Nasha Toys Pvt. Ltd. Vs. Harshad Corporation - Court Judgment

Excerpt:
- - despite several adjournments thereafter the appellant failed to take any steps. in view of the above, i find that the respondent-company has failed or neglected to pay the debt. for all the aforesaid reasons, we find that there was nothing wrong in the company petition and the objection raised by learned counsel for the appellant is not well founded. r.s. mongia c.j. 1. harshad corporation, clearing and forwarding agent, ahmedabad (hereinafter referred to as 'the respondent-company') filed a company petition being company petition no. 2 of 1995 for winding up nasha toys pvt. ltd., a joint venture with nagaland industrial development corporation ltd., having its registered office at duncan road, police station dimapur west, dimapur, under sub-section (1)(b) of section 439 of the companies act, 1956, for the alleged negligence to pay rs. 3,46,368 towards indebtedness. this company petition was registered as company petition no. 2 of 1995. the managing director of nasha toys pvt. ltd. (hereinafter referred to as 'the appellant-company') did put in his appearance before the company judge. however, he did not file any reply to the company petition. the company judge issued notice to show cause as to why the advertisement for winding up the appellant-company under section 433 read with section 438 of the companies act should not be published. in spite of that notice having been published, none appeared on behalf of the appellant-company to show cause as to why the advertisement should not be published. thereafter by order dated march 23, 1995, the company judge allowed the respondent-company to take steps for advertising the notice in two local dailies. the sentinel, an english daily and dainik asom, an assamese daily, published from guwahati.accordingly, advertisement was published in the said two dailies. an affidavit was sworn on behalf of the company regarding publication of the advertisement enclosing the copy of the newspaper. on may 18, 1995, mr. k. agarwal, learned counsel appearing on behalf of the managing director of the appellant-company prayed for one month's time to file counter and his prayer was allowed. several adjournments were given thereafter to counsel for the appellant. however, no affidavit-in-opposition was filed. on august 31, 1995, learned counsel mr. k. agarwal informed the company judge that in spite of repeated reminders he did not receive any instructions from his client. accordingly, he sent a registered letter on july 13, 1995. even then he did not receive any instructions. in these circumstances, mr. agarwal desired to withdraw from the case and his prayer was allowed by the learned company judge. mr. k. agarwal also produced a letter sent to the appellant-company. despite several adjournments thereafter the appellant failed to take any steps. the learned company judge, by the judgment and order dated december 14, 1995, ordered the winding up of the appellant-company. the concluding portion of the judgment and orders reads as under : 'i have heard learned counsel for the petitioner and have gone through the documents produced by the petitioner-company. as no counter affidavit has been filed it is not known what is the exact case of the respondent. statutory notice was also served on the respondent and thereafter notice was also published in the newspapers. in spite of that no step was taken by the respondent to defend their case. in view of the above, i find that the respondent-company has failed or neglected to pay the debt. accordingly, i order for winding up of the respondent-company. send intimation to the registrar of companies and the official liquidator according to law. the case is disposed of.' 2. the present appeal has been filed by nasha toys pvt. ltd. before adverting to the arguments of learned counsel for the appellant, it may be observed that on april 12, 2001, the following order was passed by the motion bench : 'heard mr. k. agarwal, learned counsel for the appellant. counsel for the other side is not present. the dispute involved in this appeal is with regard to the settlement of rs. 3,46,000 to be settled between the company and the supplier. considering the amount involved in this appeal, we further allow two months time to the parties to settle the dispute amicably out of court. we make it clear that if the parties are unable to settle the dispute amicably out of court, the matter shall be decided on the merits after expiry of two months. list this matter for hearing after two months.' 3. thereafter again on august 2, 2001, this bench had passed the following order : 'we have heard the case. the same remains part heard. learned counsel for the appellant is directed to get instructions as to how much money the company is prepared to pay to the respondent towards its dues and in what manner. be it listed after one month whenever this bench meets. copy of this order attested by the bench assistant be supplied to learned counsel for the appellant for onward transmission.' 