K. M. MEHTA, J. ( 1 ) THE petitioner Reserve Bank of India (hereinafter referred to as `the RBI) is a body Corporate, established by the Reserve Bank of India Act, 1934 (hereinafter referred to as `the Act ). The petitioner has filed this petition under Section 45mc of the Act (Power of Bank to file winding up petition) for winding up of M/s. Piramal Financial Services Limited. (hereinafter referred to as `the respondent Company) and is also non-Banking Financial Institution (N. B. F. C.) and also for appointment of an Official Liquidator of the said Company and also for appointment of a Provisional Liquidator of the said Company pending winding up petition. FACTS: ( 2 ) IN the present petition the petitioner has averred in this petition that the petitioner is a regulatory authority for non-banking financial companies (NBFCs) and as such it has power under Chapter III-A i. e. collection and furnishing credit information as amended by Reserve Bank of India (Amendment) Act, 1997 which include issuing of certificate of registration to NBFCs, prescribing prudential norms, issuing directions, prohibiting NBFCs from accepting deposits, filing of winding up petitions etc. It is further stated that in exercise of powers conferred by Sections 45j, 45k and 45l of Chapter IIIB of the Act, Reserve Bank of India had issued Non-Banking Financial Companies (Reserve Bank) Directions, 1977. Non-Banking Financial Companies Acceptance of Public Deposits (RB) Directions, 1998 and NBFC Prudential Norms (RB) Directions 1998 to regulate acceptance of deposits by companies carrying on the business of non-banking financial institutions. 2. 1 it was further stated that Piramal Financial Services Limited, the Company, was incorporated on 8. 10. 1992. The Reserve Bank of India had issued a certificate under Section 45i (f) of the Act that it was a non-banking financial Company and the respondent was bound by the directions by Reserve Bank of India as amended from time to time. It was also averred that Reserve Bank of India had also issued certificate of registration dated 31. 3. 1998 pursuant to its application for the same. 2. 2 it was further stated that Reserve Bank of India has conducted scrutiny of the books of account of the Company between August 23 and 27, 1999 and the scrutiny revealed a number of unhealthy features in the working of the Company and its financial position. 3. 1998 pursuant to its application for the same. 2. 2 it was further stated that Reserve Bank of India has conducted scrutiny of the books of account of the Company between August 23 and 27, 1999 and the scrutiny revealed a number of unhealthy features in the working of the Company and its financial position. It was further revealed that the bank could not honour its commitment on the ground of exceeds arrangement and during the above period 110 cheques issued by the Company for an aggregate amount of Rs. 816. 01 lakhs were dishonoured. It was further stated that the Company was facing serious liquidity crisis and failed to honour its commitments. It was further stated that it was revealed in the scrutiny that the financial position of the Company is very precarious. It was further stated that the Company suffered net loss of Rs. 197. 89 lakhs for the year ended 31. 3. 1999. It was further stated that loss for the year ended on 31. 3. 1999 was Rs. 717. 72 lakhs as per the report of the auditors and ultimately the financial position as per the year ended on 31. 3. 1999 and 31. 12. 1999 is as under:-PARTICULARS Rs. in lakhs (provisional) 31. 03. 1999 31. 12. 1999 - Capital 983. 40 983. 40 Reserves and Surplus 95. 00 95. 00 Total (Owned fund) 1078. 60 1078. 40 Accumulated loss 184. 75 287. 57 Owned funds (net) 893. 65 790. 83 Total assets 3666. 25 3424. 17 Total outside liabilities 2581. 50 2442. 12 Pre-tax Profit/ (loss) 187. 89 102. 82 -2. 3 it was further stated that the Reserve Bank of India had issued show cause notice dated 6. 9. 1999 to the Company as to why the certificate of registration issued to the Company under Section 45ia should not be cancelled. The respondent Company replied to the said show cause notice. By its order dated 29. 12. 1999 the Reserve Bank of India cancelled certificate of registration issued to the Company. The said order is produced in the petition at page 49. It was further stated that Reserve Bank of India had received a number of complaints from the depositors and unsecured (Optionally Fully Convertible Debenture Holder) OFDC holders complaining about the non-payment of their dues by the respondent Company. The said order is produced in the petition at page 49. It was further stated that Reserve Bank of India had received a number of complaints from the depositors and unsecured (Optionally Fully Convertible Debenture Holder) OFDC holders complaining about the non-payment of their dues by the respondent Company. It was further stated that some proceedings were initiated against the Company before the Company Law Board by some of the depositors that the company could not make payment and the Company Law Board issued directions which also the respondent Company failed to comply with. 2. 4 it was also further averred that the management of the Company has undergone frequent changes, namely, one on April 13, 1999 and the other on September 18, 1999. It was further stated that several other creditors have filed winding up petition. It was further stated that all the four grounds mentioned in 45mc of the RBI Act are satisfied in this case and therefore the present winding up petition is filed on 9. 5. 2000. 2. 5 the matter reached hearing on 10. 5. 2000 before this Court and in paragraphs 3 and 4 this court passed order as follows:para 3 - In view of the submissions made particularly in paras 19 to 26, I have proceeded to take up the present petition for consideration. It has been stated by the learned advocate for the petitioner that the respondent Company has failed and neglect to carry out the orders issued by the Company Law Board and the respondent Company is neglected to pay its its debts, and therefore, the petitioner has forced to approach this Court. PARA 4 - In view of the submissions made in paras 19 to 26 of the petition and having heard learned advocate for the petitioner, I am satisfied that there are sufficient grounds for appointment of Provisional Liquidator. The Official Liquidator attached to this Court is hereby appointed as Provisional Liquidator in this case. I further pass an ex-parte ad-interim injunction restraining the respondents, their agents from encumbering, transferring, alienating and dispossessing of any of the assets of the respondent company. 2. 6 being aggrieved and dissatisfied with the aforesaid order the respondent Company preferred O. J. appeal before this Court. A Division Bench of this Court (Coram: R. K. Abichandani and A. R. Dave, JJ) after hearing the appeal, by its order dated 12. 6. 2. 6 being aggrieved and dissatisfied with the aforesaid order the respondent Company preferred O. J. appeal before this Court. A Division Bench of this Court (Coram: R. K. Abichandani and A. R. Dave, JJ) after hearing the appeal, by its order dated 12. 6. 2000 was pleased to dismiss the appeal. In paras 10 and 11 of the order the Division Bench has observed as under:-"para 10 - The matter is pending only at a notice stage before the learned Company Judge and only ad-interim relief has been granted. All the contentions which have been raised here could have been raised by the appellant before the learned single Judge and it was not necessary for the appellant to rush to this Court particularly when the notice was made returnable on 18th May, 2000. However, the learned counsel for the appellant insisted that the contentions which he is raising should be decided and that is why we have rendered this order. PARA - 11 For the reasons given above, the appeal is summarily dismissed. It is made clear that nothing said in this order in connection with the ad-interim relief and appointment of provisional Liquidator should be taken to be conclusive by the learned single Judge while deciding the matter on merits in light of the contentions that may be raised by the appellant. "2. 7 in view of the same, I am hearing this petition at the admission stage. However, I allow the petitioner and respondent to argue all the points of facts and law. PRELIMINARY CONTENTION: ( 3 ) MR. Bharat Pandya, learned advocate for the respondent, has raised preliminary contention in this case. He has also stated that as per the provisions of the Companies Act and Company (Court) Rules, 1959, the present petition is filed for winding up of the Company as well as appointment of provisional liquidator and therefore a separate judges summons must be taken. He has relied on the provisions of the Companies Act and also Company (Court) Rules, particularly, Rule 11 of the Company Court Rules, 1959. He has relied on the provisions of the Companies Act and also Company (Court) Rules, particularly, Rule 11 of the Company Court Rules, 1959. According to him Rule 11 (15) provides applications under Section 439 for the winding up of a company or under Section 583 for the winding of an unregistered company or under Section 584 for the winding up of a foreign company that can be filed straightway but as per Rule 11 (b) which provides for judges summons which provide all other applications under the Act or under these rules shall be made by a judges summons, returnable to the Judge sitting in Court or in Chambers as hereinafter provided. The learned counsel for the respondent stated that when the application is filed for appointment of provisional liquidator under Section 450 of the Act and no judges summons have been taken, the present application is not maintainable under law. For that purpose he has relied on Rule 95 of the Company Court Rule also. He also relied on Rule 106 which provides for appointment of provisional liquidator. 