P L D 1984 Peshawar 133 (PLP)

Date of hearing: 18th May, 1983. JUDGIIRNT moved a I of the Manufa.cturin= Company the matter war admitted on 8‑12‑1982. It was directed that the petition be advertised 14 clear days before the next date of hearing, once in the local official Gazette and once in two newspapers. It was on 23‑12‑1982 that Khyber Electric Lamps Manufacturing Company Limited (hereinafter called the Company) moved C. M. No. 10/82 under section' 151, C. P. C. read with sections 162 and 163 of the Companies Act for modification of the order of this Court dated 8‑12‑1982 and for the stay of the advertisement. The C. M. was contested by the opposite‑party and both the learned counsel. were heard. :.

2. The learned counsel for the Company strenuously contended that there was a bona fide dispute between the parties and the petition for winding‑up was not maintainable in the eye of law. The learned counsel for the respon dent, on the other hand, maintained that the dispute was not a bona fide one. Both the learned counsel addressed full‑fledged arguments on this point but I would refrain from expressing myself on it at this stage as the matter is sub judice and a passing remark on the merits of the case may not be welcome by either of the parties. I would, therefore, confine myself to the sole point at issue, namely, whether the order for advertisement of the petition may or may not be stayed.

3. The learned counsel for the respondent raised an objection with regard to the competency of this C. M. under section 151, C. P. C. and urged that an order for advertisement was appealable under section 202 of the Companies Act. He placed reliance on Western India Theatres Ltd. v. Associated Bombay Cinemas Ltd. (A I R 1959 Bom. 170), and Western India Theatres Ltd., v. Ishwarbhai Somabhai Patel (A I R 1959 Bom. 386), wherein it is held that an order for advertise ment of the petition was appealable under section 202 of the Companies Act. The latter authority was approved of in Shankarlal Aggarwala and others v. Shankarlal Poddar and others (A I R 1965 S C 507). Both these authorities are from the Indian jurisdiction and none from our case law was cited at the Bar.

4. The learned counsel for the Company referred to Messrs Adage Advertising, Lahore v. Messrs Shezan International Ltd., Lahore (1970 S C M R 184), and contended that there being a genuine dispute between the parties the petition may be dismissed or the order of advertisement be suspended. Their Lord ships referred to the following statement of law on the subject as contained in Halsbury's Laws of England (Vol. 6): A winding‑up order will not be made on a debt which is bona fide disputed by the company, but the Court must see that the dispute is based on a substantial ground. If there is a genuine dispute, the petition may be dismissed or stayed and an injunction may be granted restraining the advertisement of the petition. The learned counsel for the Company urged that in view of the above the advertisement should be stayed. I would like to refer to the observation made in M. Y. Siddiqi v. Bavaqar Co. Ltd. (P L D 1968 Kar. 231), in which the subject has been sufficiently dealt with. It would be profitable to reproduce para. 16 of the judgment which reads as under:‑ . Reverting to the question as to whether section 151, C. P: C., is applicable to company proceedings by virtue of section 141, of that Act. I should note that section 151, is a procedural provision: See Padam Sen v. State of U. P. A I R 1961 S C

218. The Court can, no doubt, in a special sense, review an order under it. See Kawdu v. Berar Ginning Co. A 1 R 1929 Nag. 185 and Muhammad Hussain Khan v. Rasool Bux A. I R 1948 Sind

124. But this does not make the provision substan tive because such an order is not intended to correct a decision on merits, but merely to rectify what the Court did not or could not intend to do bad it been apprised of the correct situation. This is the sense in which the relevant observations in Syed Tuffozzool Hossein Khan v. Rughoonath Pershad (1871) 14 M 1 A 40 and Gurdeo Singh v. Chandrikah Singh and Chandrikah Singh v. Rashbehary Singh I L R 36 Cal. 193 should, in my humble opinion, be understood. It is clear that the provisions of section 151, C. P. C. can be invoked to rectify an error committed by the Court inadvertently. In the instant case that petition was admitted on 8‑12‑1982 without notice to the company and according to A I R 1959 Born. 170; is notice to the company was essential as "it is a very serious matter for any company to have the petition advertised without the company being heard in its defence." It was remarked that "it is precisely because of this that our practice insists upon a notice being issued to the company to enable the company to put before the Court its contention why the petition should not be proceeded with, if that is the contention the respondent wishes to put forward." It is evident that the practice of the Bombay High Court has been that a notice was issued to the company before the petition for winding up was admitted or rejected. No case‑law was made available on the practice prevailing in our country. So far as this High Court is concerned I could not lay my bands on any authority nor the learned counsel for the parties could produce any precedent of the other High Courts with regard to the said practice. 1 am, however, of the view that this practice is governed by salutary principle and should be followed by this Court in order to safeguard the interest of the companies against whom petitions for winding‑up are moved on fake or genuine grounds. if the petition is found frivolous or fails to make out a proper case for winding‑up of the company it may be rejected but if some substance is found in it a notice should be given to the company concerned. The latter may urged that for any justifiable reason the petition should not be proceeded with. Since notice was not issued to the company before the petition was admitted, in my opinion, it was an error on my part to direct advertise ment and, as such, this error can be rectified by an application under sec tion 161, C. P. C.

4. That the advertisement could be manifest from the statement of law reproduced from Halsbury's Laws of England which has been relied upon by the Supreme Court. It is observed in Bhagwmi v. New Bank of India (A I R 1950 East Pb. 111) that "Company legislation in India has followed the legislation in England. That being so, Courts in India are bound to follow the principles laid down in English Courts with regard to the same matter." It follows that advertisement can be stayed by the Court and since serious question have been agitated in the instant case it would be in the interest of justice that the, advertisement of the petition be stayed. In the result, the C. M. is allowed and the advertisement of the petition stayed. . M. Y. H. Application allowed.