstances, the final direction contained in paragraph 8 is clarified appropriately; it stands modified to the effect that the judgment and order dated 16.02.2009 to the extent it records findings and prima facie observations warranting admission of the petition would stand. No further clarification is required. The said judgment dated 7.1.2013 shall be read in the light of the present clarification. The review petition is disposed of in the above terms." (emphasis supplied) 9. The aforesaid order led to the filing of three applications, one by the Respondents and two by the Appellant Company. The Respondents in their appli....
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....rs passed by the disciplinary committee of the ICAI in the case of the petitioner No.1. Such a conduct on the part of the respondent-company cannot be countenanced. 27. For the aforesaid reasons I do not think I would be justified in issuing notice to the petitioners in C.A. No.2159/2013 and 2160/2013 filed by the respondent-company. The applications are dismissed in limine." (emphasis supplied) 12. As regards the application filed by the Respondents (CA No.898/2013) for appointment of the Provisional Liquidator and publication of the citation, the learned Company Judge after meticulously examining the chequered history of the case and reproducing extracts from the order of the Division Bench dated 05.04.2013 passed in Review Petition No.116/2013 (reproduced hereinabove) and the relevant factual observations made by the learned Single Judge with regard to the admission of the winding up petition in his order dated 16.02.2009, which in order to avoid prolixity we desist from reproducing again, by the impugned order directed the advertisement of admission to be issued by the Respondents and appointed the Official Liquidator as Provisional Liquidator to take charge of the assets and....
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....ads as under:- "In these circumstances, the final direction contained in paragraph 8 is clarified appropriately; it stands modified to the effect that the judgment and order dated 16.02.2009 to the extent it records findings and prima facie observations warranting admission of the petition would stand. No further clarification is required. The said judgment dated 07.01.2013 shall be read in the light of the present clarification." 15. In the aforesaid backdrop, we are constrained to hold that we find no flaw in the findings of the learned Company Judge which are to the effect that in view of the categorical findings and observations of the predecessor Company Judge recorded in his order dated 16.02.2009 and the further order dated 05.04.2013 passed by the Division Bench in Review Petition No.116/2013 expressly clarifying that the findings in relation to the admission of the petition would continue to stand, the contention of the Appellant Company that the order dated 05.04.2013 could not be interpreted to mean that the winding up petition stood admitted, cannot be countenanced. 16. Undoubtedly, the order dated 16.02.2009 was challenged by the Appellant before the Division Bench ....