3. 1 learned counsel for the petitioner stated that in this case winding up petition has been filed not under the provisions of Companies Act but under the provisions of R. B. I. Act and therefore these provisions will not strictly apply in the present case also. According to them this petition has been filed mainly under Section 45mc of the R. B. I. Act which I will refer at the appropriate stage. However, according to the learned counsel for the petition that mention of the Companies Act is only incidental but the main grounds which are contained under the provisions of the R. B. I. Act and therefore the provisions of Company (Court) Rules cannot apply in this case. The learned counsel for the petitioner submitted that Rule 6 provides practice and procedure of the Court and provisions of the Code to apply. Rule 9 of the Company Court Rules provides inherent powers of Court. A conjoint reading of Rules 6 and 9 of the Company (Court) Rules, 1959, indicates that the inherent power of the Court could be exercised in the manner provided under Section 151 of the Code of Civil Procedure. The learned counsel for the petitioner also relied on Rule 361 of the Company Court Rules which provides saving of Rules under Special Acts. The learned counsel for the petitioner also relied on Rule 361 of the Company Court Rules which provides saving of Rules under Special Acts. It means that nothing in these rules shall affect the operation of any rules framed under the Banking Companies Act, 1949 or the Insurance Act, 1938, or other Special Acts relating to any class of companies and these Rules shall apply to such Companies subject to the Rules, if any, made under the special Acts. 3. 2 the learned counsel submitted that Company (Court) Rules provide a procedure to be applied for filing of winding up petition as well as for appointment of provisional liquidator. According to the learned counsel, the procedure means the manner, method or form of enforcing law (See: Whartons Law Lexicon ). The procedure is but the machinery of the law after all the channel and means whereby law is administered and justice reached. The function of adjective law is to facilitate justice and further its ends. The rules of procedure are intended to be handmaid to the administration of justice and they must, therefore, be construed liberally and in such manner as to render the enforcement of substantive rights effective. A "hypertechnical view" should not be adopted by the court in interpreting procedural laws. A party cannot be refused just relief merely because of some mistake, negligence, inadvertence or even infraction of the rules of procedure. Rules of pleadings are intended as aids for a fair trial and for reaching a just decision. 3. 3 he has further submitted that in any view of the matter, the Company Court Rules provide for a procedure to be applied for filing of the winding up proceedings. In this connection, he hs relied on the decision of the Honble Supreme Court in the case of Sangram Singh Singh Vs. Election Tribunal reported in AIR 1955 SC 425 where Vivian Bose, J, rightly observed as under: " (A) code of procedure must be regarded as such. It is `procedure something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a thing designed to trip people up. Election Tribunal reported in AIR 1955 SC 425 where Vivian Bose, J, rightly observed as under: " (A) code of procedure must be regarded as such. It is `procedure something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to `both sides) lest the very means designed for the furtherance of justice be used to frustrate it. " 3. 3 (a) reliance is also placed on the decision of the Honble Supreme Court in the case of Shreenath Vs. Rajesh reported in AIR 1998 SC 1827 . In para 3 (at page 1828) of the judgement the Honble Supreme Court has held as follows: "in interpreting any procedural law, where more than one interpretation is possible, the one which curtails the procedure without eluding the justice is to be adopted. The procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. "3. 4 it may further be stated that over and above in the petition the entire grounds have been set out and the respondent has filed affidavit and further affidavits. Merely because the procedure is not followed, there is no prejudice to the respondents in this behalf. The respondents were aware about all the contentions raised by the petitioner and therefore merely because a separate judges summons have not been taken out and there is only a slight deviation from the procedure that does not affect the merits of the matter and to that extent the petition cannot be dismissed on the sole ground when on merits of the matter the petitioner has shown considerable facts in this behalf. 3. 5 in my view, therefore, the preliminary contention of the respondent ought to have been rejected on the ground that the present petition is filed under the provisions of the Reserve Bank of India Act and therefore the provisions of the Company Court Rules strictly do not apply in this case. 3. 5 in my view, therefore, the preliminary contention of the respondent ought to have been rejected on the ground that the present petition is filed under the provisions of the Reserve Bank of India Act and therefore the provisions of the Company Court Rules strictly do not apply in this case. In my view even if the provisions of the Company Court Rules apply in this case then then the same is a procedural aspect and that cannot defeat the main contention raised by the petitioner in connection with the provisions of the Reserve Bank of India Act. When the petitioner has relied on various provisions of the Reserve Bank of India Act and various facts which clearly satisfy the grounds stated in the Reserve Bank of India Act, the procedural section cannot defeat the main purpose of this petition. CONTENTION ON MERITS: ( 4 ) THE petitioner has also filed further affidavits dated 18. 5. 2000 as well as 22. 5. 2000 and reiterated its stand taken in winding up petition. They have denied the contentions raised by the respondent Company in the affidavit-in-reply. It was also stated that the Company lost its substratum and for that they have given three reasons on page 134. " (A) The Credit Rating Information Services of India Ltd. (CRISIL) in its Press Release dated 31. 3. 1999 downgraded the fixed deposit programme of the company from `fb to `fd indicating that the instrument is either in default or is expected to default on maturity. (B) The auditors of the Company themselves gave a report dated 14. 10. 1999 to the petitioner that the Company is unable to pay its depositors. (C) After the order dated 29. 12. 1999 was passed by the petitioner cancelling registration of the Company, the petitioner wrote a letter dated 22. 1. 2000 inter alia requiring the company to keep all the proceeds/recoveries in an Escrow Account or in FDRs of one of the Scheduled Commercial Banks and that such deposits can be withdrawn only for repayment of public deposits. In response thereto, the company gave a reply dated 28. 1. 2000 asking for certain clarifications and also enclosing the list of deposits and the statement of administrative expenses for an estimate of Rs. 6. 60 lacs per month. In response thereto, the company gave a reply dated 28. 1. 2000 asking for certain clarifications and also enclosing the list of deposits and the statement of administrative expenses for an estimate of Rs. 6. 60 lacs per month. It was thereafter revealed that the recoveries were much higher than the administrative expenses that the company was required to incur. "reespondents CONTENTIONS: ( 5 ) IT may be stated that the respondent has filed affidavit-in-reply dated 17. 5. 2000 wherein they have mostly denied the contentions raised by the petitioner in this behalf. It was stated that in year 1998-99 the new business had considerably shrunk; the recoveries rather slowed down. overdues started bulgeoning, good accounts started turning into doubtful ones; inflow of funds by way of deposits/loans started receding and the percentage of renewal of existing deposits started diminishing, leading to increase of outflows on account of repayment of deposits. They had admitted change of management in this behalf. Respondent also stated that new management also tried to contribute some money in this behalf. It was stated that because of myopic view taken by the regulating authority the respondent has been restrained from carrying on any business activities as an NBFC. It was also stated that for the period 1. 