Appeal No 1082 of 1967
Appeal from the judgment and order dated March 7 1967 of the Delhi High Court in Company Appeal No 3 of 1967
A N Khanna and Harbans Singh for the appellant
P C Khanna and Maharaj Krishan Chawla for the respon dent
The Judgment of the Court was delivered by Shah J
The appellants private limited Company is engaged in the manufacture of electric conduit pipes
The respon dent who is a director of the Company presented a petition in the High Court of Delhi under sections 433 and 439 of the  for an order for compulsory winding up of the Company
The respondent claimed that it was just and equitable within the meaning of section 443f of the  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 430 431 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
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 shareholders by the group of Anandi Lal was to file a petition under sections 397 and 398 of the 
The learned Judge further held that the petition for winding up was instituted with a view to unfairly prejudice the interests of the shareholders 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
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
Rule 96 of The Companies Court Rules 1959 framed by this Court provides  Upon the filing of the petition it shall be posted before the Judge in Chambers for admission of the petition and fixing a date for the hearing thereof and for directions as to the advertisement to be published and the persons if any upon whom copies of the petition are to be served
The Judge may if he thinks fit direct notice to be given to the company before giving directions as to the advertisement of the petition
 Rule 24 which relates to advertisement of petitions provides 1 Where any petition is required to be advertised it shall unless the Judge otherwise orders or these Rules otherwise provide be advertised not less than fourteen days before the date fixed for hearing in one issue of the Official Gazette of the State or the Union Territory concerned and in one issue each of a daily newspaper in the English language and a daily newspaper in the regional language circulating in the State or the Union Territory concerned as may be fixed by the Judge
432 2 Except in the case of a petition to wind up a company the Judge may if he thinks fit dispense with any advertisement required by these Rules
 When a petition is filed before the High Court for winding up of a company under the order of the Court the High Court i may issue notice to the Company to show cause why the petition should not be admitted ii may admit the petition and fix a date for hearing and issue a notice to the Company before giving directions about advertisement of the petition or iii may admit the petition fix the date of hearing of the petition and order that the petition be advertised and direct that the petition be served upon persons specified in the order
A petition for winding up cannot be placed for hearing before the Court unless the petition is advertised that is clear from the terms of r 242
But that is not to say that as soon as the petition is admitted it must be advertised
In answer to a notice to show cause why a petition for winding up be not admitted the Company may show cause and contend that the filing of the petition amounts to an abuse of the process of the Court
If the petition is admitted it is still open to the Company to move the Court that in the interest of justice or to prevent abuse of the process of Court the petition be not advertised
Such an application may be made where the Court has issued notice under the last clause of r 96 and even when there is an unconditional admission of the petition for winding up
The power to entertain such an application of the Company is inherent in the Court and r Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such direction or pass such orders as may necessary for the ends of justice to prevent abuse of the process of the Court iterates that power
In in re A Company1 it was held that if the petition is not presented in good faith and for the legitimate purpose of obtaining a winding up order but for other purpose such as putting pressure on the Company the Court will restrain the advertisement of the petition and stay all further proceedings upon it
We may state that the High Court of Punjab in Lord Krishna Sugar Mills Ltd vs Smt
Abnash Kaur2 was right in observing that the Court in an appropriate case has the power to Suspend advertisement of a petition for winding up pending disposal of an application for revoking the order of admission of the petition though we may hasten to state that we cannot agree HR Khanna J was apparently satisfied that the petition was not a bona fide petition and the respondent in presenting 1 2 ALR 1961 Punjab 505
433 the petition was acting with ulterior motive and his attempt to obtain an order for winding up was unreasonable
Before the High Court directed that the petition for winding up be advertisedthe High Court was bound to consider whether the view expressed by H R Khanna J was right
For reasons already set out in our judgment the High Court erred in holding that a petition for winding up must be advertised even before the application filed by the Company for staying the proceeding for the ends of justice or to prevent abuse of the process of the Court
The view taken by the High Court that the Court must as soon as the petition is admitted advertise the petition is contrary to the plain terms of r 96
Such a view if accepted would make the Court an instrument in possible cases of harassment and even of blackmail for once a petition is ad vertised the business of the Company is bound to suffer serious loss and injury
The appeal is allowed
The High Court has disposed of the appeal on a ground of procedure and has not considered whether the view of H R Khanna J that in the exercise of the inherent power for the ends of justice and for prevention of the abuse of the process of Court the petition should not be advertised is correct
The case is therefore remanded with the direction that the High Court do deal with and dispose of the appeal according to law
There will be no order as to its costs in this Court
The costs in the High Court will be costs in this appeal
YP Appeal allowed


Summary:
In an appeal to this Court the High Court s view that on the admission of a petition under sections 433 and 439 of the for compulsory winding up of a company the Court is bound forthwith to advertise the petition was challenged
Held A petition for winding up cannot be placed for hearing before the Court unless the petition is advertised that is clear from terms of r 242 of the Companies Court Rules 1959
But that is not to say that as soon as the petition is admitted it must be advertised
If the petition is admitted it is still open to the company to move the Court that in the interest of justice or to prevent abuse of the process of Court the petition be not advertised
Such an application may be made where the Court has issued notice under the last clause of r 96 and even when there is an unconditional admission of the petition for winding up
The power to entertain such an application of the company is inherent in the Court and r 9 iterates that power
432C F In re A Company applied
Lord Krishna Sugar Mills Ltd vs Smt
Abnash Kaur AIR 1961 Punj
505 approved