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In Re: Gaya Textiles Private Ltd. Etc. and Star Textile Engineering Works Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Petn. No. 4 of 1966
Judge
Reported inAIR1968Cal388,70CWN852
ActsCompanies (Court) Rules, 1959 - Rules 18 and 21; ;Calcutta High Court Original Side Rules - Rule 5; ;Code of Civil Procedure (CPC) , 1908 - Section 139 - Order 19, Rule 3
AppellantIn Re: Gaya Textiles Private Ltd. Etc. and Star Textile Engineering Works Ltd.
DispositionPetition dismissed
Excerpt:
- .....verification of petition? under the companies (court) rules, 1959, (hereinafter referred to as the company rules) and also under the rules of this court. rule 21 of the company rules requires that every petition shall be verified by an affidavit made by the petitioner or in the case of a petition by a body corporate, by a director, secretary or other principal officer. such an affidavit has to be made in form no. 3 which provides that the affidavit shall be made on solemn affirmation. therefore, an affidavit verifying a petition must be made on a solemn affirmation as prescribed by form no. 3. under rule 18(a) of the company rules the affidavit verifying the petition is to be signed by the deponent and sworn to in the manner prescribed by the code or by rules and practice of the court......
Judgment:
ORDER

B.C. Mitra, J.

1. This is an application for winding up of Gaya Textile Private Limited (hereinafter referred to as the Company). The petitioner's case is that sometime in April 1964 the Company entered into a contract in writing with the petitioner under which the Company agreed to buy and take delivery from the petitioner 2 ring frames. The Company agreed to pay 25 per cent of the price in cash with the order and balance of the price against delivery of Railway Receipt or any other documents through Bank. It is alleged that it was also agreed that one ring frame materials with short bottom apron arrangements and ona ring frame materials with long bottom apron arrangements would be supplied by the petitioner to the Company. Under tha terms of the agreement after satisfactory working of the said 2 ring frames, the Company was to confirm a provisional order for -38 other ring frames.

2. Pursuant to the contract the Company paid the sum of Rs. 8,730 being 25 per cent of the price of the said two frames. The petitioner sent the two ring frames to the Company on or about September 30, 1964 and sent the documents and demand drafts for two sums of Rs. 14,772.24 and Rs. 16,312.86 aggregating to a sum of Rupees 31,085.10 being the balance of price after giving credit to the Company for the said sum of Rs. 8,730

3. It is alleged that the goods were duly delivered to the Company, who wrong-fully failed and neglected to pay the said bills or any portion thereof in spite of demands. It is also alleged that by a letter dated January 3, 1965, the Company inter alia admitted the erection of the said two ring frames supplied by the petitioners at its mills in pursuance of the contract between the parties. The petitioner thereafter sent several letters and telegrams demanding payment of the balance of the price of the ring frames sold and delivered to the Company. On or about June 17, 1965, ona Rohit Mehta and one A. K. Ghosh of Textile Engineering and Trading Agency, who was the sole selling agent of the petitioner, met two of the Directors of the Company at its registered office, when the latter promised to pay a sum of Rs. 32,361.18. This was followed by the statutory demand notice for the amount claimed and thereafter this petition was presented and usual directions obtained for advertisements

4. Learned Counsel for the Company contended that no order could be made on the petition as the affidavit verifying the petition was not affirmed according to law. He argued that the affidavit verifying the petition was not affirmed at all but a declaration was made before a notary public and therefore there was no affidavit verifying the petition and for that reason no order can be made on the present petition.

5. It appears that the petition was not verified by an affidavit at all, but by a declaration. Secondly this declaration appears to have been made before a notary public at Bombay on December 24, 1965 I shall now refer to the relevant rules for verification of petition? under the Companies (Court) Rules, 1959, (hereinafter referred to as the Company Rules) and also under the rules of this Court. Rule 21 of the Company Rules requires that every petition shall be verified by an affidavit made by the petitioner or in the case of a petition by a body corporate, by a director, secretary or other principal officer. Such an affidavit has to be made in Form No. 3 which provides that the affidavit shall be made on solemn affirmation. Therefore, an affidavit verifying a petition must be made on a solemn affirmation as prescribed by Form No. 3. Under Rule 18(a) of the Company Rules the affidavit verifying the petition is to be signed by the deponent and sworn to in the manner prescribed by the Code or by Rules and practice of the Court. Under R. 5 of the Chapter XV of the Original Side Rules of this Court affidavit for use in any of the jurisdiction of the Court may be taken in Calcutta or within five miles thereof before a Commissioner, generally or specially authorised by the Chief Justice for the purpose. In this case, this rule would not apply as the affidavit was made at Bombay. As the affidavit was purported to be made outside the five miles limit, it has to be made according to Section 139 of the Code of Civil Procedure, which provides that an oath to a deponent may be administered by a Court or a Magistrate or any officer or person whom a High Court may appoint in this behalf, or any officer appointed by any other Court which the provincial Government has generally or specially empowered in this behalf. The affidavit, therefore, has to be affirmed according to the terms of Section 139 of the Code. A notary public is not a person competent to administer the oath to depenend who is affirming affidavit and, therefore, the affidavit purported to be made before a notary public is not an affidavit according to the Company Rules and the Code of Civil Procedure. Besides, a mere declaration before a notary public is something entirely different from a solemn affirmation on which alone an affidavit can be made. For these reasons, the declaration at the bottom of the petition does not comply with rules requiring verification of the petition and it must, therefore, be held that there is no verification of the winding op-petition