4. learned counsel for the appellant states that despite having written one letter on april 17, 2001, and a registered letter dated august 6, 2001, to his client nasha toys pvt. ltd., no instructions whatsoever have been received by him and even no reply has been given to the letters addressed by him. 5. learned counsel for the appellant submitted that the company itself, i.e., nasha toys private ltd. was not made respondent before the company judge in company petition no. 2 of 1995 and it was only the managing director of the respondent-company who was arrayed as respondent. it was further argued that no notice as required under section 434(1) of the companies act was served on the respondent-company before filing the company petition. he submitted that in the company petition itself it has been mentioned by the petitioner that the statutory notice which was sent by registered post acknowledgment due under section 434(1)(a) of the companies act, prior to the filing of the company petition for winding up, had been returned by the postal authorities with the remarks, 'addressee left'. 6. so far as the first argument advanced by learned counsel for the appellant is concerned, reference may be made to rule 95 of the companies (court) rules, 1959, which is in the following terms : '95. petition for winding up.--a petition for winding up a company shall be in form no. 45, 46 or 47, as the case may be, with such variations as the circumstances may require, and shall be presented in duplicate. the registrar shall note on the petition the date of its presentation.' 7. rule 95 in turn takes us to form no. 46 laying down the format of a company petition for winding up by a creditor. this in turn provides that the heading has to be as in form no. 1. form no. 1 is as under : 'in the high court at ... [(or) in the district court of . . .] original jurisdiction in the matter of companies act, 1956 and in the matter of x. y. ltd. (give the name of the company) note.--(1) where the company is being wound up the words 'in liquidation' should be inserted in brackets after the name of the company (see rule 115). (2) where the company is wound up under the provisions of the banking companies act, 1949 or the insurance act, 1938, the relevant act should be set out in the cause title along with the companies act.' 8. from a bare perusal of the aforesaid form, it is evident that the company petition has to mention the name of the company in the heading in respect of which winding up is sought. from a perusal of company petition no. 2 of 1995, we find that it is mentioned, 'in the matter of nasha toys pvt. ltd.'. in form no. 46, there is no indication that any other person is to be made respondent as such. it is sufficient to mention that the petition relates to a particular company of which the winding up is sought for. otherwise also we find that the notice which was published in the newspapers was for winding up of nasha toys pvt. ltd. in the company petition, the managing director of the company has also been arrayed as respondent. the contents of the petition relate to the affairs of the company and nothing personal against the managing director as such. after all the managing director was appearing before the company judge through a counsel representing the company. for all the aforesaid reasons, we find that there was nothing wrong in the company petition and the objection raised by learned counsel for the appellant is not well founded. 9. so far as the second objection is concerned, the notice was sent at the registered office of the company though it came back unserved with the report, 'addressee left'. according to us, this was sufficient compliance with section 434 of the companies act inasmuch as at the registered office of the company a registered notice was sent. be that as it may, even later on the notices were published in the newspapers as has been mentioned in the opening part of the judgment. the conduct of the respondent-company is writ large. despite counsel, who was appearing before the company judge, writing letters to the company, no response was made by the company or no instruction had been given to counsel so much so learned counsel for the appellant (respondent before the company judge) withdrew from the case. even this court in the appeal, by the aforesaid two orders dated april 12, 2001 and august 2, 2001 (as reproduced above) gave time to the company even now to make the payment of the outstanding dues. but despite their counsel writing letters to the company, no response was made. it seems that the company is really not interested in the matter. 10. for the foregoing reasons, we find no merit in this appeal, which is hereby dismissed. 11. before parting with the judgment, we still give three months time from today to the respondent (appellant herein) company to make the payment of the dues to the petitioner (respondent herein) or make a settlement and in such an eventuality they would be at liberty to move the company judge under section 466 of the companies act for stay of the winding up proceedings.