2. 1999 to 31. 8. 1999, 1787 number of instruments were issued of which 110 instruments have been allegedly dishonoured aggregating to Rs. 816. 01 lacs. It was also stated that the respondent Company was facing serious liquidity crunch and it continued. Regarding complaints with respect to the Company Law Board regarding OFCD, the respondent Company approached Company Law Board for a repayment scheme which was subsequently rejected under the pretext that OFCD does not come under Public Deposit Scheme. It was also admitted that because of liquidity crunch, the respondent Company could not pay the amount within the stipulated time. It was averred that all the assets of the Company as on 31. 3. 2000 is approximately Rs. 3400. 19 lacs as against the total liability of Rs. 2644. 28 lacs. However, except stating that, no other facts were stated by the respondent Company. ( 6 ) THE respondent had thereafter filed an additional affidavit dated 20. 7. 000 in which provisional balance sheet as on 31. 3. 2000 and provisional profit and loss account for the year ended 31. 3. 2000 have been produced. 2644. 28 lacs. However, except stating that, no other facts were stated by the respondent Company. ( 6 ) THE respondent had thereafter filed an additional affidavit dated 20. 7. 000 in which provisional balance sheet as on 31. 3. 2000 and provisional profit and loss account for the year ended 31. 3. 2000 have been produced. It was also stated that the Company is desirous of making payment to the creditors and the petitioner has wrongly filed winding up petition. However, the provisional balance-sheet (unaudited dated 31. 3. 2000) shows a loss of Rs. 2,99,68,155. 00 as against Rs. 1,87,89,206. 00 which was for the year ended on 31. 3. 1989. Along with the said affidavit action plan for reviving the respondent Company was also submitted and stated that the Company desires to pay the creditors in this behalf. STATUTORY BACKGROUND OF RESERVE BANK OF INDIA: ( 7 ) BEFORE I consider the rival contentions, I quote out statutory provisions of RBI Act in this behalf. 7. 1 reserve Bank of India Act, 1934 (Act 2 of 1934) has been enacted to constitute Reserve Bank of India. Section 2 provides definition. Chapter II provides for incorporation, capital, management and business. Chapter III provides for central banking functions. Chapter III A provides for collection and furnishing of credit information. Chapter III B provides for provisions relating to bon-banking institutions receiving deposits and financial institutions. Section 45ia provides for requirement of registration and net owned fund. Section 45ib provides for maintenance of percentage of assets. Section 45ic provides for reserve fund. 45j provides for power of Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money, Section 45ja provides for power of Bank to determine policy and issue directions, Section 45k provides for power of Bank to collect information from bon-banking institutions as to deposits and to give directions, Section 45l provides for power of bank to call for information from financial institutions and to give directions, Section 45m provides duty of non-banking institutions to furnish statements, etc. required by bank), Section 45ma (power and duties of auditors, Section 45mb provides for power of Bank to prohibit acceptance of deposit and alienation of assets, Section 45mc provides for power of Bank to file winding up petition. This section reads thus:-"sec. required by bank), Section 45ma (power and duties of auditors, Section 45mb provides for power of Bank to prohibit acceptance of deposit and alienation of assets, Section 45mc provides for power of Bank to file winding up petition. This section reads thus:-"sec. 45mc (1) The Bank, on being satisfied that a non-banking financial company - (A) is unable to pay its debt; or (B) has by virtue of the provisions of Section 45-IA become disqualified to carry on the business of a non-banking financial institution; or (C) has been prohibited by the Bank from receiving deposit by an order and such order has been in force for a period of not less than three months; or (D) the continuance of the non-banking financial company is detrimental to the public interest or to the interest of the depositors of the company; may file an application for winding up of such non-banking financial company under the Companies Act, 1956 (2) A non-banking financial company shall be deemed to be unable to pay its debt if it has refused or has failed to meet within five working days any lawful demand made at any of its offices or branches and the Bank certifies in writing that such company is unable to pay its debt. (3) a copy of every application made by the bank under sub-section (1) shall be sent to the Registrar of Companies. (4) All the provisions of the Companies Act, 1956, relating to winding up of a company shall apply to a winding up proceeding initiated on the application made by the Bank under this provision. "7. 2 section 45n provides for inspection, Section 45na provides for deposits not to be solicited by unauthorised persons, Section 45b provides for disclosure of information, Section 45nc provides for power of bank to exempt, Section 45q provides Chapter HB to override other laws, Section 45qa provides for power of Company Law Board to order repayment of deposit, Section 45qb provides for nomination by depositors, etc. 7. 3. MR. Amar Bhatt, learned advocate for the petitioner, has stated that in this case the petition has been filed by the Reserve Bank of India which is body Corporate constituted under the provisions of the Reserve Bank of India Act. 7. 3. MR. Amar Bhatt, learned advocate for the petitioner, has stated that in this case the petition has been filed by the Reserve Bank of India which is body Corporate constituted under the provisions of the Reserve Bank of India Act. He has stated that in this case the Reserve Bank of India has initiated proceedings under Chapter IIIB provisions relating to non-banking institutions receiving deposits and financial institutions. He has stated that before the provisions were enacted, the Reserve Bank of India had with a report of the Working Group of Financial Companies. He has relied on paras 5. 6 and 5. 7 of the said report (under Chapter V relating to Evolution of Regulations and Existing Statutory Framework) which read as under:-PARA 5. 6 - In 1987, the Supreme Court held that the business of companies carrying on certain types of `prize-chit Schemes, were not hit by the Banning Act. The Court had ruled (AIR 1987 SC page 661) that since March 31, 1978, when the residuary clause was introduced by inserting paragraph 19 in the Directions of 1977, the Reserve Bank has been vested with enough powers to control or regulate any business of the kind run by such companies even if such business is not the business of `prize-chits as defined by the Banning Act or as specified in paragraph 2 (i) of NBFC Directions. Instead of regulating these types of companies under NBFC Directions, which were not suitable to regulate this type of business, RBI considered issuing a separate set of Directions in 1987. Accordingly, RBI issued RNBC Directions, as the third set of Directions governing the NBFCs. These Directions were effective from May 15, 1987, and govern all the RNBCs which are not administered by either the NBFC Directions or the MNBC Directions. 5. 7 in 1987, the Parliament enacted the NHB Act (provision whereof came into force on different dates from July, 1988 onwards) and established the NHB to operate as principal agency to promote HFIs both at local and regional levels and to provide financial and other support to such FIs. Thereafter, on June 26, 1989, the NHB issued HFC Directions to regulate the deposit acceptance activities of HFCs as defined in Section 2 (d) of the NHB Act. Simultaneously, the RBI amended its NBFC Directions and excluded from its purview the HFCs since covered by the HFC Directions. 7. Thereafter, on June 26, 1989, the NHB issued HFC Directions to regulate the deposit acceptance activities of HFCs as defined in Section 2 (d) of the NHB Act. Simultaneously, the RBI amended its NBFC Directions and excluded from its purview the HFCs since covered by the HFC Directions. 7. 4 the learned counsel has also relied on the provisions under Chapter VI - Proposed Regulatory framework for Non-banking Financial Companies particularly paras 6. 6 and 6. 7, under the heading `uniform Regulation para 6. 11, definition of Non-banking Financial Companies contained in para 6. 13 and provisions of supervisory authority in para 6. 33 and also to contend that Reserve Bank of India has considered all these aspects and has initiated action in this behalf. 7. 5 he has also relied on the objects and reasons for enacting the said Amendment in the said Act. STATUTORY PROVISIONS OF COMPANIES ACT:7. 