Gauhati High Court
Assam Company India Ltd vs The Bank Of New York Mellon, London ... on 16 June, 2014
Author: Ujjal Bhuyan
Bench: Ujjal Bhuyan
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND
ARUNACHAL PRADESH)
Misc. Case (C) No.3351/2013
In Company Pet. No. 29/2012
Applicant/Respondent :
Assam Company India Limited, a Company incorporated under the Companies Act, 1956 and having its registered office at Greenwood Tea Estate, Dibrugarh-786001.
By Advocates :
Mr. D. K. Mishra, Sr. Advocate.
Mr. K. Goswami.
Respondent/Petitioner :
The Bank of New York Mellon, London Branch (formerly known as the Bank of New York, London Branch), a Company incorporated in New York under the laws of the State of New York, having its registered office at 40th Floor, One Canada Square, London E14 5AL, United Kingdom and its headquarters at 1, Wall Street, New York, NY 10286, United States of America, outside the jurisdiction of this Court.
By Advocates:
Dr. Ashok Saraf, Sr. Advocate, Mr. P. Baruah.
BEFORE HON'BLE MR. JUSTICE UJJAL BHUYAN.
Date of hearing : 15.05.2014.
Date of Judgment : 16.06.2014.
J U D G M E N T AND O R D E R (CAV)
Heard Mr. D. K. Mishra, learned senior counsel assisted by Mr. K. Goswami, learned counsel for the applicant and Dr. Ashok Saraf, learned Senior Counsel assisted by Mr. P. Baruah, learned counsel for the respondent.MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 1 of 24
2. This application has been filed by the applicant, Assam Company India Limited, for dismissal of the related Company petition being Company Petition No. 29/2012 filed by the respondent Bank of New York Mellon, London Branch (formerly known as Bank of New York, London Branch).
3. The Company petition has been filed by the respondent as the petitioner under Section 433 of the Companies Act, 1956 with the principal prayer for winding up of the respondent i.e. Assam Company India Limited (applicant herein) and appointment of the Official Liquidator attached to this Court as Liquidator of the respondent. The Company petition has been filed for winding up of the respondent (applicant herein) on the ground that it is unable to repay the dues of the bondholders whose bonds have become due for redemption. This Court by order dated 14.12.2012 issued notice in the Company petition and passed an interim order restraining the respondent (applicant herein) from creating any third party interest over its assets and business except in the usual course of business. Order dated 14.12.2012 reads as under:-
" The respondent Assam Company India Ltd. issued Convertible Bonds due in 2011 and pursuant to an Agency Agreement dated 23.11.2006, the petitioner was appointed as the Principal Agent to act for and on behalf of the Trustee, the bond holder as the paying agent / conversion agent. The Trust Deed dated 23.11.2006 (Annexure-C) covers the arrangement of the respondent with the petitioner Company.
Since the respondent Company failed to honour their bond liability despite repeated requests of the Bondholders, the outstanding principle amount payable on the bonds is now stated to be worth USD 16,097,038.70.
The respondent Company through its letters dated 28.12.2011 (page 422) and other letters, issued to the Bondholders, has acknowledged its liability and requested for further time for redemption of the Foreign Currency Convertible Bonds (FCCB) as per the Trust Deed dated 23.11.2006. Through a subsequent letter dated 30.12.2011 (page 423), the respondent has agreed to pay interest under Clause 2.2 of the Trust Deed for delayed payment and assured that the redemption amount will definitely be paid by 28.2.2012.
But since neither the redemption amount nor any lesser amount was paid, the petitioner issued notice on 2.8.2012 (page 436) under Section 433 of the Companies MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 2 of 24 Act, 1956 and the respondent in their reply of 31.8.2012 (page 441), while not denying its liability to the Bondholders, have raised technical objection on the renaming of the petitioner Company by addition of the word 'Mellon ' to the original name of the petitioner - "The Bank of New York, London Branch". In their explanation given on 25.9.2012 (page 442), the petitioner has informed that the original name of the petitioner was changed from "The Bank of New York" to the "The Bank of New York Mellon" and accordingly the petitioner is entitled to demand payment of the bond dues as the appointed trustee.
Dr. A Saraf, the learned senior counsel in course of his submission has referred to the order dated 13.12.2012 in Co. Pet. No.558/2012 passed by the Delhi High Court in Citibank, N.A. vs. Moser Bear India Ltd., as well as the decision of the Bombay High Court pronounced on 11.3.2011 in the Company Petition No.971 of 2009 in BNY Corporate Trustee Services Ltd. vs. Wockhard Limited to argue that the assets of the respondent Company should not be permitted to be alienated since the company in the meantime, has started a process for disposal of their Salona Tea Estate.
The petitioner projects that the outstanding dues with interest as on 2.8.2012 on account of unpaid bonds stands at USD 16,395,658.53 and if the petitioner is not protected through interim order, the assets of the respondent Company may not be available for honouring its commitment under the FCCB.
