High Court of Judicature at Allahabad
Case Law Search
Anil Arora & Others v. Arora Aluminium & Allied Works Pvt. Ltd. & Another - COMPANY PETITION No. 23 of 2003  RD-AH 4343 (14 March 2007)
Court No. 30.
Application No. 229627 of 2006
Company Petition No. 23 of 2003
Sanjay Arora and others
Arora Aluminium and others.
Hon. Sunil Ambwani, J.
Heard Sri Navin Sinha, Senior Advocate, assisted by Sri Pankaj Bhatia, in support of Misc. Application No. 229627 of 2006 filed by Sri Sanjay Arora and others dated 1.11.2006 for recalling the winding up order dated 24.10.2005, and further to stay the order during the pendency of the application.
The Company Petition was directed to be advertised on 30.8.2005 and thereafter the matter was heard and on 24.10.2005 a winding up order was passed. Both these orders namely the order advertising the petition under Rule 24 of the Company (Court) Rules, 1959 and the winding up order are subject matter of Special Appeal which are pending. There are no interim orders in these Special Appeals.
An incomplete 'Statement of Affairs' was filed on 18.6.2006 after some delay. A revised 'Statement of Affairs' was been filed on 25.11.2006. When the Official Liquidator made an attempt to take the possession of the assets it was found that a portion of constructed portion of the property of the company namely, five rooms, one newly constructed hall and one computer room were being used for running a primary school. The first floor portion is occupied by the respondent Sri Bishwambhar Lal Arora and other family members, and that 3 rooms of the ground floor are occupied by the petitioner Sri Sanjay Arora.
The winding up order was passed on the ground (a) that the company was not doing any business for the last 18 years
and (b) that the company had initially proposed a business of running petrol pump and then decided to run educational institutions. An extra-ordinary General Meeting was held on 22.6.2005 in which a special resolution was passed amending the object clause of Memorandum of Association to run the educational institution. The meeting, however, was attended only by Sri Bishwambhar Lal Arora, one of the three Directors. His sons who were allottees of the share increased in 2001. It was observed in the order that the notice of the meeting and the resolution dated 26.2.2005 was not given to the petitioner representing 119 shares out of 450 , and that the resolution was not passed by the majority of the share holders. Section 18 of the Company Act, 1956 required the resolution amending Memorandum of Association to be certified by the Registrar of the Companies. No such amending Memorandum of Association was filed on record.
Sri Navin Sinha, Senior Advocate, submits that the resolution passed in the Extra-ordinary General Meeting amending Memorandum of Association was sent to the Registrar of Companies on 24.3.2005. The Registrar of the Companies has certified the amendment. Consequently, the Memorandum of Association has been amended and thus the ground on which the winding up order was passed in no longer available. He submits that the business could not be done due to family disputes and that now when it found that the school is being run in the company premises after amending the objects clause of Memorandum of Association by Extra-ordinary General Meeting dated 26.2.2005 registered on 24.3.2005, the Court may recall the winding up order.
The order may be recalled if it is passed exparte, or that the Court exceeded in its jurisdiction in making the order. An
order may also be recalled when fraud is played upon the Court certain facts which effect the jurisdiction of the Court had escaped the attention of the Court. In the present case, the winding up order was passed on the facts that the company has not carried out any business for the last eighteen years prior to the date of winding up petition, and that the business carried out after the filing of the petition was not authorized as the object clause of the Memorandum of Association was not amended in accordance with law. The fact that business was closed for eighteen years is not denied.
The Court is not satisfied with the bonafides of the respondents who were fully aware of the Extra-ordinary General Meeting dated 26.2.2005 and could have easily obtained information regarding the registration of the resolution by the Registrar of Companies on 24.3.2005. There is no satisfactory explanation as to why these facts and documents were not brought on record raising doubts over their authenticity. Further I find that when the Special Appeal has been filed against the order, it will not be appropriate for the Court to recall the winding up. In the circumstances I am not entertaining any other submission to be raised by the learned counsel for the respondent company in the matter.
Sri Navin Sinha, Senior Advocate, then pressed the prayer in the application for making a clarification in the order dated 13.10.2006 passed in the liquidation proceedings in which observations have been made on 21.3.2006, that the Ex Directors were granted opportunity to close the school or toshift it some other place. He draws the attention on order dated 20.1.2006 in which it was observed as follows:
"The Official Liquidator has received information from Shri Sanjay Arora, the petitioner that Ex Directors have started constructions of
building inside the factory premises and has sent a video C.D. The clips thereof has been annexed to this report. In these circumstances, it is directed that the Ex. Directors shall not change the nature of the property nor raise any constructions until they are so permitted by this Court or in Special Appeal.
The District Magistrate is also made responsible to carry out the orders. It is made clear that this Court is not restraining the Ex Directors to continue to run the school, in case it is running. They, however, shall provide full and complete information to the Official Liquidator in this regard."
Since the Court had permitted Ex Directors to continue the running of the school as observed in the order dated 13.10.2006 the orders to shift the school require modification. Learned counsel is correct in his submissions. The order dated 13.10.2006 is accordingly modified and that a direction to close the school or to shift it to some other place in liquidation proceedings is recalled. The application is accordingly disposed of.
Order on application Nos. 212269 of 2006, 210075 of 2006, 210079 of 2006 and 210084 of 2006 in liquidation proceedings filed by Sri Sanjay Arora through Sri R.P. Agarwal, Advocate.
By Company Application No. 212269 of 2006, the petitioning creditor- a contributory, has brought to the notice of the Court that the 'Statement of Affairs' was filed much after three months which is maximum period provided for filing Statement of Affairs from the date of winding up order. The petitioner does not have a right to take prosecute the Ex Directors. The Official Liquidator will take notice of this application and move an appropriate application for
prosecution. This application is accordingly disposed of.
By Company Application No. 210075 of 2006, the petitioning-creditor has brought to the notice of the Court a Trust have been created for running the "Surya Convent School" , and that the property of the company was vested in the trust in contravention with Section 531A and 536 of the Companies Act, 1956. Sri Pankaj Bhatia appearing for the Ex Directors running institution will file objection/reply of this application.
The Company Application No. 210079 of 2006 draws the attention of the Court that the Official Liquidator has not taken any steps to prosecute Ex Directors under Section 554 and 538(1) of the Companies Act, 1956. The Official Liquidator will consider the matter and move q proper application. This application is accordingly disposed of.
By Company Application No. 210084 of 2006 filed under Section 457(1) of the Companies Act, 1956, the petitioning creditor has brought to the notice of the Court that the Ex Directors are still enjoying the property of the company by using them for their occupation and for running the school. The Official Liquidator will take notice of the fact an move an appropriate application. There is no interim order in the appeal. The Ex Directors have to hand over the possession and that if the school is running in the premises, the Official Liquidator shall make arrangement by appointing an Administrator to run the school. The students, however, will be allowed to continue to study in the school for the current academic session. This application is also accordingly disposed of.
Double Click on any word for its dictionary meaning or to get reference material on it.