{"id":1997,"date":"2003-04-25T00:00:00","date_gmt":"2003-04-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/satellite-television-asian-vs-kunvar-ajay-desiner-saree-p-ltd-on-25-april-2003"},"modified":"2015-08-14T00:04:29","modified_gmt":"2015-08-13T18:34:29","slug":"satellite-television-asian-vs-kunvar-ajay-desiner-saree-p-ltd-on-25-april-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/satellite-television-asian-vs-kunvar-ajay-desiner-saree-p-ltd-on-25-april-2003","title":{"rendered":"Satellite Television Asian … vs Kunvar Ajay Desiner Saree (P) Ltd. on 25 April, 2003"},"content":{"rendered":"
Gujarat High Court<\/div>\n
Satellite Television Asian … vs Kunvar Ajay Desiner Saree (P) Ltd. on 25 April, 2003<\/div>\n
Equivalent citations: 2004 118 CompCas 609 Guj, 2004 50 SCL 575 Guj<\/div>\n
Author: R R Tripathi<\/div>\n
Bench: R R Tripathi<\/div>\n<\/p>\n
<\/pre>\n
JUDGMENT<\/p>\n
 Ravi R. Tripathi, J.<\/p>\n
1. Company Petition No. 210 of 2002 is filed on  20.11.2002 praying that Kunvar Ajay Designer Saree (P)  Ltd. having its registered office at B-1, Thakkar  Palace, Ghod Dod Road, Surat 395002, be wound up under  the orders and directions of this Court. It is also  prayed that the Official Liquidator or some other fit and  proper person, as this Honourable Court may deem fit and  proper be appointed as Liquidator of the company, with  all powers under the provisions of the Companies Act,  1956. By way of interim relief it was prayed that,  pending hearing and final disposal of the petition, the  Official Liquidator or some other fit and proper person  as this Honourable Court may deem fit and proper may be  appointed as Provisional Official Liquidator of the  company with all powers under the Companies Act, 1956.  The Court issued notice on 25.11.2002 returnable on  17.12.2002. Before that date the petitioner caused an  advertisement in newspapers, Sandesh (Surat and Ahmedabad  editions) and Gujarat Samachar (Surat and Ahmedabad  editions) on 14.12.2002. Having learnt about the said  advertisement the respondent company filed Company  Application No. 407 2002 for the prayer,<\/p>\n
 “To dismiss the above mentioned winding up  petition of the petitioners therein, Satellite  Television Asian Region ltd., for the abuse of  the process of the Court by publishing a  premature advertisement of winding up in various  newspapers without the direction thereof by the  Company Court.”\n<\/p>\n
It is also prayed in the Company Application that,<\/p>\n
 “To award exemplary costs for the said abuse of  the process of this Hon’ble Court.”\n<\/p>\n
2. Mr. Soparkar, the learned counsel appearing with  the learned advocate fro the respondent company in the  Company Petition, which is the applicant in the Company  Application submitted that as he has raised a preliminary  objection about the abuse of process of Court, he has  first ‘right of audience’. The Senior Advocate was heard  at length. He invited attention of the Court to various  provisions of the Company law including various rules of  the Companies (Court) Rules, 1959 (hereinafter referred  to as “the Rules”). He submitted that Rule 24 provides  for advertisement of the petition. Rule 24 is reproduced  herein below:\n<\/p>\n
“R.24. Advertisement of petition — (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.\n<\/p>\n
(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.”\n<\/p>\n
3. Rule 96 provides for admission of petition and  directions as to advertisement. The rule reads as under:\n<\/p>\n
 “R.96 Admission of petition and directions as  to advertisement — 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 advertisements 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.”\n<\/p>\n
4. The learned counsel submitted that Rule 96  contemplates three things to happen, namely, (i) on  filing of the petition posting of the same before the  Judge for admission, once it is admitted, (ii) fixing a  date for hearing. When that is done, (iii) issuing  directions as to advertisement to be published.\n<\/p>\n
5. The learned counsel submitted that the subsequent  stages do not automatically follow the earlier one,  meaning thereby, merely because a petition is filed it is  not necessary that the same will be admitted. After the  petition is filed, it is placed before the learned Judge  for admission hearing. It is on hearing the learned  advocate appearing for the petitioner, Court decides as  to whether the petition deserves any cognisance or not.  Once it is admitted, its hearing is fixed. The Court  then decides about its advertisement and issues necessary  directions as warranted in the facts of the case. He  further submitted that in fact that is why the  Legislature has placed all these stages in a sequence and  the learned Judge has to apply his mind at every stage.  Even after admitting a petition and fixing its date of  hearing, the learned Judge has to consider as to whether  the respondent company be given a notice before giving  directions fro the advertisement. The learned counsel  submitted that if that was not so, the latter part of the  rule, namely,<\/p>\n