6 as regards provisions of the Companies Act, Part VII Chapter II provides for winding up by the Court. Section 433 prescribes the circumstances in which the company may be wound up by Court. Under Section 433 (e) the company may be wound up by court if the company is unable to pay its debts. Section 433 (f) provides for winding up of the Company if the Court is of opinion that it is just and equitable that the company should be wound up. Section 434 provides for the company when deemed unable to pay its debts. Section 439 provides for provisions as to applications for winding up. Section 447 provides for effect of winding up order. Section 448 provides for appointment of Official Liquidator. Section 450 provides for appointment and powers of provisional Liquidator. "s. 450 - Appointment and powers of provisional liquidator - (1) At any time after the presentation of a winding up petition and before the making of a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally. (2) Before appointing a provisional liquidator, the Court shall give notice to the Company and give a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Court thinks fit to dispense with such notice. (2) Before appointing a provisional liquidator, the Court shall give notice to the Company and give a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Court thinks fit to dispense with such notice. (3) Where a provisional liquidator is appointed by the Court, the Court may limit and restrict his powers by the order appointing him or by a subsequent order; but otherwise he shall have the same powers as a liquidator. (4) The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made. "section 451 provides for general provisions as to liquidators. Section 454 provides for statement of affairs to be made to Official Liquidator. Section 455 provides for report by Official Liquidator. Section 456 provides for custody of companys property. Section 457 provides for powers of Liquidator. CONTENTIONS OF LEARNED ADVOCATES MR. AMAR BHATT, for the petitioner and MR. ASHWIN L. SHAH AND MR. S. N. SOPARKAR for the interveners learned counsel for the petitioner: ( 8 ) LEARNED counsel for the petitioner contended that the petitioner (Reserve Bank of India) can file present winding up petition under the provisions of the Reserve Bank of India Act. Act. He contended that Reserve Bank of India knows intimately the affairs of banking companies and has had access to their books and accounts and once receiver is appointed to take decision, normally the decision should not be interfered with by the Court. In that connection, the learned counsel for the petitioner has relied on the decision in the case of JOSEPH KURUVILLA VELLUKUNNEL VS. RESERVE BANK OF INDIA reported in AIR 1962 SC 1371 . In paragraph 45 of the said judgement it is quoted thus:-"in the present case, in view of the history of the establishment of the Reserve Bank as central bank for India, its position as a Bankers Bank, its control over banking companies and banking in India, its position as the issuing bank, its power to license banking companies and cancel their licences and the numerous other powers, it is unanswerable that between the Court and the Reserve Bank, the momentous decision to wind up a tottering or unsafe banking company in the interest of the depositors, may reasonably be left to the Reserve Bank. No doubt, the Court can also give the time, perform this task. But the decision has to be taken without delay, and the Reserve Bank already knows intimately the affairs of banking companies and has had access to their books and accounts. If the Court were called upon to take immediate action, it would almost always be guided by the opinion of the Reserve Bank. It would be impossible for the Court to reach a conclusion unguided by the Reserve Bank if immediate action was demanded. "8. 1 he has also relied on the decision of the Supreme Court in the case of DELHI CLOTH AND GENERAL MILLS CO. LTD. VS. UNION OF INDIA AND OTHERS reported in AIR 1983 SC 937 which was in relation to Section 58a of the Companies Act which prescribed the limit, the manner in which the deposits may be invited or accepted by non-banking companies. Speaking for the Court, Mr. Justice D. A. Desai, J has observed in para 28 of the judgement thus:-"the power conferred by Section 58a on the Central Government to prescribe the limits upto which the manner in which and the conditions subject to which deposits may be invited or accepted by non-banking companies had a definite object, namely, to check the abuse by the corporate sector and to protect the depositors/investors. Mischief was known and the regulatory measure was introduced to remedy the mischief. The conditions which can be prescribed to effectuate this purpose must be a fortiori, to be valid, fairly and reasonably, relate to checkmate the abuse of juggling with the depositors/investors hard earned money by the corporate sector and to confer upon them a measure of protection namely availability of liquid assets to meet the obligation of repayment of deposit which is implicit in acceptance of deposit. "8. 2 he has also relied on the judgement in the case of RESERVE BANK OF INDIA VS. PEERLESS GENERAL FINANCE AND INVESTMENT CO. LTD. reported in AIR 1987 SC 1023 . "8. 2 he has also relied on the judgement in the case of RESERVE BANK OF INDIA VS. PEERLESS GENERAL FINANCE AND INVESTMENT CO. LTD. reported in AIR 1987 SC 1023 . In paragraph 37 the Supreme Court observed thus:-"we would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of `finance and investment companies offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings. One has only to look at the mornings newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates. On January 1, 1987 one of the national newspapers published from Hyderabad where one of us happened to be spending the vacation, carried as may as ten advertisements with `banner head lines covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest. "8. 3 he has also relied on the decision of the Supreme Court in the case of PEERLESS GENERAL FINANCE AND INVESTMENT CO. LTD. VS. RESERVE BANK OF INDIA reported in AIR 1992 SC 1033 . In this case the Supreme Court after considering the decision in DELHI CLOTH AND GENERAL MILLS VS. UNION OF INDIA reported in AIR 1983 SC 937 has observed in para 32 as under:-"the function of the Court is to see that lawful authority is not abused but not to attain itself the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts. It is not the function of the Courts to sit in judgement over matters of economic policy and it must necessarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts. "8. 4 mr. It is not the function of the Courts to sit in judgement over matters of economic policy and it must necessarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts. "8. 4 mr. Bhatt has also relied on the judgement of the Supreme Court in the case of T. VELAYUDHAN ACHARI AND ANOTHER VS. UNION OF INDIA reported in (1993) 2 SCC 582 where the Court considered provisions of Section 45-S (1) as introduced by Banking Laws (Amendment) Act, 1983. In para 30 of the judgement, the Supreme Court observed as under:-"no doubt, the impugned legislation places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon. From the earlier narration, it would be clear that the Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non-banking financial institutions which invite deposits and then utilise those deposits either for trade or for other various industries. A ceiling for acceptance of deposits and to require maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector. But for these requirements, the depositors would be left high and dry without any remedy. "8. 5 he has also relied on the judgement of the Supreme Court in the case of BHAVESH D. PARISH and OTHERS VS. UNION OF INDIA in Writ Petition No. 168 of 1997 decided on May 12, 2000 since reported in 2000 (5) SCC 471 . The Bench of the Supreme Court (Coram: B. N. Kirpal and M. B. Shah, JJ) was considering the validity of Section 9 of the Reserve Bank of India Act as amended by the Amendment Act, 1997 which prohibited carrying of business of shroffs. In that case the Supreme Court considered various provisions of the Committee report and various decisions of the Court and also the affidavit of Reserve Bank of India and in para 26 (page 486) it is observed thus:-"the services rendered by certain informal sectors of the Indian economy could not be belittled. In that case the Supreme Court considered various provisions of the Committee report and various decisions of the Court and also the affidavit of Reserve Bank of India and in para 26 (page 486) it is observed thus:-"the services rendered by certain informal sectors of the Indian economy could not be belittled. However, in the path of economic progress, if the informal system was sought to be replaced by a more organised system, capable of better regulation and discipline, then this was an economic philosophy reflected by the legislation in question. Such a philosophy might have its merits and demerits. But these were matters of economic policy. The are best left to the wisdom of the legislature and in policy matters the accepted principle is that the courts should not interfere. Moreover, in the context of the changed economic scenario the expertise of people dealing with the subject should not be lightly interfered with. The consequences of such interdiction can have large scale ramifications and can put the clock back for a number of years. The process of rationalisation of the infirmities in the country can be put in serious jeopardy and therefore it is necessary that while dealing with economic legislations, this Court while not jettisoning its jurisdiction to curb arbitrary action or unconstitutional legislation, should interfere only in those few cases where the view reflected in the legislation is not possible to be taken at all. "8. 