NATIONAL CONDUITS PRIVATE LIMITED Vs. S S ARORA

JUDGEMENT

(1.) The appellant - a private limited Company - is engaged in the manufacture of electric conduit pipes. The respondent who is a director of the Company presented a petition in the High Court of Delhi under Ss. 433 and 439 of the Companies Act, 1956, for an order for compulsory very winding up of the Company. The respondent claimed that it was "just and equitable" within the meaning of S. 433 (f) of the Companies Act, 1956, to make an order for compulsory winding up, because one of the three factories of the Company had been closed, that the accounts of the Company were not being shown to the respondent, that no meeting of the Company had been held, no balance-sheet had been, prepared and a letter of resignation purported to be signed by the respondent had been forged. On July 18, 1966. Capoor, J., directed that notice of the petition be issued to the appellant Company. The order has not been formally drawn up, and it is not clear whether by that order it was intended to call upon the Company to show cause why the petition should not be admitted, or that by the order the petition was admitted and notice under R. 96 of the Companies (Court) Rules, 1959 was issued.

(2.) The appellant Company filed its reply controverting the allegations made by the respondent. The Company also filed an application that the winding up petition filed by the respondent be taken off the file and be dismissed and that the petition in the meantime be not advertised. H. R. Khanna, J., held that the appropriate remedy of the respondent on the allegations of mismanagement of the affairs of the Company and oppression of the minority share-holders by the group of Anandi Lal was to file a petition under Ss. 397 and 398 of the Companies Act. The learned Judge further held that the petition for winding up was instituted with a view "to unfairly prejudice the interests of the share-holders of the Company ", respondent having set up a rival factory in the name of his son for manufacturing electric conduit pipes. The learned Judge directed that the petition be not advertised and be dismissed.

(3.) In appeal against the order passed by H. R. Khanna, J., the High Court of Delhi held that under the Companies (Court) Rules, 1959, once a petition is admitted to the file, the Court is bound forthwith to advertise the petition. The Company challenges that order in this appeal.