GLOBE MOTORS W LIMITED Vs. SANGHI MOTORS

JUDGEMENT

(1.) The is an application under order 9 Rule 13 read with Section 151 of the Code of Procedure and also these provisions have to be read with Rules 6 and 9 of the Company Court - Rules, 1959. The facts of the case are that a. winding up petition was moved by M/s Sanghi Motors and two others in respect of M/s Globe Motors Workshop Limited. This winding up petition was C. P. 35/71. During the course of the hearing of this winding up petition the counsel for the respondent - company withdrew at one stage and then subsequently a seconds counsel who appeared, also withdrew. A notice was thereon sent to the Company sought to be wound up, which did not put in any further appearance. At that stage an ex parte winding up order was passed by myself, after considering the evidence led by the petitioner It was noted in the order that an attempt had been made to serve the respondent-company after counsel had withdrawn, but it was not possible to serve the Company, that is how the ex parte order was passed. A notice of the present application to set aside the ex parte order of winding up was given to the original petitioners in the case, respondents, 1,2 and 3 Lamed in the application and also to the official Liquidator and the National & Grindlays Bank. Limited. At the hearing of this application a compromise had been arrived at between the applicant and respondents 1,2,3 and the original petitioners in winding up petition, C.P. 35 of 1971. The statements of the counsel of both. sides and of Shri Lakhbir Singh, Chief Accountant of M/s Sanghi Motors have been recorded The terms of the settlement between the parties are set out in an application under section 151 CPC which has been marked Exhibit 'A' for the purpose of this judgment. According to those terms, certain sums have to be paid by the applicant-company to the petitioners in the winding up petition. A sum of Rs. 2,000.00 has been paid today in the presence of the Court towards these instalments and a sum of Rs. 500.00 has been paid by way of costs. In terms of the compromise the winding up petition has to be restored but it is to remain stayed; till the instalments are paid. It is also stated that if there is a default in respect of the instalments, then the winding up petition will; automatically stand revived. There is nothing in the application for compromise about what is to happen after all these instalments are paid.

(2.) The acceptance of the compromise has been opposed principally by respondent No. 5 which is a secured creditor of the applicant company. It is submitted that the winding up petition has ended in the passing of a winding up order which enures to the benefit of all the creditors. In the circumstances, it is claimed that the setting aside of winding up order is detrimental to the interests of all the creditors. In this background it is submitted that the present application cannot be heard without impleading all the creditors of the company. The counsel for the official Liquidator, who is respondent No. 4, submits that the winding up order should not be set aside, on the ground that it will be detrimental to some creditors whom the official Liquidator otherwise represents. Alternatively, the counsel for respondent No. 5 submits that the winding up order has become final and cannot be set aside at-all. Further, it is claimed that if a compromise as is contained in the application under Section 151 of the Code of Civil Procedure is brought to court it requires a meeting of the creditors under Section 391 of the Companies Act, 1956.

(3.) I have had occasion to deal with a situation somewhat similar to the one in the present case when dealing with another case in which an ex parte winding up order had been passed. "In the case K. C. Sethi etc vs. M/s Bir Bahadur Singh & Co. Private Ltd., C.P. 10 of 1973, a winding up order was passed on the non- appearance of the Company. Later an application was moved showing that the Company had changed its registered office and, therefore, the winding up order has been passed without properly serving the Company. In C.A.No. 18/74 decided on March 28, 1974, I set aside the winding up order passed earlier exparte. I had to examine in that case, the same argumets which have been advanced by the 4th and 5th respondents in the present case. Although, nobody had objected in that case to the setting aside of the ex parte winding up order, I had myself thought that it was a matter which required very serious consideration, because the consequences of the winding up order were that the company was to be wound up for the benefit of all the creditors, and all its assets and liabilities were to vest in the official liquidator. I came to the conclusion that whatever the consequences of the winding up order might be, the provisions of the Code of Civil Procedure, governed the trial of such a matter before the Court this is set out in the Company Court: Rules, which applies the provisions of the Code to the trial of cases arising under the Companies Act; and even otherwise, the power to dismiss a matter in default for the non-appearance of the applicant or petitioner, and the power to pass an ex parte order is to be found in the provisions of the Code. It, therefore, follows that if there is a power to pass an ex parte order there must be a corresponding power to set aside that order. I, therefore, came to the conclusion that if a winding up order can be passed on the non- appearance of a Company it also follows, that the provisions allowing the setting aside of such an ex parte order must also apply.