6 the learned counsel for the petitioner stated that in this petition a new problem has arisen regarding winding up of the Company by the Reserve Bank of India under the provisions of the Reserve Bank of India Act and therefore new solution will have to be found out by the court. For that purpose has has relied on the judgement of the Supreme Court in the case of R. K. GARG VS. UNION OF INDIA reported in AIR 1981 SC 2138 popularly known as bearer bond cases. For that purpose has has relied on the judgement of the Supreme Court in the case of R. K. GARG VS. UNION OF INDIA reported in AIR 1981 SC 2138 popularly known as bearer bond cases. In para 8 of the judgement, the Court observed as under:-"the Court must always remember that `legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that may problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry that exact wisdom and nice adaption of remedy are not always possible and that `judgement is largely a prophecy based on meagre and uninterpreted experience. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The Courts cannot, as pointed by the United States Supreme Court in Secy. of Agriculture Vs. Central Roig. Refining Co. (1950) 94 L ed 381, be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience distortion and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. that is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. that is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. " ( 9 ) LEARNED counsel for the petitioner further stated that in this case the Court must consider the fact that the petition has been filed by the Reserve Bank of India and therefore due weight must be given to it than an ordinary winding up petition filed by ordinary secured or unsecured creditor. He has stated that in the petition several grounds for appointment of provisional liquidator and this court should also appoint provisional liquidator in this behalf. In this connection, the learned counsel for the petitioner has relied on the judgement of English Court reported in (1972) 1 All England Law Reports 1105 reported in Re Union Accident Insurance Co. Ltd. In this case on page 1110 the Court has observed as under:-"there are two matters though, which seem to be relevant for me to consider. The first is whether the department has made out a good prima facie case for a winding up at the hearing of the petition. Any views I express about the matter now are of course provisional only because I am not trying the petition at the present time. If the department has not made out a good prima facie case for a winding up order then clearly I think it would not be right to appoint a provisional liquidator. On the other hand, if the department has made out a good prima facie case for a winding up order then the second matter for my consideration arises, namely, whether in the circumstances of this case it is right that a provisional liquidator should have been appointed. So far as the first matter is concerned, in my judgement the department has made out a good prima facie case, both under s. 35 of the 1967 Act and under s. 13 of the 1958 Act. So far as the first matter is concerned, in my judgement the department has made out a good prima facie case, both under s. 35 of the 1967 Act and under s. 13 of the 1958 Act. So far as s 35 is concerned, all the matters set out in para 9 of the petition, which I have already read, are in my judgement supported by the evidence at least to the extent of a good prima facie case, and I only want to add a word about the fourth of those matters, namely, that there are circumstances suggesting that the company has been seriously underestimating outstanding claims. "9. 1 he has also relied on decision in the case of In Re LUBIN, ROSEN AND ASSOCIATES LTD. 1975 (1) The Weekly Law Reports page 122 (The Weekly Law Reports, January 24, 1975 ). At page 127 the Court observed thus:-"it seems to me that the very fact that the Secretary of State has reached such a conclusion is a factor which, without being in any way decisive, ought to be given appropriate weight by the court. Mr. Morritt also referred me to Palmers Company Law, 21st ed. (1968) where at p. 742, it is said: `the court is invested with a wide jurisdiction in the interests of commercial morality; and if the facts disclose a strong prima facie case for investigation into the formation or promotion of the company, or the issue of debentures by it, the Court will make a compulsory order irrespective of creditors opposition. "9. 2 he has also relied on the decision in Re HIGHFIELD COMMODITIES LTD. reported in (1984) 3 All England Law Reports 884. At page 890 the Court observed as under:-"i do not think that this can be right. Even if the present case does not fall within literal meaning of what was said in the Hoffmann case, and even if Sec. 35 was not in the minds of anyone concerned in that case, the launching and prosecution of a petition under S. 35 seems to me to fall squarely on the same side of the line as the proceedings in the Hoffmann case so far as they related to the enforcement of the law and not the pursuit of the Crowns proprietary rights. The Secretary of State is acting selflessly on the basis of information and documents obtained by his officers; and when from this material it appears to him to be expedient in the public interest that the company should be wound up, and he petitions accordingly, he seems to me to be carrying out what can fairly be described as a process of law enforcement. The mischief of a fraudulent company is likely to be more effectively dealt with by winding up the company than by leaving it in existence and relying on prosecuting those who have taken part in any criminal activity; and the Secretary of State ought not to be dissuaded from exercising his statutory powers in this behalf by being required to give any undertaking in damages. Even if I am wrong in regarding a petition by the Secretary of State under the Companies Act, 1967, s. 35 as a form of enforcing the law, I would reach the same conclusion as regards the undertaking in damages, on the footing that the Hoffmann principle is wide enough to cover the selfless performance of a public duty by the Crown, at all events if it is imposed directly or impliedly by statute. I should add that I have been quite unable to see that HCL has established any special circumstances in the case that would justify requiring the Secretary of State to give any undertaking in damages. "9. 3 the learned counsel for the petitioner has also relied on Halsburys Law of England, 4th Edition, Volume 7, Companies (on page 624) para No. 1045 it is stated thus:-"1045. Provisional Liquidator before winding up order - The court may appoint a provisional liquidator to take possession of and protect the companys assets at any time after the presentation of a winding up petition and before the making of a winding up order. The occasion for the appointment is not limited to special circumstances; other factors, such as the public interest, may be taken into account. Either the official receiver or any other fit person may be appointed. A person other than the official receiver is occasionally appointed, but the almost invariable rule is to appoint the official receiver. When a provisional liquidator is appointed, the court may limit and restrict his powers by the order appointing him. Either the official receiver or any other fit person may be appointed. A person other than the official receiver is occasionally appointed, but the almost invariable rule is to appoint the official receiver. When a provisional liquidator is appointed, the court may limit and restrict his powers by the order appointing him. His appointment does not completely oust the powers of the board; it may still cause the company to oppose the winding up petition or to apply to discharge the provisional liquidator. "9. 4 he has also relied on Palmers Company Law, 24th Edition, 1987 in which at paragraph 88. 18 (page 1380) after referring to In Re Lubin, Rosen and Associates and also referring to Re Highfield Commodities Ltd. the learned authors stated thus:-"the Secretary of State has power under S. 440 of the Companies Act to petition the court for a winding up order if it appears to him - (A) from an inspectors report made under Section 437 of the Act; or (B) from information or a document obtained as the result of the inspection of the companys books or papers under Sections 447 to 451 inclusive of the Act; or (C) from information or a document obtained under section 18 or 19 of the Protection of Depositors Act, 1963;that it is in the public interest that the body should be wound up. If the court thinks it just and equitable for the company to be wound up, it will make a winding up order. "9. 