 “.. .. 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.”\n<\/p>\n
would not have been so worded. He further submitted that  it is not a necessary corollary of ‘admission’ of a  petition that advertisement must follow. In a given  case, in given facts and circumstances, the Judge may  think that instead of causing publication of an  advertisement, the company be given a notice before  advertisement. The learned counsel submitted that it is  in view of the aforesaid legal position that the action  of the petitioning creditor of publishing the  advertisement without there being any direction for the  same is required to be considered as a serious abuse of  process of the Court and the petition is required to be  thrown out only on this short ground.\n<\/p>\n
6. The learned counsel submitted that once the Court  issues a direction of causing publication of  advertisement, then Rule 24 comes into play and an  advertisement is to be caused as provided therein. He  submitted that advertising the winding up petition and  pre-publication of any sort has inherited commercial  harm. That is why the same is viewed as so serious as to  prove fatal to the petition. He further submitted that  the action of the petitioning creditors of causing an  advertisement which they have described as informative  and cautionary in nature in their reply filed to Company  Application No. 407 of 2002 is to be considered as a  serious abuse of process of the court as it has harmed  the repute of the company and must necessarily result  into summary dismissal of the petition with exemplary  costs. The learned counsel submitted that even in  England where an advertisement of winding up petition  presented at the office of the Registrar of the Companies  Court is a procedural requirement and the petitioner or  his solicitor has to file a certificate of compliance  that the rules relating to service and advertisement of  the petition as provided, a period of not less than seven  clear days after the petition is served on the company  with a purpose that before notice is advertised the  company has opportunity to prevent the advertisement of  the petition which may immensely cause injustice to the  company, particularly if it is a going concern. The  learned counsel submitted that if that is the position in  English law wherein advertisement of every petition is to  be caused without there being a specific order from the  company court, in India when the position of law is that  an advertisement can be caused only after a specific  direction is issued by the Court, action of the  petitioning creditors requires to be viewed very  seriously. The learned counsel relied upon a decision of  this Court in the matter of American Express Bank Ltd.  Vs. Core Health Care Ltd., reported in (1999) 96 Company  Cases Page 841, wherein he relied upon the following  discussion :\n<\/p>\n
“.. .. ..\n<\/p>\n
In this connection it would be apposite  to allude to the position obtaining in England as  per Palmer’s Company Law. A winding up petition  to the High Court is presented at the office of  the Registrar of the Companies court, who  appoints the time and place at which the petition  is to be heard. After a petition has been  presented, the petitioner or his solicitor must,  on a day to be appointed by the Registrar, not  less than five days before the day appointed for  the hearing of the petition, file a certificate  of compliance with the rules relating to service  and advertisement of the petition. The law has  been stated to be that unless the court otherwise  directs, every petition is to be advertised in  the Gazette not less than seven clear days  (excluding Saturdays, Sundays and public  holidays) after it has been served on the company  and not less than seven clear days before the day  fixed for the hearing.”\n<\/p>\n
The difference in procedure has to be  noticed that the petition is required to be  served on the company and advertisement by public  notice is to wait until seven days excluding  holidays after service on the company. The  purpose for retaining this hiatus is that before  notice is advertised the company has an  opportunity to prevent the advertisement of the  petition which may immensely cause injustice to  the company particularly if it is a going  concern. The following passage may be  illuminating:\n<\/p>\n
 “For the purposes of any stay of   advertisement which is granted by the   Court, pending the resolution of any   challenge to the pursuit of the   proceedings,  the concept of   ‘advertisement’ is a wide one extending   to any informal communication to third   parties. Thus, the petitioner’s act of   sending a faxed copy of the winding up   petition to the company’s bank on the   same day as the petition was served on   the company was considered by the court   in Bill Hennessey Associates Ltd., In re   (1992) BCC 386 to justify dismissal of   the petition. The faxing of the copy was   held to have been an advertisement in   violation of rule 11(2) which requires a   minimum of seven business days to elapse   from the date of service of the petition,   and the ulterior purpose of this targeted   publicity was judged to have been the   putting of pressure on the company to pay   the sum demanded. This rigorous approach   is necessitated by the commercial harm   which can be inflicted upon a company   through the improper use against it of   the presentation of a winding up   petition.”\n<\/p>\n