Judgment:

R.S. Mongia C.J.

1. Harshad Corporation, clearing and forwarding agent, Ahmedabad (hereinafter referred to as 'the respondent-company') filed a company petition being Company Petition No. 2 of 1995 for winding up Nasha Toys Pvt. Ltd., a joint venture with Nagaland Industrial Development Corporation Ltd., having its registered office at Duncan Road, Police Station Dimapur West, Dimapur, under Sub-section (1)(b) of Section 439 of the Companies Act, 1956, for the alleged negligence to pay Rs. 3,46,368 towards indebtedness. This company petition was registered as Company Petition No. 2 of 1995. The managing director of Nasha Toys Pvt. Ltd. (hereinafter referred to as 'the appellant-company') did put in his appearance before the company judge. However, he did not file any reply to the company petition. The company judge issued notice to show cause as to why the advertisement for winding up the appellant-company under Section 433 read with Section 438 of the Companies Act should not be published. In spite of that notice having been published, none appeared on behalf of the appellant-company to show cause as to why the advertisement should not be published. Thereafter by order dated March 23, 1995, the company judge allowed the respondent-company to take steps for advertising the notice in two local dailies. The Sentinel, an English daily and Dainik Asom, an Assamese daily, published from Guwahati.

Accordingly, advertisement was published in the said two dailies. An affidavit was sworn on behalf of the company regarding publication of the advertisement enclosing the copy of the newspaper. On May 18, 1995, Mr. K. Agarwal, learned counsel appearing on behalf of the managing director of the appellant-company prayed for one month's time to file counter and his prayer was allowed. Several adjournments were given thereafter to counsel for the appellant. However, no affidavit-in-opposition was filed. On August 31, 1995, learned counsel Mr. K. Agarwal informed the company judge that in spite of repeated reminders he did not receive any instructions from his client. Accordingly, he sent a registered letter on July 13, 1995. Even then he did not receive any instructions. In these circumstances, Mr. Agarwal desired to withdraw from the case and his prayer was allowed by the learned company judge. Mr. K. Agarwal also produced a letter sent to the appellant-company. Despite several adjournments thereafter the appellant failed to take any steps. The learned company judge, by the judgment and order dated December 14, 1995, ordered the winding up of the appellant-company. The concluding portion of the judgment and orders reads as under :

'I have heard learned counsel for the petitioner and have gone through the documents produced by the petitioner-company. As no counter affidavit has been filed it is not known what is the exact case of the respondent. Statutory notice was also served on the respondent and thereafter notice was also published in the newspapers. In spite of that no step was taken by the respondent to defend their case. In view of the above, I find that the respondent-company has failed or neglected to pay the debt. Accordingly, I order for winding up of the respondent-company.

Send intimation to the Registrar of Companies and the official liquidator according to law.

The case is disposed of.'

2. The present appeal has been filed by Nasha Toys Pvt. Ltd. Before adverting to the arguments of learned counsel for the appellant, it may be observed that on April 12, 2001, the following order was passed by the Motion Bench :

'Heard Mr. K. Agarwal, learned counsel for the appellant. Counsel for the other side is not present.

The dispute involved in this appeal is with regard to the settlement of Rs. 3,46,000 to be settled between the company and the supplier. Considering the amount involved in this appeal, we further allow two months time to the parties to settle the dispute amicably out of court. We make it clear that if the parties are unable to settle the dispute amicably out of court, the matter shall be decided on the merits after expiry of two months.

List this matter for hearing after two months.'

3. Thereafter again on August 2, 2001, this Bench had passed the following order :

'We have heard the case. The same remains part heard. Learned counsel for the appellant is directed to get instructions as to how much money the company is prepared to pay to the respondent towards its dues and in what manner.

Be it listed after one month whenever this Bench meets.

Copy of this order attested by the Bench assistant be supplied to learned counsel for the appellant for onward transmission.'