5 he has also relied on Buckley on the Companies Act, 14th Edition, Part-V on page 587 it is observed as under:-"the early cases (which can be better understood if the changes effected by the 1890 Act mentioned below are borne in mind) contain some expression of opinion as to the circumstances in which an appointment can be made, but the section in fact confers an unfettered discretion on the court and in a recent case Plowman J. rejected the companys contention that the appointment should be made, if opposed by the company, only if there are special circumstances, such as danger to the assets or obvious insolvency, or the company has admitted that it has no defence to the petition. The section confers quite general powers on the court and, depending on the circumstances of each case, there may be other matters which may be relevant, such as the public interest. In that case, he refused to discharge the appointment of the official receiver as provisional liquidator made by the registrar on the ex-parte application of the Department of Trade and Industry on the day on which it had presented a petition to wind up an insurance company carrying on motor insurance business against which the Department had made a direction under s. 68 of 1967 Act precluding it from entering into or varying contracts of motor insurance. He found that the Department had made out a good prima facie case for winding up, both under S. 35 of 1967 Act and under s. 13 of the Insurance Companies Act, 1958, and that particularly having regard to the S. 68 direction and to the requirement in the public interest that an insurance company should either maintain its statutory margin of solvency or be wound up before its liabilities exceeded its assets, in the particular circumstances of the case it was right that a provisional liquidator should have been appointed to protect the assets pending the hearing of the petition. "9. 6 he has also relied on Boyle and Sykes Gore Browne on Companies, 43rd Edition. In para 31- 20 it is held thus:-"if it appears to the Department of Trade from any inspectors report made under section 168 that it is expedient in the public interest that a company should be wound up, the Department may present a winding up petition. The court can order winding up on such a petition if it thinks it just and equitable for the company to be wound up. The Department may, in addition to or instead of, presenting a winding up petition, present a petition for an order under section 210. It appears that although such petitions cannot be presented against a company which is already in compulsory liquidation, a petition for compulsory liquidation can be presented by the Department against a company in voluntary liquidation. A petition can be presented in the name of the Secretary of State for Trade acting through one of his officers and does not require the personal attention of the Secretary of State for Trade. A petition can be presented in the name of the Secretary of State for Trade acting through one of his officers and does not require the personal attention of the Secretary of State for Trade. Where the relevant officer of the Secretary of State swears an affidavit verifying the petition, being an affidavit exhibiting the relevant inspectors report, that report can be relied upon as indicating the validity of matters stated in the petition, even though the report is strictly hearsay. If the report is challenged by persons with knowledge of the facts the report is nevertheless to be treated as prima facie evidence by the court. "again he has relied on para 31-30 which reads thus:-"provisional Liquidator - After the presentation of a petition, if the property of the company is in danger, or it is alleged that those in control are misappropriating or wasting the assets or any other good cause exists, an application may be made by any creditor or contributory or by the company for the appointment of a provisional liquidator, and the court in a proper case, after being satisfied of the facts by affidavit, will in England make the appointment at any time before the making of a winding up order, or in Scotland at any time fore the firs appointment of liquidators. "9. 7 penningtons Company Law, 5th Edition, (1985) 14, Chapter 23 Winding up by the Court at page 867. PROVISIONAL LIQUIDATOR:"at any time after the presentation of a winding up petition the Court may appoint the official receiver or any other fit person to be provisional liquidator of the company. The purpose of making the appointment is to preserve the companys assets and to prevent the directors from dissipating them before a winding up order can be made. It has been said that a provisional liquidator will only be appointed if the company is the petitioner or if it consents to the appointment or if the company is clearly insolvent or if it is obvious to the court that a winding up order will be made. It has been said that a provisional liquidator will only be appointed if the company is the petitioner or if it consents to the appointment or if the company is clearly insolvent or if it is obvious to the court that a winding up order will be made. These dicta show the courts reluctance to pre-judge the issue between the petitioner and the company by appointing a provisional liquidator before the hearing of the petition, but it has also been held that the courts power to appoint a provisional liquidator is not limited to such cases, and may be exercised if there is an interest of the public to be protected, for example, when the company is an insurance company on whose continued solvency the effectiveness of policies issued by it depends or where the petition is presented by the Secretary of State for Trade and Industry who makes out a strong prima facie case that the companys business activities have throughout been designed to mislead the public into making hazardous speculations on vague terms which have resulted in excessive charges being made by the Company for its services. "9. 8 the learned counsel for the petitioner has also relied on the judgement of this court in the case of NAVJIVAN TRADING FINANCE P. LTD. In re reported in 48 Company Cases 402. The judgement was delivered by Mr. Justice M. P. Thakkar (as he then was ). In that case the petition has been instituted by the Registrar of Companies before the High Court. In this case the Registrar of Companies has instituted a winding up petition under Section 433 (e) of the Companies Act praying for winding up of NAVJIVAN TRADING FINANCE P. LTD (supra) on the ground that the Company is unable to pay its debts and under Section 433 (f) on the ground that it is just and equitable that the Company should be wound up. The learned Judge after examining the facts of the case and relevant decisions of this court and after considering section 433 (e) and Section 434 of the Act observed at page 416 thus:-"but in a case like the present, where the company is not producing or manufacturing any goods and is not rendering any service useful to the society, where the whole purpose of its existence appears to be to provide the directors with an opportunity to enrich themselves at the cost of petty subscribers who in the hope of getting some prizes or rewards and better returns on their hard earned savings (sometimes they may even resort to borrowing in the hope of getting rich quickly) become contributories to various schemes, floated by the company the matter stands on a different footing. In a case like the present where the main activity of the company consists in tempting and roping in innocent persons in the scheme by publishing tantalizing advertisements, greater harm would ensue by refusing to pass an order of winding up than by passing an order of winding up. In fact, to wind up such company would be an act of social service, for, thereby, several innocent persons would be saved from being trapped by a company of this nature. Alas, as discussed earlier, the time taken in affording reasonable opportunity to the company in obeisance to the principles of natural justice has been utilised by the company to collect lakhs of rupees from the innocent subscribers merely in order to enrich the directors in an unjust fashion. Under the circumstances, there is no scope for hesitation or reluctance in winding up the company which the court ordinarily feels when dealing with some manufacturing unit. XXXXXXXXX There is no scope for resurrecting the company by evolving any scheme for running the company from the standpoint of the business in which it is presently engaged. The consideration which usually deter the court from passing a winding up order are of no avail in the case of a company of the present nature. XXXXXXXX The curtain cannot be dropped without expressing a word or two of anxiety - anxiety that the moral of this episode is not lost on the authorities who have miserably failed to