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2008 DIGILAW 290 (ORI)

Orissa Flour Mills Ltd. v. Lalchand Agarwal

2008-04-07

B.N.MAHAPATRA

body2008
ORDER 7.4.2008 — Heard learned counsel for the parties. These two Company Appeals namely, COA No.2 of 2008 and 3 of 2003 have been filed arising out of the proceeding of winding up of M/s. Orissa Flour Mills Ltd. (hereinafter called as the ‘said Company’) at the instance of the petitioning creditor who is respondent herein. Though both the appeals have been filed beyond time, on considering the facts and circumstances of the case, we dispose of both the appeals by the following order. Learned counsel for the Company has submitted that this petition for winding up was admitted without any application of mind by the learned Company Judge. The admission has been done by the following orders dated 24.3.1994. “Heard. Admit.” Learned counsel for the petitioner submits that before admission of the Company petition, learned Company Judge will have to form a prima facie view before admitting the winding up petition. Learned counsel for the petitioner further submits that nothing appears from the order dated 24.3.1994 that there was any application of mind by the learned Company Judge when the peti¬tion was admitted. The learned counsel for the petitioner therefore, submits that there is a statutory violation of Section 439(8) of Companies Act in the matter of admission of the Company petition. Apart from that, the learned counsel further submits that upon appellant’s appearance in the said Company petition, material facts were disclosed and issues were framed. It appears from the order dated 9.3.2007 that five issues were framed. Learned counsel for the petitioner submits that issue No.(iv) is whether it is just and equitable that the Company should be wound up. Learned counsel for the appellant submits that when the matter came up for hearing on 16.3.2007 there is no finding on the aforesaid issue and without any finding on issue No. (iv), the order of winding up was passed. It is further submitted that the same is contrary to the principles laid down by the Hon’ble Supreme Court in the case of Hind Overseas Private Ltd. v. Raghu¬nath Prasad Jhunjhunwalla and another, reported in AIR 1976 SC 565 . Learned counsel for the appellant draws the attention of this Court to paragraphs 31,32,33,34,35,36 and 42 of the said judgment. It is further submitted that the same is contrary to the principles laid down by the Hon’ble Supreme Court in the case of Hind Overseas Private Ltd. v. Raghu¬nath Prasad Jhunjhunwalla and another, reported in AIR 1976 SC 565 . Learned counsel for the appellant draws the attention of this Court to paragraphs 31,32,33,34,35,36 and 42 of the said judgment. Learned counsel for the appellant submits that before passing the order of winding up of the Company, the Company Judge should see whether such an order is just and equitable. The winding up order will have a large repercussion on the sharehold¬ers of the Company. Therefore, before passing an order, the Company Court has to keep in mind the position of the company as a whole and the interests of other shareholders and see that they do not suffer in a fight for power that ensues between two groups. The learned counsel further submits that the aforesaid principles have not been followed in the instant case. Therefore, the said order of winding up cannot be sustained. Learned counsel for the appellant submits that the appellant has already made an application for recalling the order dated 16.3.2007 and without disposing of the said application, an order was passed by the present Company Judge directing issuance of sale notice by order dated 25.1.2008. Learned counsel for the appellant submits that the claim of the opposite party is only Rs.60,000/-. Therefore, the Company Court should come to a finding whether the Company on just and equitable grounds should be wound up. This Court finds sufficient force in those contentions of the learned counsel for the appel¬lant. Learned counsel for the opposite party on the other hand submitted that the winding up petition be restored and heard on merit along with the appellant’s petition for recall by the learned Company Judge in presence of the parties. Since that stand has been taken by the learned counsel for the opposite parties, this Court disposes of both the appeals by setting aside the order of winding up dated 16.3.2007 and consequential order for issuance of sale notice dated 25.1.2008 challenged in COA No.3 of 2008 and COA No.2 of 2008 respectively. Since that stand has been taken by the learned counsel for the opposite parties, this Court disposes of both the appeals by setting aside the order of winding up dated 16.3.2007 and consequential order for issuance of sale notice dated 25.1.2008 challenged in COA No.3 of 2008 and COA No.2 of 2008 respectively. This Court is passing this order for the reasons discussed hereinabove inasmuch as this Court finds that proper exercise of discretion has not been made by the Company Judge while passing the order of winding up of the Company without considering the issues already framed. This Court, therefore, allows both the appeals and the orders under appeal are set aside. The winding up proceeding should be heard on merit along with the appellant’s application for recalling the winding up order on the materials which are already on record before the Company Judge. This Court observes that this should be done as early as possible. Both the petition for winding up and recall petition be heard by the learned Compa¬ny Judge as expeditiously as possible and may be disposed of within a period of two months from today. The delay in filing the aforesaid appeals is condoned. No costs. Appeals allowed.