In view of above, let notice returnable in 6 weeks be issued.
Petitioner to ensure service on the respondent by Regd. Post.
In the interim, having regard to the judgment of the Bombay High Court in the Company Petition No.971 of 2009 and the interim order of the Delhi High Court of 13.12.2012 in the Co. Pet. No.558/2012, the respondents are restrained from creating any 3rd party interest over its assets, Division, Business, except those in usual Course of business, until the returnable date."
4. Applicant has filed the present application, which has been registered as Misc. Case No. 3351/2013, for dismissal of the Company petition. It is contended that the affidavit which was sworn and filed in support of the Company petition is a false document. As such, the averments made in the Company petition have not been verified by a valid affidavit. Such a petition therefore cannot be acted upon. It is also contended that one Ritu Rana Khanna had sworn the affidavit describing herself as the constituted attorney of the petitioner. It is contended that the said Ritu Rana Khanna is not competent and has no locus to file the Company petition. Lastly, it is contended that the respondent/petitioner has filed the Company petition in its capacity as a trustee on behalf of the holders of the bonds who together own more than 25% of the outstanding bonds. MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 3 of 24 Respondent/petitioner has not disclosed the particulars of the bondholders on whose behalf the Company petition has been filed by the respondent/petitioner as trustee. In this connection, applicant has referred to clause-24 of the trust deed dated 23.11.2006 (Annexure-C to the Company petition). Petitioner has also not disclosed the letter of authority whereby the bondholders had authorized it to move the Company petition. It is in this backdrop that the applicant has contended that the Company petition is not at all maintainable and should therefore be rejected.
5. Respondent/petitioner has filed an affidavit opposing the above application filed by the applicant. It is denied that the affidavit sworn in support of the Company petition is a false document. The affidavit was properly affirmed by the power of attorney holder (Ritu Rana Khanna) of the respondent/petitioner. The same was signed and affirmed before a Notary in Mumbai on September 25, 2012. It is stated that there is a typographical error in that in the affidavit it was wrongly typed that Ritu Rana Khanna was "presently in Guwahati"
and that the affidavit was signed "at Guwahati". It is stated that the affidavit was notarized at Mumbai and that Ritu Rana Khanna was duly authorized by the respondent/petitioner by a power of attorney to file the Company petition on its behalf, which has been annexed to the affidavit as Annexure-A. Therefore, the said Ritu Rana Khanna had full power and authority to swear the affidavit and to file the Company Petition. It is further stated that the respondent/petitioner is not bound either under the trust deed or otherwise to furnish to the applicant the particulars of the bondholders who together own not less than 25% of the outstanding bonds and on whose behalf respondent MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 4 of 24 has filed the Company petition as a trustee. At this stage, identity of the instructing bondholders is irrelevant. The application has not been filed bonafide since intention is to delay the proceeding. It is an abuse of the process of Court. The application should therefore be dismissed.
6. Learned senior counsel for the applicant submits that the winding up petition filed by the respondent is not supported by an affidavit since the sworn affidavit is a false document and is therefore nonest in the eye of law. He submits that the affidavit dated 25th September, 2012 was notarized at Mumbai by a Notary Public Ramdas S. Javle but the deponent i.e. Ritu Rana Khanna was shown to have been present at Guwahati where she stated to have signed the affidavit. Further submission is that averments made in the Company petition are not verified as per the requirement of law. The verification paragraph No. 2 of the affidavit is blank but strangely enough, on the right hand side of paragraph 2 of the affidavit, both the Notary Public and the deponent have put their initials. The identification column of the said affidavit is also blank. He submits that in the copy of the Company petition filed in the Court, the affidavit is shown to have been signed before the Notary Public on 4th October, 2012 and the verification paragraph-2 of the said affidavit has been filled up. The affidavit reveals that the same was signed and executed by the deponent (Ritu Rana Khanna) at Guwahati but was notarized on the same day at Mumbai by the Notary Public Ramdas S. Javle. The deponent is shown to have been identified by one Sri Santosh Barman, Advocate's Clerk at Guwahati. Learned senior counsel submits that this defect in the affidavit is a fundamental one and strikes at the very root. Therefore, question of rectification of such defect in the affidavit MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 5 of 24 does not arise because it is not a defective affidavit but a false affidavit. He also submitted about the conduct of the Notary Public, who in the facts and circumstances of the case, could not have notarized the affidavit on 4th October, 2012 at Mumbai though the deponent stated that she was present at Guwahati and had signed the affidavit at Guwahati. Rather, he has executed 2 affidavits on 2 days i.e. one on 25.09.2012 where the statements made in the winding up petition are not verified but still carries the initials of the deponent and the Notary Public and the other on 04.10.2012 (Court copy) where the paragraphs verified are inserted by hand. In both the affidavits, though the deponent stated that she was present at Guwahati and had signed the affidavits at Guwahati, the notary certified that the deponent had affirmed before him at Mumbai.
