Allahabad High Court
Tayal Potteries And Another vs Macroplast (P) Ltd. on 9 September, 1998
Equivalent citations: 1998(3)AWC2200, [2001]103COMPCAS404(ALL)
JUDGMENT A.K. Banerji, J.
1. By means of the abovenoted company petition filed under Sections 433(e) and 434(1)(a) of the Companies Act, 1956 (The Act in short), the petitioners M/s. Tayal Potteries through its sole proprietor (hereinafter referred to as the petitioners) have sought the winding up of the respondent-company M/s. Macroplast Pvt. Ltd. (Respondent-company) on the ground that the said respondent is unable to pay its debts, consequently, it be wound up.
2. Briefly stated the petitioner' case is that it is engaged in the manufacturing of bushing which are used for transformers. On the orders placed by the respondent-company which is basically engaged in the manufacture of transformers, the petitioners supplied goods. The respondent-company defaulted in making payment, consequently, a sum of Rs. 89,123.75 paise as on 25.3.95 was due besides interest at the rate of 24% per annum. On request for payment, the respondent issued a cheque for Rs. 90,000 on 8.4.1995 which was returned by the Bank for the reason that the same exceeded arrangement. When the said fact was brought to the notice of the company, one of its Directors Shri S. K. Mishra by means of the letter dated 26.8.1995 expressed regrets and assured the clearance of the dues alongwith compensation, at an early date. It transpires that the said promise was hollow as no payment was made. Consequently, the petitioners were constrained to serve a statutory notice of demand dated 52.7.1997 for the aforesaid amount alongwith interest. Despite the service of the notice at the registered office of the respondent, the company failed and neglected to pay the same, consequently the present petition. It is noteworthy that the affidavit in support of the petition was filed by the Satyendra Veer, son of late Baljeet Singh, resident of 409, W. K. Road, Meerut as pairokar and the petition was also signed by the said pairokar.
3. On notice being issued, the company put in appearance and filed objection which was supported by an affidavit of one of its directors namely, Shri A. K. Misra, wherein it was, inter alia, asserted that the supplies made by the petitioners were defective and of poor quality on account of which the consignment meant for Orissa got damaged during transit and the same was of no use. It was further stated that, in the meantime, dispute arose between the directors and one Satyendra Veer, Ex-director of the company after obtaining an order from the S.D.M., Dadri took possession of the factory on 13.4.1995. Subsequently, however, on contest the factory was handed over to the present Board of Directors but the said order was stayed by the High Court. Ultimately the matter was settled by compromise and the company purchased the shares of Satyendra Veer. The cheque which was dishonoured, was during the period when the dispute was going on with the Ex-director Satyendra Veer. It was pleaded that the petitioners were not entitled to any payment for the damaged goods supplied and there was a bona fide dispute with regard to the same, consequently the petition was not maintainable. It was also asserted that the company is commercially sound and can meet its financial commitments and it is incorrect to state that it has become insolvent or cannot pay its debts.
4. The petitioners filed a rejoinder-affidavit denying that the goods supplied were of poor quality or were damaged in transit. It was asserted that no such complaint had been made by the respondent prior to the filing of the present counter-affidavit. So far as the dispute between Satyendra Veer and the present Board of Directors is concerned, it has been stated that the petitioners have no concern with the same.
5. I have heard the learned counsel for the petitioners and Shri S. K. Misra, the present Managing Director of the company, who appeared in person. It has been contended on behalf of the respondent that there is no real dispute between the petitioners and the respondent-company and the present company petition was a camouflage at the Instance of Sri Satyendra Veer who after compromising his dispute with the respondent and having walked out of the company has now got the present petition filed to settle his personal vendetta. It is worthy of note that the affidavit filed in support of the petition has not been sworn by the petitioner or the proprietor but by a pairokar, namely, Satyendra Veer who admittedly is none else but the same Ex-director and who has. It appears, dropped his surname to hide his involvement in the present case.
