The Delhi High Court held that it lacks jurisdiction to retain a winding up petition where no notice was issued to the respondent under Rule 26 of the Companies (Court) Rules, 1959, directing its transfer to the NCLT.
The petition was directed to be transferred to the National Company Law Tribunal (NCLT).
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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ASHOK KUMAR & SONS (HUF) ..... Petitioner Through Mr.Sandeep P.Agarwal, Sr.Adv. with Mr.Rajesh Pathak, Adv.
Versus
BRAHMA CITY PRIVATE LTD. ..... Respondent Through Mr.Devesh Bhati and Mr.Satyam Dwivedi, Advs.
CORAM: HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.
“Learned counsel for the respondent relies upon the Notification dated 7.12.2016 being GSR I 19(E) issued by the Ministry of Corporate Affairs to contend that in view of the fact that though notice of this petition has not been directed to be issued, this court does not have the jurisdiction to adjudicate this petition and the matter has to be referred to NCLT.
Learned senior counsel appearing for the petitioner has relied upon judgment of the Bombay High Court in [2017 (3) MilL]
Co.Pet. 319/2015 Page 1 of 10
384} West Hills Realty Private Ltd., vs. Neelkamal Realtors Tower Ltd. to contend that mere service of petition on the respondent as envisaged under Rule 26 of The Company (Court) Rules, 1959 is sufficient for this court to continue to adjudicate the present petition.”
Provided also that where a petition relating to winding up of a company is not transferred to the Tribunal under this rule and remains in the High Court and where there is another petition under clause (e) of section 433 of the Act for winding up against the same company pending as on 15th December, 2016, such other petition shall not be transferred to the Tribunal, even if the petition has not been served on the respondent."].” 5. Rules 26 and 27 of the Companies (Court) Rules, 1959
read as follows:
Co.Pet. 319/2015 Page 2 of 10
“26. Service of petition - Every petition shall be served on the respondent, if any, named in the petition and on such other persons as the Act or these rules may require or as the Judge or the Registrar may direct. Unless otherwise ordered, a copy of the petition shall be served along with the notice of the petition.
"Provided always that such notice when by the Act or under these Rules is required to be served on the Central Government, the same shall, unless otherwise ordered by the Court, be served not less than 28 clear days before the date of hearing".
6. Form-6 reads as follows:
“Form No. 6
(In Winding-up matters)
IN THE HIGH COURT OF JUDICATURE AT ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. ....... OF .......
In the matter of Companies Act, 1956;
And
In the matter ___________________
(Full title as per proceeding)
To, Name and address of the Respondent Company.
Co.Pet. 319/2015 Page 3 of 10
TAKE NOTICE THAT Petition under Section ........... of the Companies Act, 1956 for winding-up of the abovenamed Company presented by ............. the Petitioner on --/--/200 is admitted pursuant to Order dated --/--/200 and the same is now fixed for hearing before the Company Judge on --/--/200 at 11:00 O' Clock in the forenoon or soon thereafter.
If you desire to support or to oppose the said Petition at the hearing, you should give notice thereof in writing to the Advocates for the Petitioners mentioned below so as to reach the Advocate for the Petitioner/s not later than five days before the date fixed for hearing of the said Petition and appear at the hearing in person or by an Advocate/s, who is entitled to practice in this Hon'ble Court. If you wish to oppose the said Petition, the grounds of opposition or a copy of your Affidavit, should be furnished with your notice to the Advocate/s for the Petitioner/s mentioned below.
Copies of the Petition and the Affidavit-in Support thereof are enclosed.
Dated this ...... day of ..... 200..”
“8. Coming now to Rules 26 to 29, even a cursory reading of these rules makes it clear that the rules treat the two subjects, namely, service of petition and notice of petition, differently. Service of petition implies service on the respondent or other person, as the case may be, of a copy of the petition, whereas notice of the petition connotes notice of the hearing of the petition before the court. Rule 26 provides for service of petition, whilst Rule 27 provides for notice of petition. Rule 28 provides for the manner in which service is to be effected on the company, whereas Rule 29 casts the responsibility for all services required to be
Co.Pet. 319/2015 Page 4 of 10
effected by the Rules or by orders of court or registrar on the petitioner.