7. Mr. Mishra, learned senior counsel for the applicant submits that the Company petition has been filed by a body corporate but the supporting affidavit is not filed either by the Director or by the Secretary or by the Principal Officer of the company. The affidavit has been filed by one Ritu Rana Khanna claiming herself to be the constituted attorney of the respondent/petitioner. Learned senior counsel referring to Rule 21 of the Companies (Court) Rules, 1959, more particularly the proviso thereto, submits that no leave was sought for by the said person and consequently granted by the Court to make and file the affidavit. It is the contention of Mr. Mishra that the deponent who had sworn the affidavit is neither a Director nor a Secretary nor the Principal Officer of the respondent/petitioner which is a body corporate. She is only an attorney holder. Therefore, she is not entitled to file such affidavit alongwith the Company petition in MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 6 of 24 terms of Rule 21 of the Companies (Court) Rules, 1959. Since she had not taken the leave of the Court or the Registry to file the affidavit, the proviso to Rule 21 would not come to her aid. The net result would be that the affidavit was filed by an incompetent person. He submits that this is not a technical defect which can be overlooked since the Company petition seeks winding up of the applicant Company which has far reaching consequences.
8. Mr. Mishra further submits that the averments made in the Company petition have not been properly verified in as much as according to the deponent, who is neither the Director nor the Secretary nor the Principal Officer of the Company, averments have been verified as being true to her knowledge. Since the deponent is a resident of Mumbai and does not hold an important office/position in the Company, it is impossible for her to have personal knowledge in matters relating to the instructing bondholders and redemption of their bonds, he contends. He finally submits that failure of the respondent/petitioner to disclose the names of the bondholders who together own more than 25% of the bonds and on whose behalf the Company petition has been filed amounts to suppression of material facts and clearly shows that the respondent/petitioner has not approached this Court with clean hands. The winding up petition should therefore be dismissed at the threshold, he submits. In support of his submissions, learned senior counsel has placed reliance on a number of decisions which will be adverted to in the course of the judgment.
9. Vehemently opposing the submissions made by Mr. Mishra, learned counsel for the applicant, Dr. Saraf, learned senior MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 7 of 24 counsel for the respondent/petitioner submits that the affidavit dated 25.09.2012 inadvertently had a defect in as much as the deponent had signed above the oath portion. Therefore, a fresh affidavit was sworn which was filed before the Court alongwith the Company petition. By mistake, the applicant was served with a copy of the Company petition which was accompanied by the earlier affidavit signed on 25.09.2012. He submits that it was a typographical error whereby the deponent was stated to be at Guwahati instead of Mumbai at the time of signing the affidavit. According to Dr. Saraf, it is a minor error which is sought to be blown out of proportion by the applicant. Defects as to verification of the affidavit which is an irregularity can be cured at any time. He submits that an opportunity should be granted to the respondent/petitioner to cure such defect which inherent power the Court possess and is recognized in Rule 9 of the Companies (Court) Rules, 1959. Dr. Saraf submits that the deponent who had sworn the affidavit on 04.10.2012 was the constituted attorney of the respondent/petitioner vide Power of Attorney dated 17.09.2012. Therefore, it cannot be said that the Company petition was filed by an incompetent person or by a person who had no locus. He submits that this irregularity can be rectified by the Court by invoking its inherent power which is recognized in Rule 9 by granting post facto leave. There is no violation of Rule 21 of the Rules, he contends. He further submits that there is no requirement under the law to disclose the names of the bondholders on whose behalf the Company petition has been filed. Respondent/petitioner as the trustee of the bondholders is fully competent to institute the winding up proceeding as the applicant had failed to pay the bondholders the dues on maturity of the bonds. He submits that since failure of the applicant to repay the dues of the MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 8 of 24 bondholders is apparent and admitted, applicant has therefore raised highly technical pleas by magnifying what are clearly minor rectifiable irregularities. He, therefore, prays for dismissal of the application and for deciding the Company petition on merits. Dr. Saraf has also referred to a number of decisions in support of his argument, which will be referred to in the course of the judgment.
10. Submissions made by learned counsel for the parties have received the due consideration of the Court.
11. Before proceeding further, it would be apposite to refer to Section 433 of the Companies Act, 1956 since the Company petition has been filed under the aforesaid provision for winding up of the Company (applicant). Section 433 deals with circumstances in which a company may be wound up. Clause (e) provides that failure of the Company to pay its debts would be a ground for winding up of the Company. Section 434 explains and illustrates the situations as to when a Company shall be deemed to be unable to pay its debts. Under Section 439, an application for winding up of a Company shall be by a petition presented by the Company or by any creditor or by the holder of any debentures, the trustee for the holders of debentures etc.
