NATIONAL CONDUITS (P) LTD. versus S.S. ARORA

Citation: [1968] 1 S.C.R. 430 · Decided: 01-09-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

NATIONAL CONDUri'S (P) LTD. 
v. 
S. S.ARORA 
September l, 1967 
[J. C. SHAH, S. M. Sum and J. M. SHELAT, 11.) 
Companies Act, (1 of 1956) Ss. 433 and 439-Compu!sol"I/ wiT&d-
ing up-Petition admitted-Advertisement-If Coo.rt bound. 
Companies (Court) Rules, 1959, f"I". 9, 24(2) and 96. 
In an appeal to this Court, the High Court's view that on the 
admission o! a petition under ss. 433 and 439 of tit! Companies Act, 
1956 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 claar from 
terms of r. 24(2) 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 applica-
tion 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 
pow~r to entertain such an 
application of the company is inherent in the Court and r. 9 Iterates 
that power. [432C-F] 
fa re. A. Compan11 (1894) 2 Ch. D. 349 applied. 
Imd Krishna Sugar MiUs Ltd., v. Smt. A!mash Kaur A.J.R.. 
(1961) Punj. 505 approved 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1082 of 
1967. 
Appeal from the judgment and order dated March 7, 1967 
of the Delhi Hig~ Court in Company Appeal No. 3 of 1967. 
A. N. Khanna and Harbans Singh, for the appellant. 
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P. C. Khanna and Maharaj Krishan Chawla. for the respon· 
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dent 
The Judgment of the Court was delivered by 
Shah, J. The appellant-a 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 ss. 433 and 439 of the Companies 
Act. 1956, for an order for compulsory winding up of the Com-
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pany. The respondent claimed that it was "just and equitable" 
within the meaning of s. 443(f) of the Companies Act, 1956, 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 
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been prepared and a letter of resignation purported to be signed 
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NATIONAL CONDUITS (P} LTD. V. ARORA (Shah, J.) 
431 
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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 
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r. 96 of the Companies (Court) Rules, 1959 was issued. 
The appellant Company filed its reply controverting the allega-
tions made by the respondent. The Company also filed an appli-
cation that the winding up petition filed by the respondent be 
taken olf the file and be dismissed and that the petition in the 
meantime be not advertised. H. R. Khanna, J., held that the ap-
propriate remedy of the respondent on the allegations of mis-
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management of the affairs of the Company and oppression of the 
minority shareholders by the group of Anandi Lal was to file a 
petition under ss. 397 and 398 of the Companies Act 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 
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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 chal-
lenges 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 o
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