6. Initially this case was heard alongwith two other connected company petitions, namely. Company Petition Nos. 82 of 1997 and 88 of 1997. The Court had reserved the orders thereof. It was found by the Court that the present petition was not in accordance with Rule 21 of the Companies (Court) Rules, 1959, consequently it was directed to be listed for further hearing. Learned counsel for the petitioners sought adjournment and on the next date he filed an application dated 24.9.1998. Inter alia, praying that the affidavit filed by Satyendra Veer be accepted in support of the winding up petition or another affidavit which was being filed alongwith the application by the petitioner No. 2 be accepted in support of the winding up petition. I have heard learned counsel for the parties on the question of maintainability of the petition as well as on the merits of the application dated 24.9.98.
7. Shri Vivek Chaudhary, learned counsel for the petitioners has strongly contended that the objection with regards to Rule 21 of the Companies [Court) Rules was not taken in the counter-affidavit and was also not raised at the time when the petition was filed or during the initial hearing of the company petition, hence the said objection could not be raised subsequently and that too at the instance of the Court. I have not been able to appreciate the said submission. The present Company Petition No. 83 of 1997 was connected with two other Company Petitions namely, Company Petition Nos. 82 of 1997 and 88 of 1997. All these three petitions were listed and heard together on 5.8.1998. Company Petition No. 82 of 1997 being the leading case was argued first. The affidavit filed in support of the said petition was by the petitioner No. 2, consequently it was in, accordance with Rule 21 of the Companies (Court) Rules. As the facts in the present Company Petition No. 83 of 1997 were similar to those in Company Petition No. 82 of 1997, the same arguments were advanced with regards to this case also, Consequently, at the time of hearing it was neither brought to the notice of the Court nor the Court had noticed that the affidavit filed in support of the present company petition was not that of the petitioner No. 2 but by the pairokar. Besides, these company petitions were argued in person by the Managing Director of the respondent-company, namely, Sri S. K. Misra, who argued the petitions on merits of the dispute and the technical defect in the present petition was not pointed out, consequently also it escaped the notice of the Court. However, before the judgment was delivered, the defect was noticed in the present company petition and the same was ordered to be listed for further hearing alongwith the two connected petitions. I am. therefore, unable to accept the submission made by the learned counsel that the said objection cannot be taken at this stage. In fact. It was the duty of the petitioners to satisfy the Court that the petition was in accordance with the rules and the same could be admitted.
8. It was next urged that under the proviso to Rule 21 of the Companies (Court) Rules, this Court was empowered to grant leave to any other person duly authorised by the petitioner to file the affidavit. On this basis, it was contended that as the petitioners had authorised Satyendra Veer to file the affidavit, this Court could still grant leave and accept the affidavit filed by the said Satyendra Veer in view of the proviso. Before this submission is considered, it would be appropriate to notice the provision of Rule 21 of the Companies (Court) Rules, which has bearing on the question of the maintainability of the present petition. The said rule reads as follows :
"21. Affidavit verifying petition.--Every petition by an affidavit made by the petitioner or by one of the petitioners where there are more than one, and in the case the petition is presented by a body corporate, by a Director, Secretary or other Principal Officer thereof ; such affidavit shall be filed alongwith the petition and shall be in Form No. 3 :
Provided that the Judge or the Registrar may, for sufficient reason, grant leave to any other person duly authorised by the petitioner to make and file the affidavit."
Admittedly, in the present case the affidavit verifying the petition is not by the sole proprietor, R. P. Tayal, on behalf of the proprietorship firm but by a Pairokar, namely, Satyendra Veer. In view of the provisions of Rule 21, the petition is not in accordance with the mandatory requirements thereof. So far as the proviso is concerned, it will be necessary to note that the affidavit filed by Satyendra Veer as pairokar in support of the petition nowhere states that the said person was duly authorised by the petitioners to file the affidavit in support of the petition. All that it says is that, "the deponent was the pairokar in the aforesaid case and well acquainted with the facts deposed to below". It is only in the application dated 24.9.1998 that for the first time it was being stated that the petitioners had duly authorised Satyendra Veer to file the petition. This appears to be an after thought and only with a view to get rid of the difficulty in complying with the provisions of Rule 21 of the Rules. Besides, the Court does not see any sufficient reason to grant leave to the pairokar to file this petition especially fn view of the averments made in the counter-affidavit and the contention of the respondent that the instant petition has been engineered by Satyendra Veer Singh who was the Ex-director of the respondent-company and also had serious litigation with the present Board of Directors. Consequently, I see no reason to accept the prayer made and to grant leave to accept the affidavit already filed.