12. Under the Companies (Court) Rules, 1959, particularly Rule 11 thereof, an application for winding up of a Company is required to be made by a petition. As per Rule 21, every petition shall be verified by an affidavit made by the petitioner or by one of the petitioners where there are more than one and in a case where the petition is presented by a body corporate, the verification by affidavit has to be made by a Director or Secretary or other Principal Officer of MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 9 of 24 the body corporate. Such affidavit has to be filed alongwith the petition and as per the prescribed format (Form No. 3). However, for sufficient reason, the Company Judge or Registrar may grant leave to any other person duly authorized by the petitioner to make and file the affidavit.
13. Having noticed the above, the question which may now be considered is as to what is an affidavit?
14. As per the Concise Oxford English Dictionary (Indian Edition), affidavit has been defined as a written statement confirmed by oath or affirmation, for use as evidence in Court. On the other hand, Black's Law Dictionary 6th Edition defines affidavit as a written or printed declaration or statement of facts, made voluntarily and confirmed by the oath or affirmation of the party making it, taken before a person having authority to administer such oath or affirmation.
15. In the General Clauses Act, 1897, affidavit is defined in Section 3 (3). As per the said definition, affidavit includes affirmation and declaration in the case of persons by law allowed to affirm or declare instead of swearing.
16. Order 19 of the Civil Procedure Code deals with affidavit. Order 19 Rule 3 provides that affidavits shall be confined to such facts as the deponent is able of his own knowledge to prove, except on interlocutory applications, on which statements of his belief may be admitted.
17. Notary is a person appointed as such under the Notaries Act, 1952. Under Section 3 of the said Act, the Central Government MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 10 of 24 for the whole or any part of India and any State Government for the whole or any part of the State, may appoint as notaries any legal practitioners or other persons who posses such qualifications as may be prescribed. Section 8 of the said Act mentions the functions of notaries. Amongst other functions, a notary by virtue of his office is competent to administer oath to any person or take affidavit from any person.
18. Litigations before our Courts are decided on the basis of pleadings and evidence which are supported by affidavits. A proper and valid affidavit is thus the foundation of the case superstructure which is adjudicated upon by the Courts. If the affidavit is found to be defective or if the affidavit suffers from some basic fundamental mistake, it is bound to affect the case superstructure. Affidavits play a vital role in the dispensation of justice and cannot be taken lightly. Filing of affidavit is not an empty formality. Since the outcome of a case is dependent on it, due care and attention has to be given to filing of affidavit.
19. In State of Bombay Vs. Purushottam Jog Naik reported in AIR 1952 SC 317, the Hon'ble Supreme Court was dealing with an appeal in respect of detention under the Preventive Detention Act, 1950. The Bombay High Court had directed release of the detenue from detention. State of Bombay had moved the Apex Court against the direction for release of the detenue. While hearing the appeal, the Apex Court noted that the verification of the affidavit filed in the Court was defective. Stating that the Home Secretary had sworn the affidavit verifying that everything was true to the best of his own knowledge and belief, the Apex Court warned that such slipshod verification of MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 11 of 24 affidavit may lead to rejection of the affidavit in a given case. It was stressed by the Apex Court that verification should invariably be modelled on the lines of Order 19 Rule 3 of the Civil Procedure Code. When the matter deposed is not on personal knowledge, the source of information should be clearly disclosed.
20. In LH Sugar Factories and Oil Mills (Pvt.) Ltd. Vs State of UP & Ors. reported in AIR 1962 Allahabad 70, which was a case relating to challenge to an award made by the Labour Court under the Industrial Disputes Act, 1947 declaring that the workmen were illegally deprived of promotion and holding that they were entitled to promotion to the next higher grade, a Single Bench of the Allahabad High Court noticed that the affidavit supporting the petition under Article 226 of the Constitution of India challenging the award was sworn by a person who described himself as a Clerk in the establishment of the petitioner Company. He had verified all the statements made in the petition as being true to his personal knowledge. It was held that if a person swears an affidavit in a case which does not concern him, it is not enough for him to make the formal verification that he is personally acquainted with the facts deposed in his affidavit. He must explain how he became acquainted with the facts which ordinarily did not concern him. The affidavit supporting a petition under Article 226 of the Constitution must be sworn by a person who can relate facts from his personal knowledge.
