WPC NO.8889/2009 Page 1 *IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) No. 8889/2009 HARDICON LTD. ..... Petitioner. Through Mr.Arvind K. Nigam, Sr. Advocate with Mr.Dinkar Singh, advocate. versus REGISTRAR OF COMPANIES ..... Respondent Through Ms.Maneesha Dhir, Ms.Preeti Dalal, advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA O R D E R % 13.05.2009 1. Learned counsel for the respondent-Registrar of Companies appears on advance notice and has been heard. 2. As limited controversy is involved in the present cases, with the consent of the parties, the present Writ Petitions are heard and are being disposed of with this common Order. 3. Petitioners herein have challenged the letter/notice dated 23rd April, 2009 which as per the petitioners is an Order under Section 234(7) of the Companies Act, 1956 (hereinafter referred to as the Act, for short). By the said document, the respondent-Registrar of Companies has called for various information from the petitioners- WPC NO.8889/2009 Page 2 Companies as have been set out therein. 4. Sections 234 (1) and (7) of the Act read as under:- “234. Power of Registrar to call for information or explanation.- (1) Where, on perusing any document which a company is required to submit to him under this Act, the Registrar is of opinion that any information or explanation is necessary with respect to any matter to which such document purports to relate, he may, by a written order call on the company submitting the document to furnish in writing such information or explanation, within such time as he may specify in the order. (2) x x x x x (3) x x x x x (4) x x x x x (5) x x x x x (6) x x x x x (7) If it is represented to the Registrar on materials placed before him by any contributory or creditor or any other person interested that the business of a company is being carried on in fraud of its creditors or of unlawful purpose, he may, after giving the company an opportunity of being heard by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order, within such time as he may specify therein; and the provisions of sub-sections (2), (3), (3A) and (4) and (6) of this section shall apply to such order. If upon inquiry the Registrar is satisfied that any representation on which he took action under this sub-section was frivolous or vexatious, he shall disclose the identity of his information to the company.” 5. Document dated 23rd April, 2009 refers to both Sections 234(1) WPC NO.8889/2009 Page 3 and (7) of the Act. The petitioners, allege that both the Sections 234(1) and (7) of the Act are not applicable and Registrar of Companies does not have jurisdiction because requisite pre- conditions are not satisfied. It is also alleged that there should be material before the Registrar of Companies to form a tentative or prima facie opinion of fraud on its creditors or otherwise of fraudulent or unlawful purpose and the said information must come from the persons stipulated in Sub-section (7). 6. It is stated by the petitioner that before an Order under Section 234(7) of the Act is passed the petitioners-Companies should have been given opportunity of being heard. 7. The present Writ Petitions will be treated as representations by the petitioners to the Registrar of Companies who will after giving hearing to the petitioners-Companies pass a preliminary Order in terms of Section 234(7) of the Act before the petitioners are called upon to furnish information. While passing the said Order he shall also deal with the contention that Section 234(1) of the Act is not applicable. The petitioners-companies will appear before the Registrar of Companies on 19th May, 2009 at 2.00 p.m. If required, subsequent dates for hearing will be fixed by the Registrar of WPC NO.8889/2009 Page 4 Companies on the said date. This Order is being passed, so as to not delay the proceedings because of alleged technical flaws and non- compliance of right to hearing. The Supreme Court in GKN Driveshafts (India) Ltd. v. ITO, reported in (2003) 1 SCC 72, at page 73 observed: “5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years.” 8. Following this judgment in Jagdish Prasad Gupta versus Joint Commissioner of Income Tax reported in 205 (122) DLT 178, a writ petition challenging existence of jurisdictional pre- conditions for issue of reassessment notice under the Income Tax Act, 1961 was disposed of directing that objections raised will be considered by the competent authority by passing a speaking Order before dealing with the merits of the case. The principle and ratio of the said judgment will equally apply to the present case. Alternative remedy is not a bar to maintainability of a writ petition but a matter WPC NO.8889/2009 Page 5 of discretion. The present case is not a fit case in which discretion at this stage should be exercised to entertain the present Writ Petition because of alleged technical flaws and non-compliance of right to hearing. This order ensures hearing and passing of a speaking order, which takes care of substantial grievance raised by the petitioner. Other aspects raised shall be crystalised and clarified once the speaking order is passed. 9. At this stage, learned counsel for the petitioners-Companies states that they want to file additional documents before the Registrar of Companies. Learned counsel is granted liberty to do so. 10. It is clarified that this Court has not expressed any opinion on the merits of the issues raised by the petitioners or the Registrar of Companies. Petitioners will be at liberty to ventilate their grievance in case they are aggrieved by any Order passed by the Registrar of Companies. Writ Petitions are accordingly disposed of. DASTI under signature of the Court Master. SANJIV KHANNA, J. MAY 13 , 2009. P