9. It was next urged that assuming there was defect in the petition for want of the same being supported by an affidavit by any of the petitioners, the petitioners have filed an affidavit of the petitioner No. 2 Shri R. P. Tayal alongwith the application dated 24.9.98 in support of the contents of the petition and the said affidavit may be accepted and taken in support of the petition. It was further contended that this Court has ample power under Rule 21 read with Rules 33 and 9 of the Companies (Court) Rules. 1959 to accept the said affidavit as the defect pointed out was only formal in nature or a mere irregularity. Otherwise also, if the petition is defeated on a technical ground, it will result in injustice to the petitioners. In support of his submission learned counsel for the petitioners has placed reliance upon the following decisions :
(i) Mrs. Roma Devi and others v. R. C. Sood & Co. (P.) Limited. (1990) 67 Company Cases 350 :
(ii) Suvarn Rajaram Bandekar v. Rajaram Bandekar Sirigao Mines (P.) Limited. (1997) 88 Company Cases 673.
in the case of Mrs. Roma Debi (supra), where a defective affidavit, which did not meet the requirements of Rule 21 and Form No. 3 of the said Rules, was filed in support of the winding up petition, a learned single Judge of the Delhi High Court had held that the defect in the verification clause of the affidavit could be remedied by filing another affidavit, since no rights of a third party would seem to be affected. Similarly, in the case of Suuam Rajaram Bandekar (supra) where the affidavit filed in support of the winding up petition was defective and not properly verified, a learned single Judge of the Bombay High Court (Panaji Bench) held that the petition could not be dismissed on technical ground of failure to comply strictly with the Rules or Forms. So far as aforementioned cases are concerned, as already noticed, the same pertain to defect in the verification clause of the affidavit which was not in accordance with Form No. 3 contained in the Companies (Court) Rules. It is on those facts that the Court had held that the defect in the verification clause could be cured by filing another affidavit in support of the petition and the defect was only of a technical nature or a mere irregularity which could be rectified. The facts, however, in the present case at hand are not the same. Here, the defect is not in the verification clause of the affidavit and the question is not of the non-compliance of Form No. 3. Here, the affidavit filed in support of the petition has been filed by a pairokar and the affidavit does not disclose that the said pairokar had been authorised by any of the petitioners to file the affidavit in support of the petition. The requirement of the rule, as already noticed above, is that the petition shall be verified by an affidavit of the petitioner. Even the proviso to Rule 21 on which reliance has been placed states that leave can be granted by the Court for sufficient reason to any other person duly authorised by the petitioner to file the affidavit. It is evident, therefore, that compliance of Rule 21 has not been made in the present case. There can be no dispute that the Rules which have been framed under Section 643 of the Act are statutory Rules which have been framed under statutory powers. It is also apparent that the said rule regarding the verification of affidavit is couched in a mandatory form. It is also noteworthy that the petitioner in this case is proprietary firm carrying on its business at Rhurja whereas the pairokar Satyendra Veer is a resident of Meerut. Admittedly, there was a serious dispute between the pairokar and the Board of Directors of the respondent-company which had resulted in litigation. The allegation of the respondent-company. Is that the present petition has been engineered by the said pairokar in the name of the petitioners. In view of the said allegation, the provision of Rule 21 has to be more strictly applied in the present case.