21. In an application for winding up of a Company before the Calcutta High Court, an objection was put forward on behalf of the Company contending that no order could be made on the application for winding up as the affidavit verifying the petition was not affirmed MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 12 of 24 according to law. It was contended that the affidavit verifying the petition was not affirmed at all but only a declaration was made before a Notary Public. In this case (Textile Engineering Works Ltd. Vs Gaya Textiles Pvt. Ltd.=Manu/WB/0362/1966), a Single Bench of the Calcutta High Court referred to the provisions of the Companies (Court) Rules, 1959 and held that an affidavit supporting an application for winding up must be made on a solemn affirmation as prescribed in Form No. 3. When a contention was made that the defect in the affidavit was a mere irregularity and, therefore, it should be allowed to be rectified, the Calcutta High Court held that had it not been a petition for winding up of a Company, the contention could have been accepted. The Calcutta High Court held that verification of a winding up petition must strictly comply with the rules for verification and re-verification of a winding up petition cannot be allowed. The Calcutta High Court held as under:-
" 10. Had this not been a petition for winding up a Company, I would have readily accepted the contentions of the learned counsel for the petitioner. But it cannot be overlooked that the present petition is a petition for winding up of a Company and a winding up order relates back to the date of the presentation of the winding up petition. If on the date when the petition was presented there was no proper verification according to law, then there was no petition at all on which the Court could issue directions for advertisement. Secondly, if leave is granted to cure the verification today, then a proper petition for winding up of the Company would come into existence as from today, and in that event the question of dealings by the Company with its assets between the date of presentation of the winding up petition and the date when the Court grants the Company leave to re-verify the petition would also create a good deal of confusion. Since a winding up order relates back to the date of presentation of the winding up petition, all dealings by the Company with its assets would be subject to the rules relating to fraudulent preference and transactions are liable to be set aside on the ground that the Company had unlawfully dealt with its assets in order to deprive its creditors. But if leave is granted to the petitioner to cure the defect in the verification by allowing re-verification of the petition according to the rules today, it would be open to the Company to contend, if a winding up order is made, that the rules relating to fraudulent preference or unlawful dealing with the assets from the date of presentation of the winding up petition would not apply, as a petition properly verified according to law came into existence only on the date on which leave was granted to the petitioner to re-verify the petition. There is, however, another matter to be considered in connection with the defective verification of a winding up petition. In the event of dealings by the Company with its assets between the date of presentation of the winding up petition and the date when a valid petition comes into existence after re-verification of the same, third parties may acquire rights in the Company's assets, which, it will be difficult to assail or set aside. For these reasons, verification of a winding up petition must strictly comply with the rules for MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 13 of 24 verification of the same. The petition with which I am concerned in this application being a petition for winding up of a Company, the principles discussed in the several decisions cited by the learned counsel for the petitioner are not attracted and do not assist the petitioner. Counsel for the petitioner admitted and I think rightly, that the verification was defective and the Court could not make an order for winding up on this petition, and it was for that reason that he asked for leave to re-verify the petition. That being the position, in my opinion, re-verification of a winding up petition cannot be allowed, particularly because in this case the verification appears to have been done before a notary public, who under the rules is not an officer before whom a petition could be verified under the rules of this Court as also under the Companies (Court) Rules, 1956. For the reasons mentioned above, the Court cannot proceed to make an order on the present petition nor can the Court give leave to the petitioner to re-verify the petition in conformity with the rules. In the circumstances, this application is dismissed with costs. Certified for counsel."
22. This issue again cropped up before the Punjab and Haryana High Court in Mool Chand Wahi Vs National Paints P. Ltd. And Anr. (Manu/PH/0219/1983) which was also a case relating to petition for winding up of a Company under Sections 433, 434 and 439 of the Companies Act, 1956. An objection was raised on behalf of the Company that the affidavit accompanying the petition was not in proper form and, therefore, the petition should be dismissed. This objection found favour with the learned Judge who referred to the provisions of the Companies (Court) Rules, 1959 and held that in a petition for winding up, it is mandatory to file an affidavit alongwith the petition. The purpose of the affidavit is that the allegations made in the affidavit read with the petition are treated as substantive evidence. In case the petition is not accompanied by an affidavit there is no petition in the eye of law and consequently it is liable to be dismissed on this ground alone. It was held that a petition for winding up, if accepted, relates back to the date of its presentation. In case a properly sworn affidavit is allowed to be filed subsequently the question will arise as to whether the winding up petition would relate back to the date of presentation of the petition or the affidavit. Accordingly, the winding up petition was dismissed on the ground that it was not accompanied by a proper affidavit. This view of the Single MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 14 of 24 Bench of the Punjab and Haryana High Court was subsequently upheld by a Division Bench of the said High Court. The above were the decisions relied upon by Mr. Mishra, learned senior Counsel for the applicant.
23. As already noticed, it was argued by Dr. Saraf, learned senior counsel for the respondent/petitioner that defects if any in the affidavit regarding verification of a petition are irregularities which are not fatal and can be cured at any stage of the proceeding. Opportunity should be given to rectify any defect or irregularity in the filing of an affidavit. Ultimate objective being to do justice, procedure and technicalities should not be allowed to come in the way of dispensing justice. A winding up petition cannot be dismissed because of irregularities in the affidavit alone. In the context of the submissions advanced by Dr. Saraf as above, let us now examine the decisions relied upon by him.