These observations clearly warn against the  inherent commercial harm that lay in  advertising the winding up petition and  pre-publication of any sort had been viewed as  so serious as to prove fatal to the petition.\n<\/p>\n
It appears that there being no separate  provisions like admission before making the order  of advertisement, the provision for a clear  period for abstinence from advertisement has been  stipulated in the rules itself giving the  respondent company a chance to approach the court  and obtain the postponement of advertisement  resulting in a public notice of the pending  petitions, and to save it from an inherent  commercial harm which such public notice may  cause. In other words, the hearing of the  petition at that stage about the advisability of  winding up is envisaged before public notice is  advertised or ordered to be advertised, spelling  serious adverse consequence in a commercial  sense.\n<\/p>\n
.. .. .. .. ”\n<\/p>\n
7. The learned counsel submitted that in a given  case even sending of fax copy of a Company Petition is  held to be an advertisement by the courts while in the  present case a fulfledged advertisement is issued giving  details of winding up petition filed before this Court.  He submitted that the advertisement issued by the  petitioning creditors is nothing short of an  advertisement of a winding up petition inasmuch as it  gives the number of the Company Petition which is filed  before this Court. He submitted that therefore, the  petitioning creditor could not be heard of saying that  the said advertisement was caused by the petitioning  creditors only with a view to make the members of public  aware of their claim against the company so that future  multiple proceedings can be avoided.\n<\/p>\n
8. The learned counsel for the company relied upon  the judgement of Chancery Division (Companies Court)  reported in (1996) 1 BCLC (Butterworths Company Law  Cases) 501. The learned counsel submitted that in this  case even telephone calls made by the petitioning party  to the local office of the Inland Revenue saying that she  intended to have the company wound up, was considered to  be an advertisement. On that ground the party was non  suited. The learned counsel invited attention of the  Court to the following para of the judgement.\n<\/p>\n
“Advertisement in the case of contributories’  petitions.\n<\/p>\n
There was no dispute between the parties that the  communication of the intention to present the  petition or the fact of its existence to BCS, the  bank and the Inland Revenue constituted  ‘advertisement’. .. ..”\n<\/p>\n
The Court while referring to various decisions referred  to the decision in the case Re Signland Ltd. (1982) 2  All ER 609, wherein it is observed that,<\/p>\n
“… …   … …\n<\/p>\n
In the present case, I understand not  only was there a failure to allow the company  seven clear days after service of the petition  before advertisement took place, but the  advertisement in fact took place two days before  the petition was served. Furthermore the company  has appeared to take the point. While I am quite  content to accept the assurance of counsel  appearing on behalf of the petitioner to the  effect that this breach of the rules was not  deliberate, it seems to me to have been a  flagrant and serious breach and one of a type  which the court must take every step to  discourage.    .. ..\n<\/p>\n
To advertise before service of  the petition appears to me not only an  infringement of the rules but a serious abuse of  the whole process of advertisement.”\n<\/p>\n
Justice Laddie has noted that the aforesaid was the view  taken by Slade, J. though he accepted that in so doing  the petitioner had not intended deliberately to breach  any of the rules. Justice Laddie finally observed that,<\/p>\n
 “It seems to me that to engage in premature  advertisement is at least as likely to be an  abuse of process in relation to contributories’  petitions as it is in the case of creditors’  petitions. To engage in advertisement in advance  of the court having had an opportunity to  determine, in accordance with r.4.23(1)(c),  whether there should be any advertisement at all  appears to me to be prima facie an abuse. …  …”\n<\/p>\n
9. The learned counsel submitted that there is a  definite purpose behind not permitting a premature  advertisement of a winding up petition. He submitted  that while discussing the object behind the rules for  advertisement the learned Judge Slade in the case of Re  Signland Ltd (supra) stated as under:\n<\/p>\n