protect the poor from being robbed even after the deplorable state of affairs pertaining to this company came to light. XXXXXXXX The curtain cannot be dropped without expressing a word or two of anxiety - anxiety that the moral of this episode is not lost on the authorities who have miserably failed to protect the poor from being robbed even after the deplorable state of affairs pertaining to this company came to light. Could the misfortune not have been averted? What should be done to ensure that what has happened in the past is not re-enacted in the future. ? Could the sanction to institute the petition not have been granted earlier? Could a provisional liquidator not have been appointed? Could the financial position of the company not have been exposed to the eyes of the poor public in order to warn them of the booby trap? And to foreclose a repeat performance of a Robinhood drama in reverse (here the poor are robbed to pay the rich) can it not be ensured that no company which has not obtained a certificate of solvency (to be procured within 3 or 6 months of the close of every accounting year) from the company law authorities or the Reserve Bank authorities is permitted to issue advertisements inviting the public to join the scheme and from collecting subscriptions, contributions or deposits? The exercise is worth undertaking if the endeavour to protect the common man (if not to improve his lot) is not to be drowned in the tears shed for the miseries of the rich. "9. 8a the learned counsel Shri A. L. Shah who appeared and also in turn relied on the judgement of this court in the case of FICOM ORGANICS LIMITED VS. LAFFANS PETROCHEMICALS LIMITED reported in (1998) 5 Company Law Journal 24 (Guj.) wherein the learned Judge (Coram: M. S. Shah, J) has decided that when a winding up order is to be passed. In para 16 the court has held as follows:-"it is thus clear that there is nothing in principle or precedent which would prevent the court from admitting the winding up petition for enforcing payment of a just debt. In para 16 the court has held as follows:-"it is thus clear that there is nothing in principle or precedent which would prevent the court from admitting the winding up petition for enforcing payment of a just debt. Merely because the winding up order is not a normal alternative in the case of a company to the ordinary procedure for realisation of the debts, it does not dilute the power of the court to admit a winding up petition where the facts and circumstances of the case show that it would be a form of equitable execution. In such cases, the court would, therefore, ordinarily admit the petition after the company fails to avail of the opportunity given to it to pay up the debt in respect of which the Company Court had already given a finding that the dispute raised by the company was not bona fide, or the court may even conditionally admit the petition while granting the company opportunity to pay the debt to the petitioner. It would, however, be for the court to consider while exercising its judicial discretion as to whether in the facts and circumstances of a given case, the court would simply grant to the the company to pay the amount to the petitioner or whether the court should conditionally admit the petition and defer the order for advertisement or whether the court should not admit the petition, because even though the defence may not be substantial, the debt is also not found to be a just one. "9. 9 the learned counsel has also relied on the judgement in the case of ANDHRA PAPER MILLS CO. LTD. In Re reported in 18 Company Cases 8 at page 11, Madras High Court and the judgement of the Kerala High Court in the case of BRUNTON AND COMPANY ENGINEERS LTD. In Re (Ker.) reported in 63 Company Cases 299. Both these decisions lay down the principle for appointment of provisional liquidator. 9. 10 in the case of BHARTI TELECOM LTD. VS. ALTOS INDIA LTD. (NO. 2) reported in 94 Company Cases 929 (Punjab and Haryana High Court) the court observed on page 939 as under:-"in view of the above detailed discussion contention IV is also answered against the company as the company was admittedly not carrying on any business. It had no workers but had a skeleton administrative and accountancy staff only. (NO. 2) reported in 94 Company Cases 929 (Punjab and Haryana High Court) the court observed on page 939 as under:-"in view of the above detailed discussion contention IV is also answered against the company as the company was admittedly not carrying on any business. It had no workers but had a skeleton administrative and accountancy staff only. Seeing this in contrast to the interest of the public undertakings, financial institutions, secured and unsecured creditors, landlords and the other afore-referred petitions, it would be averse to public interest if the provisional liquidator is not permitted to continue to take stock of the defaulted record and assets of the company. On page 240 the court further observed as follows:-"while declining to review the order dated June 11, 1998 or recalling the said order or cancelling the appointment of the provisional liquidator, I would issue the following directions to the provisional liquidator for compliance forthwith: (A) The official liquidator shall associate three members from the secured creditors (banks to whom the properties of the company has been charged, hypothecated) one representative from the respondent company for carrying out these directions. The officers shall not be below the rank of senior manager/managing director/official liquidator. (B) at the outset the official liquidator shall prepare an inventory of all movable and immovable properties belonging to the respondent company and/or lying in the premises rented or belonging to the respondent-company. (C) He shall prepare complete inventories of the record of the company. (D) if any records are requested for by the respondent-company, copies thereof shall be given by the official liquidator to enable the company to pursue its matters before the competent forum including BIFR. ( 10 ) MR. Bharat Pandya, learned advocate for the respondent, has raised the following contentions. He has also relied on the judgement of the Kerala High Court in BRUNTON AND COMPANY ENGINEERS LTD. (supra) and 49 Company Cases 532 and stated that appointment of provisional liquidator is drastic action and no cogent and convincing ground has been stated by the petitioner for the same and therefore this High Court ought not to have considered appointment of provisional liquidator. He also stated that judgement of the Supreme Court in VELLUKUNNEL VS. (supra) and 49 Company Cases 532 and stated that appointment of provisional liquidator is drastic action and no cogent and convincing ground has been stated by the petitioner for the same and therefore this High Court ought not to have considered appointment of provisional liquidator. He also stated that judgement of the Supreme Court in VELLUKUNNEL VS. RESERVE BANK OF INDIA (supra) is not applicable in this case because in that case the Supreme Court was considering the Banking Companies Act and the provisions of the said Act and the provisions of the Reserve Bank of India Act are quite different. 10. 1 the learned counsel for the respondent has also relied on the decision of the Kerala High Court in the case of Brunton and Company Engineers Ltd. (supra) and has stated that appointment of provisional liquidator is drastic action and no cogent and convincing ground has been stated by the petitioner for the same and therefore this High Court ought not to have been considered appointment of provisional liquidator. He also stated that the judgement of the Supreme Court in Vellukunnel Vs. Reserve Bank of India (supra) is also not applicable in this case because in that case the Supreme Court was considering the Banking Companies Act and the provisions of the said Act and the provisions of the Reserve Bank of India Act are quite different. He has also relied on the judgement of the Kerala High Court in the case of Brunton and Company Engineers Ltd. (supra ). He has also stated that the petitioner has not given cogent and convincing reasons for appointment of provisional liquidator. CONCLUSION: ( 11 ) IN view of the facts as disclosed in the winding up petition as well as in additional affidavit, I am of the view that this a clear case in which winding up petition should be admitted as all the four grounds mentioned in Section 45mc of the Reserve Bank of India Act are satisfied and therefore I have no hesitation in admitting the winding up petition. It may be stated that respondent has not been able to properly set out reasons as to why the petition should not be admitted in this case. It may be stated that respondent has not been able to properly set out reasons as to why the petition should not be admitted in this case. Affidavit-in-reply filed in this case earlier and recently do not inspire any confidence in the court and the averment made by the respondent are not trustworthy as to when they will be able to repay the debts to the creditors. Only a bald statement has been made that if the Company is given a chance , the Company will be able to make the payment but about as to how they will be able to make and when they will be able to make repayment of debts, the Company is totally silent on this count. ( 12 ) I have gone through the submissions made by the learned counsel petitioner as well as the submissions made by the learned counsel for the respondent on the merits of the matter and also considered various authorities which have been cited by both the sides. I have also gone through the pleadings filed by the petitioner as well as by the respondent in this behalf. In my view the petitioner is able to prove a strong and prima facie case. The petitioner has successfully demonstrated that all grounds stated under Section 45mc of the R. B. I. Act are satisfied in this case and for that purpose the petitioner has relied on paragraphs 19 to 26 of the petition and also further affidavits dated 18. 