24. In Roma Dev & Ors. Vs. M/s R. C. Sood & Co. Pvt. Ltd. ILR (1986) 1 Del 498, a Single Bench of the Delhi High Court over- ruled the objection raised by the Company against a winding up petition on the ground that the petition was not supported by an affidavit. Differing with the views expressed by the Calcutta High Court and by the Punjab and Haryana High Court, the learned Judge held in the facts of that case that the defect in the verification was not so fatal that it could not be remedied. The Court has the inherent power to allow the petitioner to present an affidavit in support of the winding up petition, if the original affidavit did not conform to Form No. 3. It was reasoned that if an amendment of the petition can be allowed, there MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 15 of 24 does not seem any reason as to why a defective affidavit verifying the petition could not be rectified. However, the learned Judge sounded a note of caution and concluded that in the case of a winding up petition, Court will not permit rectification of the defect just as a matter of course and will take into account all the relevant circumstances including the conduct of the parties.
25. In FA Sapa & Ors. Vs. Singora & Ors. reported in (1991) 3 SCC 375, the issue related to objection as to prayer of the returned candidate for striking of the pleadings. In that case, which related to election petition under the Representation of People Act, 1951, the Apex Court held that mere defect in the verification of the election petition is not fatal to the maintainability of the petition and the petition cannot be thrown out solely on that ground.
26. In Malhotra Steel Syndicate Vs. Punjab Chemi-Plants Ltd. reported in 1993 Supp. (3) SCC 565, the Apex Court held that a verification in the affidavit which on a proper and liberal construction does contain an averment to the effect that the statements made in the affidavit are true and correct to the knowledge of the appellant could not be described as defective. Even if there is some slight defect or irregularity in the filing of the affidavit, the appellant should have been given an opportunity to rectify the same.
27. In a judgment of the Rajasthan High Court in the case of Sand Plast (India) Ltd. Vs. ITC Bhadrachalam Finance & Investment Ltd. (Manu/RH/0128/2001), the Rajasthan High Court disagreed with the view taken by the Punjab and Haryana High Court MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 16 of 24 by holding that imperfect verification of the affidavit is only an irregularity and not an illegality.
28. Similar is the view of the Gujarat High Court in Manu/GJ/0399/2001 (Welding Rods (P) Ltd. Vs. Indo Borax & Chemicals Ltd.). Holding that defect in the form of verification or affidavit is only a technical irregularity and that an opportunity should be given to the concerned party to cure such defect, the Gujarat High Court ruled that in such cases, the inherent power of the Court as recognized by Rule 9 can certainly be invoked.
29. Dr. Saraf has also pressed into service the decision of the Apex Court in the case of Uday Shankar Triyar Vs. Ram Kalewar Prasad Singh and Anr. reported in (2006) 1 SCC 75 to contend that procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Non- compliance with any procedural requirement should not entail automatic dismissal or rejection of a petition. However, even in this case, the Hon'ble Supreme Court has culled out certain well recognized exceptions to the above principle, such as:-
" (i) where the statute prescribing the procedure, also prescribes specifically the consequence of non-compliance;
(ii) where the procedural defect is not rectified, even after it is pointed out and due opportunity is given for rectifying it;
(iii)where the non-compliance or violation is proved to be deliberate or mischievous;
(iv) where the rectification of defect would affect the case on merits or will affect the jurisdiction of the court;
(v) in case of memorandum of appeal, there is complete absence of authority and the appeal is presented without the knowledge, consent and authority of the appellant."
30. In Associated Journals Ltd. Vs. Mysore Paper Mills Ltd. reported in (2006) 6 SCC 197, which was also a case relating to winding up petition where the learned Company Judge had allowed MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 17 of 24 the petitioners to file a fresh affidavit correcting the defect in the verification of the winding up petition, the Apex Court upheld the decision of the learned Company Judge and held as follows:-
"22. This Court has in a catena of decision held that substantial compliance is enough. Rules are undoubtedly statutory and the forms are to be adopted wherever they are applicable. The rules relating to the affidavit and the verification cannot be ordinarily brushed aside, but then what is required to be seen is whether the petition substantially complies with the requirements and, secondly, even when there is some breach or omission, whether it can be fatal to the petition. In the instant case, both the learned Company Judge and also the Division Bench were of the opinion that there is substantial compliance with Rule 21. In Khaitan Overseas & Finance Ltd. Vs. Dhandhania Bros. (P) Ltd. a petition was filed by the Chairman-cum-Director of the Company. He annexed with the petition a resolution of the Board of Directors permitting him to execute necessary petitions, documents, applications, affidavits and to lodge a suit to recover dues from the debtor Company. This was held to include the authority to file a winding up petition also. The affidavit accompanying the petition was signed, sworn and affirmed on oath in the prescribed manner. The Court said that the affidavit conformed with the requirements of law.
23. We are of the opinion that the rules of procedure cannot be a tool to circumvent the justice. In fact, the rules are laid to help for speedy disposal of justice. The learned Judges of the Division Bench have appreciated that the technical plea raised by the appellant regarding defective affidavit was raised after seven years of filing the petition. The learned counsel submitted that the appellant is raising the defence of technical plea to protect himself from the consequence of his default and this plea cannot be enough to review the order of advertisement. Assuming without admitting that the affidavit was not verified as per the Company Rules, the learned counsel has correctly submitted that if this objection was taken earlier the respondent would have cured the defect."