 “As I understand it, the principal reasons why  the rules have directed that advertisement shall  take place not less than seven clear days after  service on the company are (1) to give a company  served with a winding up petition the opportunity  to discharge the debit in question, if it is  undisputed, before advertisement takes place,  with all the necessarily potentially damaging  consequences to the company, and (2) to enable  the company, if it wishes to dispute the debt, to  apply to the court to restrain advertisement. As  a matter of indulgence, however, it has been my  practice during this term to accept premature  advertisement where it has taken place less than  seven clear days after service on the company and  the company has not appeared to take the point.”\n<\/p>\n
The counsel submitted that while in India Rule 96 takes  care of the aforesaid object. He emphatically submitted  that in India advertisement is not a necessary corollary  to filing of the petition as it is the case in England.  He submitted that in India advertisement has to be caused  only after there is a specific order of the Court to that  effect. He submitted that without going into  desirability of the position of law in England and in  India he restricted his submissions that in the present  case the petitioning creditors have caused an  advertisement and have thus, resorted to abuse of process  of the court and therefore, holding that the petitioning  creditors are guilty of grave abuse of process of court,  the petition should be dismissed on this short ground.\n<\/p>\n
10. The learned counsel appearing with Mr. Soni  submitted that, (i) the present application is not  maintainable, (ii) the correct, true, admitted facts  stated in the advertisement do not constitute, an abuse  of process of court. In the alternative the  advertisement of correct, true and admitted facts will  not amount to an advertisement under the company law,  (iii) discretion should be exercised in favour of the  petitioning creditors taking into consideration the facts  of the case, (iv) the respondent company has chosen not  to file any reply on merits and has only thought fit to  take a technical plea of abuse of process of court by the  petitioning creditor. He submitted that in view of  various provisions of the company law and rules on the  subject, the application should not be entertained and  the same should be rejected and the company petition be  entertained. The learned advocate invited attention of  the Court to the provisions of section 443(1)(a). He  submitted that under sec.443(1)(a) if at all the petition  is to be dismissed the same can be done only on hearing.  Hearing in this subsection means fulfledged hearing.  Fulfledged hearing can take place only when the  respondent company has put forward its case on merits and  the court has appreciated the same. He submitted that  without doing so dismissing the petition and non suiting  the petitioning creditors will result into injustice to  the petitioning creditors.\n<\/p>\n
10.1 The submissions of the learned counsel cannot be  accepted for the simple reason that even if the term,  ‘hearing’ is to mean ‘fulfledged hearing’ it cannot be  taken to mean that it is only after the company places  its case on merits before the court. It may happen that  the Company Petition is filed before the Court and the  respondent company comes forward and says that here is  the registration certificate and that the company is not  registered within the territorial jurisdiction of the  court taking up the matter. If the submissions of the  learned counsel are accepted, the Court will have to  direct such company to place its case on merits before  the court. After that only the court can direct the  petitioning creditor to go to the concerned court. Even  otherwise taking into consideration the objection raised  by the respondent company as a preliminary objection, if  the court is of the opinion that there is substance in  the preliminary objection, normally if the court feels  that the petitioning creditor is guilty of an act of  abuse of process of court, this Court is of the opinion  that the respondent company is not required to be called  upon to place its case on merits. In that view of the  matter the submissions are rejected. The learned counsel  placed reliance on the decision of the Bombay High Court  in the matter of S. Kantilal and Co. Pvt. Ltd. Vs.  Rajaram Bandekar (Sirigao) Mines Pvt. Ltd. reported in  (1993) 76 Company Cases page 800. The counsel placed  reliance on the following Head Note:\n<\/p>\n
 “When a company fails to comply with a notice  under sec.434(1)(a) for payment of a debt, the  Court has no discretion but to make a winding up  order. The sub clause does not merely lay down a  presumption of inability to pay, but the word  “shall” is of great significance and the creditor  is entitled to a winding up order ex debito  justitiae. In such a matter a creditor is not  required to establish that the company is  commercially insolvent, and the fact that the  creditor has an alternative means of filing a  suit to recover the debt is irrelevant.”\n<\/p>\n
11. The learned counsel also relied upon the  following observations made by the learned Judge in the  said decision,<\/p>\n
