Case: Hitechi Jewellery Industries Limited Vs. Choksi Arvind Jewellers

it was competent to Mr. Justice Shelat at this stage to have dismissed the petition and not to have acted under Rule 751. In the Hirjee Mills case, 57 Bom.L.R. 378: ((S) AIR 1955 Bom 355 ) the petitioner was entitled to have an order of winding up. In this case the company was entitled to have an order of dismissal. In that case the petitioner was aggrieved because he did not get the order of winding up. In this case the company is aggrieved because the learned Judge did not dismiss the petition but proceeded to give directions under Rule 751.5. Mr. Gupte contends that there is a distinction between an order of dismissal and an order directing advertisements under Rule 751. He concedes, as indeed he must, that if the petition had been dismissed, that order undoubtedly would have been subject to appeal. But there, according to him, the learned Judge would have decided something. But as the matter stands today, the learned Judge has not decided anything. Mr. Gupte would have been right if all that the learned Judge could do at this stage was to order advertisements. If he could neither dismiss the petition nor pass any other effective order, then undoubtedly it could be said that the learned Judge has not decided anything. But surely in this case the learned Judge has decided something and his decision is that the petition should not be dismissed, that the petition discloses a prima facie case, and that the case should be tried. Let us take an extreme case. If the petition was on the face of it not maintainable, if it was a creditor s petition and the petitioner was clearly not a creditor, and yet the learned Judge and given directions under Rule 751 and not dismissed the petition, is it suggested that the company could not come in appeal and draw the attention of the Court of appeal to the fact that the petition was not clearly maintainable and should be dismissed. The position to-day is not to extreme as the illustration we have just given, but even so the case of the appellant is that on the face of the petition no case for winding up has been made out and the learned Judge should have dismissed the petition and not passed an order which is fraught with serious consequences to the company. In our opinion, looking to the wide language used in Sec.202 and looking to the interpretation we have placed upon that section in 57 Bom LR 378: ((S) AIR 1955 Bom 355 ), the order made by the learned Judge is appealable.6. Now, we wish to make this position clear. It is one thing to say that an order is appealable; it is another thing to say that the Court of appeal would ordinarily interfere with the discretionary order passed by the learned Judge under R. 751. It would seem to us that except in a very gross case where the petition was not clearly maintainable, the Court of appeal would be loath to interfere with the discretion exercised by the learned Judge, because all that the learned Judge says at this stage is that he has considered the matter and it appears to him that there is a prima facie case and it requires further inquiry and investigation. In that sense it may be said that the learned Judge has not made up his mind. He has taken a prima facie view of the petition and the materials before him and he has felt that the materials before him would not justify him summarily dismissing the petition but that more materials, more inquiry and more investigations was necessary before he ultimately made up his mind whether the petition should be allowed or should be dismissed. Therefore as we were just saying it would require a very strong case indeed to induce the Court of appeal to interfere with the discretion exercised by the Company Judge in ordering advertisements under R.751.10. The issue before the Division Bench in the Western India Theatres was whether an order directing advertisement of company petition is appealable. The arguments was that even though the order of advertisement of company petition could affect the company and to which the company can be legitimately aggrieved, but for making such order appealable, the order must be a decision and the order advertising the company petition is not a decision. Not accepting this contention, the Division Bench, through Chagla, C.J., held that when the Company Judge order advertisement, it has decided that the petition should not be dismissed, and that the petition discloses prima facie case and that the case should be tried. When the Division Bench of this Court observed that while admitting the company petition the Company Judge has decided something that the petition should not be dismissed, the expression decision has been used in its widest sense but that does not mean in our view that such decision determines the rights of the parties. As already noted by us above, the company petition if admitted may be a decision in the widest sense but surely it is not determination of the rights of the parties. By admitting winding up petition what follows is that the matter is worth consideration on further material and that it is not liable to be dismissed summarily, We accordingly, over-rule the first contention of the learned Counsel for the Appellant.11. Having considered the available material, we are satisfied that, prima facie, it cannot be said that the company has been able to raise bonafide dispute. It is not in dispute that the seven cheques aggregating sum of Rs.31,36,200/- were issued by the Company. It is also not in dispute that the said cheques were dishonoured. It is also a matter of record that Company Petition No. 540 of 2000 has been admitted against the Company. We are informed that few other winding up petitions against the company have also been admitted.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]8. The question before the Apex Court was whether the Court while hearing the writ petition is under an obligation to pass a speakingorder recording in brief at least the reasons which weighed with the court in determining the salient questions raised by the parties to the action while dismissing or rejecting the petition. The observation made by the Apex Court in paragraph 14 of the report with reference to the question afore noted, we are afraid, cannot be made applicable as it is to a case such as this where a Company Judge admits the Company Petition. Needless to say a writ Court or for that matter any other Court while disposing of the writ petition or proceeding, at the final stage or threshold, needs to state reasons, briefly or elaborately, in support of the order, so that aggrieved party knows the basis on which the Court determined the matter. The determination of any question of facts or law has to be supported by reasons. The order admitting the company petition does not determine the facts and/or law. In the widest connotation of the term decision , an order admitting the company petition may be deemed to be decision to the extent that on prima facie consideration of the matter, the Company Judge forms the opinion that the matter requires consideration and is not liable to be summarily dismissed but that does not mean that by admission of Company Petition, the rights of the parties on facts or law are determined. An order admitting the company petition for winding up is not an order determining the rights of the parties, Prima facie, or finally.The issue before the Division Bench in the Western India Theatres was whether an order directing advertisement of company petition is appealable. The arguments was that even though the order of advertisement of company petition could affect the company and to which the company can be legitimately aggrieved, but for making such order appealable, the order must be a decision and the order advertising the company petition is not a decision. Not accepting this contention, the Division Bench, through Chagla, C.J., held that when the Company Judge order advertisement, it has decided that the petition should not be dismissed, and that the petition discloses prima facie case and that the case should be tried. When the Division Bench of this Court observed that while admitting the company petition the Company Judge has decided something that the petition should not be dismissed, the expression decision has been used in its widest sense but that does not mean in our view that such decision determines the rights of the parties. As already noted by us above, the company petition if admitted may be a decision in the widest sense but surely it is not determination of the rights of the parties. By admitting winding up petition what follows is that the matter is worth consideration on further material and that it is not liable to be dismissed summarily, We accordingly,the first contention of the learned Counsel for the Appellant.11. Having considered the available material, we are satisfied that, prima facie, it cannot be said that the company has been able to raise bonafide dispute. It is not in dispute that the seven cheques aggregating sum of Rs.31,36,200/were issued by the Company. It is also not in dispute that the said cheques were dishonoured. It is also a matter of record that Company Petition No. 540 of 2000 has been admitted against the Company. We are informed that few other winding up petitions against the company have also been admitted. In the backdrop of these facts, prima facie, it may be inferred that the Company is unable to pay its debts.