31. Dr. Saraf also relied upon Baader Beteiligungs GMBH Vs. Parsoli Motor Works (P) Ltd. (Manu/GJ/0609/2012) and Zenith Infortech Ltd. Vs. The Bank of New York Mellon London Branch decided by the Bombay High Court on 02.09.2013 in Appeal (L) No.344/2013 and other connected cases.
32. Having considered the various decisions as above, let us now turn to the affidavit sworn in support of the winding up petition. Mr. Mishra has placed before the Court two sets of affidavits:- one accompanying the winding up petition which was served on his client and one which has accompanied the winding up petition filed in the Court on 16.10.2012. Both the affidavits are signed and affirmed by Ritu Rana Khanna. In the copy served on the applicant/respondent, MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 18 of 24 the date of the affidavit is 25th September, 2012. The affidavit reads as under:-
" AFFIDAVIT I, Ritu Rana Khanna, Indian Inhabitant, resident of India having my office at 3 North Avenue, Premises No. 35 & 36, 3rd Floor Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai-4000051, presently at Guwahati do hereby solemnly affirm and state as follows:-
1. That I am the Constituted Attorney holder of the Petitioner Company in the present case and as such I am fully acquainted with the facts and circumstances of the instant case and authorized to swear and sign this affidavit.
2. That the statements made in this affidavit and in paragraphs....................................................................... are true to my knowledge and those statements made in paragraph.....................................
are true to my information derived from the records and rest are my humble submission before this Hon'ble Court.
3. That the annexures annexed to the accompanying petition are true copies of its original.
And I sign this affidavit on this 25th day of September, 2012 at Guwahati.
Ritu Rana Khanna On oath-" I swear that this declaration is true, that it conceals nothing and that no part of it is false, so help me God."
Identified by:
Advocate's Clerk DEPONENT Solemnly affirmed before me on this 25th Day of September, 2012 I certified that I read over and explained the contents to the deponent and that the declarant seemed perfectly to understand them.
BEFORE ME Ramdas S. Javle.
NOTARY GREATER MUMBAI"
In this affidavit though Ritu Rana Khanna described herself as a resident of Mumbai, she declared herself as present at Guwahati for the purpose of affirming the affidavit, further stating that she was the constituted attorney holder of the petitioner. Paragraph 2 of the said affidavit which is intended for verification of the statements MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 19 of 24 made in the accompanying winding up petition is blank. She signed the affidavit on 25th September, 2012 at Guwahati though it was notarized by the Notary Public Ramdas S. Javle at Mumbai on 25.09.2012. The deponent was not identified by anybody as the column earmarked for identification by the Advocate's Clerk is blank. But the Notary Public certified that the deponent i.e., Ritu Rana Khanna had solemnly affirmed before him on 25th September, 2012 and that he had read over and explained the contents to the deponent and that the declarant seemed perfectly to understand them.
33. The 2nd affidavit which is annexed to the winding up petition filed in the Court on 16.10.2012 reads as under:-
" AFFIDAVIT I, Ritu Rana Khanna, aged about 45 years, Indian Inhabitant, resident of India having my office at 3 North Avenue, Premises No. 35 & 36, 3rd Floor Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai-4000051, presently at Guwahati do hereby solemnly affirm and state as follows:-
1. That I am the Constituted Attorney holder of the Petitioner Company in the present case and as such I am fully acquainted with the facts and circumstances of the instant case and authorized to swear and sign this affidavit.
2. That the statements made in this affidavit and in paragraphs 1, 6, 8, 12, 18 to 26, 30 to 48 are true to my knowledge and those statements made in paragraph 2 to 5, 7, 9 to 11, 13 to 17, 27 to 29 are true to my information derived from the records and rest are my humble submission before this Hon'ble Court.
3. That the annexures annexed to the accompanying petition are true copies of its original.
And I sign this affidavit on this 4th day of October, 2012 at Guwahati.
On oath-"I swear that this declaration is true, that it conceals nothing and that no part of it is false, so help me God."
Ritu Khanna
Identified by: DEPONENT
4 OCT, 2012
Santosh Barman
4.10.12
Advocate's Clerk
MC No. 3351 of 2013
In Co. Pet No. 29 of 2012 Page 20 of 24
Solemnly affirmed before me on this 4th
Day of October, 2012 I certified that I
read over and explained the contents to
the deponent and that the declarant
seemed perfectly to understand them.