4. Learned counsel for the appellant states that despite having written one letter on April 17, 2001, and a registered letter dated August 6, 2001, to his client Nasha Toys Pvt. Ltd., no instructions whatsoever have been received by him and even no reply has been given to the letters addressed by him.

5. Learned counsel for the appellant submitted that the company itself, i.e., Nasha Toys Private Ltd. was not made respondent before the company judge in Company Petition No. 2 of 1995 and it was only the managing director of the respondent-company who was arrayed as respondent. It was further argued that no notice as required under Section 434(1) of the Companies Act was served on the respondent-company before filing the company petition. He submitted that in the company petition itself it has been mentioned by the petitioner that the statutory notice which was sent by registered post acknowledgment due under Section 434(1)(a) of the Companies Act, prior to the filing of the company petition for winding up, had been returned by the postal authorities with the remarks, 'addressee left'.

6. So far as the first argument advanced by learned counsel for the appellant is concerned, reference may be made to Rule 95 of the Companies (Court) Rules, 1959, which is in the following terms :

'95. Petition for winding up.--A petition for winding up a company shall be in Form No. 45, 46 or 47, as the case may be, with such variations as the circumstances may require, and shall be presented in duplicate. The Registrar shall note on the petition the date of its presentation.'

7. Rule 95 in turn takes us to Form No. 46 laying down the format of a company petition for winding up by a creditor. This in turn provides that the heading has to be as in Form No. 1. Form No. 1 is as under :

'In the High Court at ... [(or) In the District Court of . . .] Original jurisdiction

In the matter of Companies Act, 1956 and In the matter of X. Y. Ltd. (give the name of the company) Note.--(1) Where the company is being wound up the words 'in liquidation' should be inserted in brackets after the name of the company (see Rule 115).

(2) Where the company is wound up under the provisions of the Banking Companies Act, 1949 or the Insurance Act, 1938, the relevant Act should be set out in the cause title along with the Companies Act.'

8. From a bare perusal of the aforesaid form, it is evident that the company petition has to mention the name of the company in the heading in respect of which winding up is sought. From a perusal of Company Petition No. 2 of 1995, we find that it is mentioned, 'In the matter of Nasha Toys Pvt. Ltd.'. In Form No. 46, there is no indication that any other person is to be made respondent as such. It is sufficient to mention that the petition relates to a particular company of which the winding up is sought for. Otherwise also we find that the notice which was published in the newspapers was for winding up of Nasha Toys Pvt. Ltd. In the company petition, the managing director of the company has also been arrayed as respondent. The contents of the petition relate to the affairs of the company and nothing personal against the managing director as such. After all the managing director was appearing before the company judge through a counsel representing the company. For all the aforesaid reasons, we find that there was nothing wrong in the company petition and the objection raised by learned counsel for the appellant is not well founded.

9. So far as the second objection is concerned, the notice was sent at the registered office of the company though it came back unserved with the report, 'addressee left'. According to us, this was sufficient compliance with Section 434 of the Companies Act inasmuch as at the registered office of the company a registered notice was sent. Be that as it may, even later on the notices were published in the newspapers as has been mentioned in the opening part of the judgment. The conduct of the respondent-company is writ large. Despite counsel, who was appearing before the company judge, writing letters to the company, no response was made by the company or no instruction had been given to counsel so much so learned counsel for the appellant (respondent before the company judge) withdrew from the case. Even this court in the appeal, by the aforesaid two orders dated April 12, 2001 and August 2, 2001 (as reproduced above) gave time to the company even now to make the payment of the outstanding dues. But despite their counsel writing letters to the company, no response was made. It seems that the company is really not interested in the matter.

10. For the foregoing reasons, we find no merit in this appeal, which is hereby dismissed.

11. Before parting with the judgment, we still give three months time from today to the respondent (appellant herein) company to make the payment of the dues to the petitioner (respondent herein) or make a settlement and in such an eventuality they would be at liberty to move the company judge under Section 466 of the Companies Act for stay of the winding up proceedings.