“.. .. According to him, the company is  now making various attempts to wriggle out of the  situation by all sorts of ways and for that  matter whatever has been urged today is some new  case de hors whatever has been pleaded or for  that matter what is pleaded is not sustainable on  facts. .. .. ..\n<\/p>\n
xx xx xx  .. ..\n<\/p>\n
According to him, the sole  question to ask is whether the claim made by the  petitioners is bona fide disputed by the company  and if it is not the winding up must follow.  ..   ..”\n<\/p>\n
12. The learned counsel submitted that in the present  case also similar question is required to be asked by the  Court as to whether the respondent company has bona fide  disputed claim of the petitioning creditors and if the  answer is ‘no’, the order of winding up is to be passed.  The learned counsel emphatically submitted that in the  present case answer can only be ‘no’, as the respondent  company has not filed any reply on merits as a necessary  consequence of order of winding up must follow.\n<\/p>\n
13. Having perused the judgement, this Court is of  the opinion that the said judgement has no application to  the facts of the present case. The Court at present is  required to consider firstly the question as to whether  the petitioning creditors are guilty of the act of abuse  of process of court. If answer is ‘yes’, the court is  not required to go into any other question because when a  party is guilty of the act of abuse of process of court,  it does not deserve any order under discretionary  jurisdiction of the court. There are number of  judgements of this Court as well as that of the  Honourable the Apex Court to the effect that the order of  winding up is not a matter of right. More so in case of  a going concern.  The court has to consider the  desirability of passing of winding up order.  The  petitioning creditors can only invoke jurisdiction of the  court but it is for the court to decide as to whether in  a given fact and circumstances of the case an order of  winding up is required to be passed or not. In that view  of the matter the submissions of the learned counsel  having found no substance are rejected.\n<\/p>\n
14. The learned counsel also urged that the  advertisement published was bona fide and was only with a  view to see that the members of public at large are not  defrauded by the respondent company. This Court is not  in a position to agree with the submission of the learned  counsel inasmuch as Rule 96 wherein it is clearly  provided that an advertisement can be caused only after  the same is ordered by the Court. An advertisement  remains the same irrespective of the purpose for which it  is issued. Therefore, it remains to be an act of  advertisement amounting to an act of abuse of process of  the court. Therefore, this submission is also not  accepted. The learned counsel also submitted that the  advertisement which was caused cannot be said to be an  advertisement under the Company law and therefore, it  should not be held to have constituted an act of abuse of  process of court. The learned counsel Mr. Soparkar  invited attention of the court to the advertisement  wherein the number of the Company Petition is mentioned  and it is also stated that the petition is filed in the  High Court of Gujarat seeking orders of winding up. That  being so, only because of the format is different or at  variance, it cannot be said that it is not an act of  advertisement. Therefore, this contention is also  rejected.\n<\/p>\n
15. The learned counsel did try to distinguish the  aforesaid three decisions relied upon by the learned  advocate for the company, but is not successful.\n<\/p>\n
16. The learned counsel also submitted that the Court  should take into consideration the events subsequent to  filing of the affidavit in reply in the Company  Application as stated in para 3 therein in view of the  discussion hereinabove the same is of no consequence.\n<\/p>\n
17. In the result, Company Petition No. 210 of 2002 is  dismissed. Company Application No. 407 of 2002 is allowed  with cost of Rs. 7500\/-, (Rupees seven thousand and five  hundred only).<\/p>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court Satellite Television Asian … vs Kunvar Ajay Desiner Saree (P) Ltd. on 25 April, 2003 Equivalent citations: 2004 118 CompCas 609 Guj, 2004 50 SCL 575 Guj Author: R R Tripathi Bench: R R Tripathi JUDGMENT Ravi R. Tripathi, J. 1. Company Petition No. 210 of 2002 is filed on 20.11.2002 praying […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-1997","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nSatellite Television Asian ... vs Kunvar Ajay Desiner Saree (P) Ltd. on 25 April, 2003 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/satellite-television-asian-vs-kunvar-ajay-desiner-saree-p-ltd-on-25-april-2003\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Satellite Television Asian ... vs Kunvar Ajay Desiner Saree (P) Ltd. on 25 April, 2003 - 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