5. 2000 and 20. 5. 2000 and the documents produced along with the affidavit. According to him, the respondent is unable to pay its debts to the creditors. The respondent has by virtue of the provisions of Section 45ia become disqualified to carry on the business of Non-banking Financial Institution. Reserve Bank of India has prohibited the respondent company from receiving deposit by an order and such an order has been in force for a period of not less than three months and the Reserve Bank of India has demonstrated that continuance of non-banking financial company (the respondent company) is detrimental to the public interest or to the interest of depositors of the Company. The respondent Company has not been able to carry out the orders of the Company Law Board. The Reserve Bank of India by order dated 29. 12. The respondent Company has not been able to carry out the orders of the Company Law Board. The Reserve Bank of India by order dated 29. 12. 1999 also cancelled the certificate of registration issued to the respondent Company under Section 45ia of the RBI Act and therefore the respondent Company has become disqualified to carry on the business of non- banking financial institution. The Reserve Bank of India has also been able to prove that upto February, 1999 the respondent Company was managed under the chairmanship of Dr. Mohanlal Piramal. However, thereafter, the erstwhile promoters ECGIL (Electric Control Gear India Ltd.) offered their shareholding in favour of Shri Ashish Patel, Shri Dilip Trivedi and Radhe Developers (I) Ltd. at a token value. It appears that thereafter in September, 1999 again the management of the Company has been changed to Mr. S. K. Mani and his Associates. The Reserve Bank of India has stated that in view of the frequent change in the management of the Company, the continuance of the respondent Company is detrimental to the public interest and to the interest of the depositors of the company and it has been stated that the continuation of the respondent Company is detrimental to the public interest and the interest of its depositors. I am, therefore, satisfied that the provisions of Section 45mc have been complied with and the Company is liable to be wound up read with the provisions of the Companies Act. REGARDING BALANCE OF CONVENIENCE:12. 1 as regards balance of convenience is concerned, when the petition is filed by the Reserve Bank of India and when RBI is custodian legis of the public, Reserve Bank of India has stated that continuance of the respondent Company is detrimental not only to the public interest but also to the interest of the depositors who have deposited money with the respondent Company. In the earlier paragraph, it has been demonstrated that continuation of business by the respondent Company is detrimental to the general public and therefore continuation of business by the respondent Company is not only detrimental to the interest of general public but also the depositors who have deposited money with the respondent Company. In the earlier paragraph, it has been demonstrated that continuation of business by the respondent Company is detrimental to the general public and therefore continuation of business by the respondent Company is not only detrimental to the interest of general public but also the depositors who have deposited money with the respondent Company. In my view the object of appointing provisional liquidator is just, equitable, necessary, and fair distribution of the assets of the Company and the assets of the Company may not be wasted in this behalf and in view of public interest. The balance of convenience is in favour of the petitioner and against the respondent Company. If the respondent Company is continued to carry on business there is a possibility of large number of innocent persons depositing money and that deposit may not be returned to them in future to them and R. B. I. has pointed from the order of the Company Law Board and therefore also provisional liquidator has also been appointed. In my view it is just, equitable and in the interest of justice provisional liquidator may be appointed to the Company with all powers under the Companies Act, 1956 and further it is just, equitable and necessary in the interest of justice that an injunction may be issued to the Company prohibiting the Company and its directors from disposing of any of the assets. 12. 2 as regards provisional liquidator, I have considered Section 450 of the Companies Act. I have already passed an order dated 10. 5. 2000 and after that as directed by the Division Bench I have heard learned counsel for the respondent Company and also considered his submission and after considering the submissions made by the learned counsel Mr. Amar Bhatt, Shri A. L. Shah, learned counsel for the petitioner and intervener who have stated that there are number of winding up petitions have been filed and Shri S. N. Soparkar, learned counsel for the intervener, I am of the view that in this case provisional liquidator should also be appointed otherwise the Companys assets will be taken away and creditors will not be in a position to realise any amount. It is now stated that the Company has filed large number of suits as well as Criminal Complaint under Section 138 of the Negotiable Instruments Act but the provisional liquidator with the help of an advocate can monitor the same and can realise the amount in question and therefore in my view provisional liquidator is a right person who can administer the assets of the Company in good spirit. ( 13 ) IN view of the same, I am passing the following order:-13. 1 the petition should be admitted. Official liquidator attached to this court should be appointed as provisional liquidator as already ordered on 10. 5. 2000 be confirmed. 13. 2 while reviewing the order dated 10. 5. 2000 and while considering the submissions of the learned advocate for the respondent Company that I should quash and vacate the order, I may issue the following direction to the provisional liquidator for compliance forthwith: (A) the official liquidator shall associate two members from the Reserve Bank of India (bank will nominate two officers in this behalf ). The Officer shall not be below the rank of senior Manager/ Deputy Manager. (B) at the outset the official liquidator shall prepare an inventory of all the movable and immovable properties belonging to the respondent company and/or lying in the premises rented or belonging to respondent company. (C) He shall prepare complete inventories of the record of the company. (D) if any records are requested for by the respondent company, copies thereof shall be given by the official liquidator to enable the company to pursue its matters before the competent forum including BIFR. (E) the committee of the aforesaid persons within four weeks from today shall place before the court a detailed report. The committee would suggest whether it is possible to consider and implement any viable or workable scheme by which the company could revive its business and provide modes of repayment of the secured and unsecured creditors of the company simultaneously. 13. 3 in view of the above, the petition is to be admitted and the provisional liquidator should be appointed forthwith. ( 14 ) IN the result, the petition is admitted. No order as to costs. (K. M. MEHTA, J) (pkn) after the pronouncement of the judgement, Mr. Bharat Pandya, learned advocate for the Company prayed that the implementation of the aforesaid order be stayed for some time. Mr. ( 14 ) IN the result, the petition is admitted. No order as to costs. (K. M. MEHTA, J) (pkn) after the pronouncement of the judgement, Mr. Bharat Pandya, learned advocate for the Company prayed that the implementation of the aforesaid order be stayed for some time. Mr. Amar Bhatt, learned advocate for the petitioner, has strongly objected to the same. In the interest of justice, the order is stayed upto 13. 11. 2000 to enable the respondent to file appeal, if any. Mr. Bharat Pandya states that in the meanwhile the Company will maintain status quo and at least the properties of the Company will be preserved and protected in this behalf. If there is any complaint about the same then the stay order will get vacated by this court. .