BEFORE ME
Ramdas S. Javle
NOTARY GREATER MUMBAI"
In this affidavit, certain changes are noticeable. Age of Ritu Rana Khanna has been mentioned by hand (which is missing in the first affidavit i.e., the affidavit signed on 25th September, 2012) and paragraph 2 of the affidavit has been filled up by hand mentioning the paragraphs in the winding up petition which have been verified by the deponent. This affidavit is shown to have been signed at Guwahati on 4th October, 2012 and the deponent is identified by one Santosh Barman, Advocate's Clerk on 04.10.2012. Deponent had stated that though she is a resident of India having her office at Mumbai, she was presently at Guwahati to affirm the affidavit. Moreover, she categorically stated in the last line of the affidavit above the words "On Oath" that she signed the affidavit on 4th day of October, 2012 at Guwahati. However, from the certificate of the Notary Public, who is the same Ramdas S Javle, who is the notary of Greater Mumbai, the affidavit was affirmed before him on 4th October, 2012 and he certified that he had read over and explained the contents to the deponent who seemed perfectly to understand them. The Advocate's Clerk has not stated whether he identified the deponent on 04.10.2012 at Guwahati or at Mumbai.
34. A comparison of the two affidavits prima facie shows that those were the typed copies of the same draft. While keeping the date MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 21 of 24 of signing the affidavit blank, it was typed as "and I sign this affidavit on this------- day of September, 2012 at Guwahati". In the first affidavit 25th was inserted by hand whereas in the second affidavit 4th was inserted by hand after striking off September and replacing it with October by hand. The affidavits per se and in comparison are clearly contradictory. The affidavits could not have been affirmed at two places i.e. Guwahati and Mumbai simultaneously on either of the two dates 25th September, 2012 or 4th October, 2012. One gets the clear impression that the affidavits without verification of the averments in the winding up petition were notarized at Mumbai on the two dates by the same Notary Public, one on 25th September, 2012 and the other one on 4th October, 2012 and at the time of filing the petition in Court, paragraph 2 of the affidavit signed on 4th October, 2012 was filled up by hand by mentioning various paragraphs of verification. In both the affidavits, the same deponent stated that she had signed the affidavit at Guwahati though as per the certificate of the Notary Public, the affidavits were affirmed before him on the two dates. Additionally, he certified that he had read over and explained the contents to the deponent who seemed perfectly to understand the contents. Such glaring contradiction and the grossly callous manner in which the affidavit has been filed cannot be simply explained and brushed aside as mere typographical errors. This is not a procedural error or a minor technicality which can be rectified by giving a further chance to the respondent/petitioner to file proper affidavit. As already discussed above, affidavits filed in the Courts are sacrosant. They are the base or basis on which the legal edifice is built and cases are decided. If these sort of affidavits are filed, I am afraid it will have a far reaching impact on the justice delivery system itself.
MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 22 of 24
35. In the affidavit-in-opposition filed by the respondent/petitioner, the clear stand taken in paragraph-11 thereof is that the power of attorney holder Ritu Rana Khanna had signed and affirmed the affidavit accompanying the winding up petition before a notary in Mumbai on 25th September, 2012. It is the further case of the respondent/petitioner that the words "presently at Guwahati" and that "and I sign this affidavit on this 25th day of September, 2012 at Guwahati" are typographical errors since the affidavit was notarized at Mumbai. However, the affidavit-in-opposition is totally silent about the affidavit signed and affirmed by Ritu Rana Khanna on 4th October, 2012, which is the affidavit filed in the Court alongwith the winding up petition. The affidavit signed and affirmed on 25th September, 2012 has not been filed in the Court supporting the winding up petition. Respondent/petitioner has not owned up this affidavit and the glaring contradictions which are visible on the face of the affidavit as discussed above have remained unexplained.
36. While there is no dispute to the proposition that procedural defects and irregularities or technicalities should not be allowed to come in the way of dispensation of justice and that since the Courts are established to render justice, the approach of the Courts should not be hyper-technical and procedure-centric so as to defeat the cause of justice itself. But at the same time, a distinction has to be drawn between what are procedural irregularities which can be cured and illegalities which cannot be cured. In the case of the former, even in the absence of any specific legal provision, Courts have inherent power to allow parties to rectify the defects or to remove the irregularities. But if the defect is such which strikes at the root or as MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 23 of 24 explained by the Apex Court in Uday Sankar Triyar (supra) where the procedural defect can be termed as "mischievous", such defect would be an illegality and the Courts will not overlook such an illegality. However, without entering into the debate as to whether the filing of the affidavit in the present case is mischievous or not, the Court is firm and certain in its view that such affidavit is invalid and cannot be accepted.
37. For the aforesaid reasons, I am of the view that the affidavit filed in support of the Company petition is an invalid affidavit and no petition, much less a winding up petition, can survive on the basis of verification reflected in such invalid affidavit. This is not an irregularity or a technical defect but an illegality which strikes at the very root of the affidavit in the present case. On the basis of such an affidavit, Court is not inclined to adjudicate on the winding up petition filed by the respondent/petitioner.
38. Since this application is being allowed on the point of affidavit itself, other issues raised need not be gone into.
39. For the aforesaid reasons, this Misc. application is allowed. Related Company Petition No. 29/2012 is dismissed.
40. Parties to bear their own costs.
JUDGE Aparna MC No. 3351 of 2013 In Co. Pet No. 29 of 2012 Page 24 of 24