Case: Extrusion Processes Private Limited Vs. Jivabhai Marghabhai Patel

( 2 ) THE respondent in this appeal had filed a winding up petition against the Extrusion Process private Ltd. , the appellant company. It is a private limited company and a substantial portion of the shares is held by the managing director and his relations and friends. In the petition for winding up serious allegations were made to show that it was proper and fit that the company should be wound up. It came first before Mr. Justice K. K. Desai for preliminary orders under rule 96 of the Companies (Court) Rules framed under the Companies Act. Desai J. dismissed the petition in limine. Against his order an appeal, being Appeal No. 32 of 1963, was filed and that appeal was heard by us on November 5, 1963. After hearing counsel on both the sides we made the following order :"in the result, we allow the appeal, admit the petition, give a notice to the company and postpone the giving of the advertisement until after it is heard. The trial court will hear the matter hereafter. . . "( 3 ) BEFORE the matter came on board, affidavits were filed on behalf of the company to show cause. Affidavits in rejoinder were filed by the petitioning shareholder and also the other shareholders including a director who was according to his allegation excluded from management. Mr. Justice Kantawala felt that we had heard the company and that we had already admitted the petition. He, therefore, directed advertisements. It is against this order that the present appeal is brought.

Court's reasoning:
( 10 ) THE subsequent observations of the court have to be read in the light of this principle. It is possible, therefore, that in response to such a notice the company may be able to show that the application does not lie or that without going into the merits the application ought to be dismissed and this is what is pointed out by the learned Chief Justice in the next paragraph of the judgment. He says (page 1242) : "in answer to the notice all that the respondent is entitled to urge is that for any justifiable reason the petition should not be proceed with and further steps should not be taken. "( 11 ) MR. Parpias contention that before admission of the petition the company ought to be heard cannot possibly be supported. Out reader, therefore, rightly admits the petition. We had only postponed the advertisement.