6. Learned Counsel for the petitioner, however, contended that the defect in the verification of the petition was a mere irregularity which should be overlooked, and leave should be granted to the petitioner to re-verify the petition, according to the rules. In support of this contention, learned counsel for the petitioner firstly relied upon a decision of the Allahabad High Court reported in 0043/1924 : AIR1925All79 in which it was held that a plaint was not void merely because it did not contain the verification clause as required by the Code and that the omission to verify was a mere irregularity which could be cured even at a later stage and such a plaint therefore, should be deemed to be presented on the date of actual presentatior and not on the date of its verification. It was also held that merely on the ground of such defect the plaint could not be treated as altogether invalid This case, to my mind, has no application as I am not concerned with a defective verification of plaint, but with the verification of a winding up petition to which entirely different considerations apply. Besides, it cannot be overlooked that allegations in the plaint can: be acted upon only upon proof of the same by evidence or upon admission by the defendant. The allegations in a petition, on the other hand, are to be treated by the Court as evidence without any further proof.

7. The next case relied upon by the learned counsel for the petitioner is a decision of the Supreme Court reported in : [1955]2SCR428 . In that case, allegations were made in a petition, the paragraphs of which were not enumerated with regard to matters which were based on information, and it was held that this could not be considered as a defect. Secondly no date was mentioned in the verification and it was held that the absence of a date in the verification could be cured by a supplementary affidavit indicating the date of the original verification. This decision, to my mind, does not assist the petitioner in this case as the affidavit was property affirmed, but was defective for want of a date and also for want of enumeration of the paragraphs which were based on information

8. The next case relied upon by the learned counsel for the petitioner is a decision of this Court reported in (1905) 9 Cal WN 608 in which the verification of a plaint was defective and it was held that the plaint should not have been rejected, but leave should have been granted to amend it. As I stated earlier, statements in the plaint are not to be acted upon by the Court except upon proof of the same by evidence or upon admission by the defendant. A plaint, therefore, stands on an entirely different footing from a petition so far as verification is concerned

9. The next case relied upon by the learned counsel for the petitioner was also a decision of this Court reported in : AIR1927Cal376 . In that case again the verification was that of a plaint and not of a winding up petition and it was held that the defect in the verification of a plaint was a mere irregularitv and could be cured bv amendment and upon such amendment the plaint should be treated as having been presented on the date on which it was filed and not on the date when the verification was amended This decision also is of no assistance to the petitioner as I am not concerned with the defective verification of a plaint, but of a winding up petition. Reliance was also placed on the decision reported in : [1958]33ITR591(Cal)

10. Relying upon the decisions mentioned above, it was contended that it was well settled that mere defect or irregularity in the verification of pleading would not entitle the other side to claim that the petition or plaint was void and that in such oases of defective verification the Court should grant leave to the petitioner or the plaintiff to cure the defect by re-verification according to law.

11. Had this not been a petition for winding up a Company, I would have already accepted the contentions of the learned counsel for the petitioner. But it cannot be overlooked that the present petition is a petition for winding up of a Company and a winding up order relates back to the date of the presentation of the winding up petition. If on the date when the petition was presented there was no proper verification according to law, then there was no petition at all on which the Court could issue directions for advertisement. Secondly, if leave is granted to cure the verification today, then a proper petition for winding up of the Company would come into existence as from today, and in that event the question of dealings by the Company with its assets between the date of presentation of the winding up petition and the date when the Court grants the Company leave to re-verify the petition would also create a good deal of confusion. Since a winding up order relates back to the date of presentation of the winding up petition, all dealings by the Company with its assets would be subject to the rules relating to fraudulent preference and transactions are liable to be set aside on the ground that the Company had unlawfully dealt with its assets in order to deprive its creditors. But if leave is granted to the petitioner to cure the defect in the verification by allowing re-verification of the petition according to the rules today, it would be open to the Company to contend, if a winding up order is made, that the rules relating to fraudulent preference or unlawful dealing with the assets from the date of presentation of the winding up petition would not apply, as a petition properly verified according to law came into existence only on the date on which leave was granted to the petitioner to re-verify the petition

12. There is, however, another matter to be considered in connection with the defective verification of a winding up petition. In the event of dealings by the Company with its assets between the date of presentation of the winding up petition and the date when a valid petition comes into existence after re-verification of the same, third parties may acquire rights in the Company's assets, which, it will be difficult to assail or set aside. For these reasons, verification of a winding up petition must strictly comply with the rules for verification of the same. The petition with which I am concerned in this application being a petition for winding up of a Company, the principles discussed in the several decisions cited by the learned counsel for the petitioner are not attracted and do not assist the petitioner. Counsel for the petitioner admitted, and I think rightly, that the verification was defective and the Court couldnot make an order for winding up on thispetition, and it was for that reason that heasked for leave to re-verify the petition.That being the position, in my opinion, re-verification of a winding up petition cannotbe allowed, particularly because in this casethe verification appears to have been donebefore a notary public, who under the rulesis not an officer before whom a petitioncould be verified under the rules of thisCourt as also under the Companies (Court)Rules, 1959. For the reasons mentionedabove, the Court cannot proceed to make anorder on the present petition nor can theCourt give leave to the petitioner to re-verify the petition in conformity with therules. In the circumstances, this application is dismissed with costs. Certified forcounsel.


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