Co.Pet. 319/2015 Page 5 of 10
respondent is the requirement of Rule 26 itself. One does not have to go to the other provisions of the Act or the Rules or the orders of the Judge or the Registrar for such requirement. There is one more circumstance provided in Rule 26 where service of the petition needs to be made, i.e. when a notice of the petition is to be served. The last sentence of Rule 26 provides that when a notice of the petition is to be served on the respondent or any other person then, unless otherwise ordered, a copy of the petition shall also be served. Rule 26 has no reference to the order of admission of the petition. Rules 27 and 28, on the other hand, make it clear that they together form the requirement of service of the notice of the petition on the respondent company after the petition is admitted and provide for the time and manner of such service. Rule 29, on the other hand, fixes the responsibility of any service under the Rules or directions of the court or the Registrar on the petitioner. The scheme of these four rules, thus, suggests that whereas service of the petition is mandatory on the respondent and, if the Act or the Rules provide or the Judge or the Registrar directs, on such other person/s, whereas notice of the petition on the respondent is obligatory only in the event of admission of the petition. So also, other persons are entitled to notice of the petition only if the Act or the Rules require or the Judge or the Registrar directs. In case of any service, whether service of the petition or of the notice of the petition, it is the petitioner who must execute it.”
Co.Pet. 319/2015 Page 6 of 10
“24. As rightly pointed out by the learned Additional Solicitor General, in the case of West Hills Realty Pvt. Ltd. (supra), the Court had not laid down the definite principle that Rule 26 also encompasses cases where pre-admission notice has been issued.
“96. Admission of petition and directions as to advertisement -
Co.Pet. 319/2015 Page 7 of 10
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.”
“16. We are of the view that Rules 26 and 27 clearly refer to a preadmission scenario as is clear from a plain reading of Rules 26 and 27, which make it clear that the notice contained in Form No. 6 has to be served in not less than 14 days before the date of hearing. Hence, the expression “was admitted” in Form No. 6 only means that notice has been issued in the winding up petition which is then “fixed for hearing before the Company Judge” on a certain day. Thus, the Madras High Court view is plainly incorrect whereas the Bombay High Court view is correct in law.
17. The resultant position in law is that, as a first step, when the Code was enacted, only winding up petitions, where no notice under Rule 26 of the Companies (Court) Rules was served, were
Co.Pet. 319/2015 Page 8 of 10
to be transferred to the NCLT and treated as petitions under the Code……”
Co.Pet. 319/2015 Page 9 of 10
“It is made clear that in view of the peculiar circumstances of this case, no notice to show cause as to why the respondentcompany be not wound up is issued to the respondent at this stage.”
None of the subsequent orders have issued notice to the respondent. The respondent has also not been asked to file counter affidavit to the main petition to oppose its admission. Hence, no notice under Rule 26 of the Companies(Court) Rules, 1959 was served on the respondent. The Supreme Court in Forech India Ltd. vs. Edelweiss Assets Reconstruction Co.Ltd. (supra) has held that where no notice under Rule 26 of the Companies (Court) Rules is issued the petition has to be transferred to NCLT. Hence, this court would have no jurisdiction to retain the present matter in view section 434 read with Rule 5 of the Companies(Transfer of Pending Proceedings) Rules, 2016. It is directed accordingly. The Registry may transfer the present petition to NCLT.
JAYANT NATH, J.
FEBRUARY 05, 2019/v
Co.Pet. 319/2015 Page 10 of 10
3 issues framed by the court
Whether the High Court has jurisdiction to adjudicate a winding up petition where no notice was issued to the respondent under Rule 26 of the Companies (Court) Rules, 1959.
Whether the petition should be transferred to the National Company Law Tribunal (NCLT) under Section 434 read with Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016.
Whether the respondent's appearance on the first date exempt the court from issuing a statutory notice or transfer the matter.
Colour shows how this judgement treated each authority
West Hills Realty Private Ltd. vs. Neelkamal Realtors Tower Ltd.Followed¶13
[2017 (3) MilL] 384 West Hills Realty Private Ltd., vs. Neelkamal Realtors Tower Ltd.
Grundfos Pumps India Pvt. Ltd. v. IIC LIMITEDReferred¶16
Co.Pet. No.123/2016, titled as „ Grundfos Pumps India Pvt. Ltd. v. IIC LIMITED’
Mr. Sanjay Goel vs. EL Forge Ltd.Distinguished¶47
Mr.Sanjay Goel vs. EL Forge Ltd. being CP Nos.14/2015, 239/2015, 242/2015, 94/2016 and 364/2016 dated 11.1.2017
Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd.Followed¶56
Forech India Ltd. v. Edelweiss Assets Reconstruction Co.Ltd., Civil Appeal 818/2018, by judgment dated 22.01.2019
3 provisions across 3 enactments
ASHOK KUMAR & SONS (HUF)
BRAHMA CITY PRIVATE LTD.
JAYANT NATH
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
