Bombay High Court
S.P. Capital Financing Ltd. vs Bagade (India) Engineering Ltd. on 15 December, 1999
Equivalent citations: [2002]109COMPCAS657(BOM)
Author: S.S. Nijjar
Bench: S.S. Nijjar
JUDGMENT S.S. Nijjar, J.
1. On an application filed by the petitioners, by order dated December 7, 1999, the petition was permitted to be withdrawn. The facts relating to the conduct of the company are narrated in the order dated December 7, 1999 and they need not be repeated here. The official liquidator has submitted the report dated December 13, 1999. In this report, it is stated that the order dated December 7, 1999, suffers from an error apparent on the face of the record. It has been passed in ignorance of the provisions of Section 447 of the Companies Act, 1956.
2. In view of the above, the court treats the report of the official liquidator dated December 13, 1999, as a review petition of the order dated December 7, 1999. Counsel for the company as well as the petitioner were given due notice of the report. Mr. Diwan appearing on behalf of the company has submitted that Section 447 has no applicability to the facts and circumstances of this case. He submitted that no creditor or contributory has come forward to lay a claim as required under Rules 25, 100 and 101 of the Companies (Court) Rules. Therefore, the order does not suffer from any illegality. Furthermore, it is submitted that if the official liquidator's report is treated as a review petition, this. court would be sitting in appeal over its own order which is not permissible in law. It is submitted by Mr. Diwan that as soon as the judge signs the order, he becomes functus officio and even if a glaring illegality or error is pointed out in the judgment, the court is helpless in correcting the same. According to learned counsel the only remedy available is that of an appeal. The court who has passed inherently illegal order has no power to rectify the mistake. I am unable to agree with the submissions made by learned counsel. A bare perusal of Section 447 makes it abundantly clear that an order for winding up a company shall operate in favour of all the creditors and of all the contributories of the company as if it had been made on the joint petition of a creditor and of a contributory. A bare reading of this Section makes it abundantly clear that as soon as the order of winding up is passed, the nature of the winding up petition undergoes a transformation from an individual petition to a petition on behalf of all the creditors and all the contributories. That being so, it will not be permissible for the petitioner to withdraw the petition as he would not have the consent of all the creditors or the contributories.
3. In view of the above, I find that the order dated December 7, 1999, was wholly without jurisdiction. The petitioner could not have been permitted to withdraw the petition. Apart from this, it is the case of the company that the company is registered before the BIFR. The facts leading up to the registration of a reference before the BIFR are noticed in my order dated December 7, 1999, as also in the order of Justice Kapadia dated November 4, 1999. This reference, in fact, was registered after the order of winding up was passed on April 5, 1999. Be that as it may. Even on the company's own submissions, no further proceedings could have taken place in the winding up petition after a reference has been made before the BIFR.
4. Keeping the aforesaid facts and circumstances in view, the order dated December 7, 1999, is hereby recalled. The judge's summons taken out for withdrawing the petition is hereby dismissed.
5. No costs.
6. At this stage, Mr. Diwan prays that the operation of the order be stayed. I do not find any justification for the same. Rejected.
7. Certified copy expedited.