10. So far as the submission made by the learned counsel for the petitioners that since the petitioner No. 2 was filing an affidavit in support of the petition which could be accepted by the Court is concerned, the said submission cannot be accepted. In the case of Goya Textile (P.) Limited 'v. Star Textile Engineering Works Limited, AIR 1968 Cal 388, the Calcutta High Court had held that to a defect in verification of a winding up petition entirely different considerations apply and the same is not akin to a defective plaint as the allegations in a winding up petition are treated by the Court as evidence without any further proof and a winding- up order relates back to the date of presentation of a winding up petition. Therefore, if there was no proper verification according to law, then there was no petition at all on which the Court could proceed. No leave, therefore, could be granted to rectify the verification. This view of the Calcutta High Court applies with stronger force in the facts of the present case where there was no defect of verification in the verification clause or in the form of verification but the winding up petition was presented by a person who was not the petitioner but a pairokar only and there being nothing to show in the affidavit that he was authorised by the petitioner to file the petition. It is also noteworthy that the said pairokar has also signed the petition and the prayer made in the petition. Now if the affidavit of the petitioner No. 2 which is sought to be filed is accepted, the position which wilt emerge that whereas the petition has been signed on each page and the prayer clause by the pairokcar Satyendra Veer, the affidavit which is now sought to be filed will be by the petitioner No. 2. This anomaly cannot be reconciled. The decision of the Calcutta High Court in the case of Gaya Textile, has been followed by a learned single Judge of the Punjab and Haryana High Court in the case of Mool Chand Wahi v. National Paints, (P.) Limited and another, (1986) 60 Company Cases 198, and the judgment of the learned single Judge in the said case was confirmed by the Division Bench of the same High Court in the case reported in the same volume namely. 1986 (60) Company Cases 402. The Punjab and Haryana High Court while agreeing with the view of the Calcutta High Court has held that an affidavit which supports the company petition is treated as substantive evidence and where there is no affidavit in accordance with law accompanying the petition it is no petition in the eyes of law. The prayer to file a fresh affidavit properly sworn is to be rejected for the reason that if the amendment of the petition for winding up is allowed, it will relay back to the date of presentation and will lead to great confusion and complications. In fact, even the Bombay High Court in the case of Suvaran Rojaram Bandekar (supra) has observed while considering the question of verification that the importance of verification is to test the genuineness and the authenticity of the allegations and also to make the deponent responsible for the allegations. In essence, the verification is required to enable the Court to find out whether it will be safe to act on such affidavit evidence. The same question can be asked in the facts of the present case as to whether it will be safe to act on the affidavit filed by a pairofcar who is admittedly on inimical terms with the respondent-company having been removed from the Board of Directors and who has been litigating against the respondent-company.
11. In the case of Mrs. Roma Debi (supra), the Delhi High Court, though not agreeing with the view expressed by the Calcutta High Court in the case of Gaya Textile, has, however, observed that the Court would not permit rectification of a defect just as a matter of course and would take into account all relevant circumstances including the conduct of the parties. Taking into consideration the relevant facts and circumstances of the present case at hand and also for the reasons stated above, this Court is of the view that the affidavit now being sought to be filed by the petitioner No. 2 in support of the petition cannot be taken to cure the defect in complying with Rule 21 of the Companies (Court) Rules which, as noted above, are mandatory in nature. For the reasons stated above, the Court is of the view that the present winding up petition is not in accordance with Rule 21 of the Companies (Court) Rules and will, therefore, not be maintainable only on this ground.
12. Before parting with the case, it may be necessary to state that the learned counsel for the petitioners has also sought to argue that as the respondent-company was not disputing the debt, this Court could waive the technical objection. The Court refrains from making any observation with regards to the merits of the dispute. However, only this much is necessary to be stated that in the counter-affidavit, the respondent-company has raised a defence and they were not admitting the debt. Consequently also, the submission made by the petitioners could not be accepted.
13. As a result, this company petition is not maintainable in view of the defect in complying with the provisions of Rule 21 of the Companies (Court) Rules and consequently is dismissed.