Bombay High Court
Shivkant Chaudhary vs M/S. Geeta Marine Services Pvt. ... on 28 November, 2017
Bench: K.R. Sriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPLICATION NO.735 OF 2015
IN
COMPANY PETITION NO.628 OF 2008
Mr.Shivkant Chaudhary )....Applicant
V/s.
Mr.Dinesh Chandra Maingi )....Respondent
----
Mr.Saeed Akhtar a/w Ms.Pradnya Meshram and Ms.Pinny Pathak for
the applicant.
Mr.A.M.Vernekar i/by M/s.Joseph and Associates for respondent and
for applicant in CA 532/2014 and CA 533/2014.
[Mr.Mahendhar Aithe-Company Prosecutor for Official Liquidator
present].
----
CORAM : K.R.SHRIRAM,J
DATE : 28.11.2017
P.C.:-
1 This application is taken out on behalf of ex-director of
respondent-company Geeta Marine Services Pvt. Ltd. to set aside/re-
call the winding up order dated 19.3.2009, after condoning delay of 6
years and 4 months.
2 The facts in brief are as under :-
On 3.6.2008 Company Petition (L) No.471 of 2008 was
filed and the same was registered on 27.6.2008 as Company Petition
No.628 of 2008. On 31.7.2008 this court had issued notice before
admission in Company Petition No.628 of 2008. On 16.10.2008
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Advocate Lalit Jain has filed his Vakalatnama on behalf of respondent
company - Geeta Marine Services Pvt. Ltd. and filed reply. On
23.10.2008 this court had passed an order in Company Petition
No.628 of 2008 setting conditions for admission of company petition.
On 19.3.2009 this court had passed winding up order in Company
Petition No.628 of 2008.
On 4.8.2009 first meeting took place in the office of
Official Liquidator and Minutes of meeting was signed. On 15.7.2010
this court passed order in Official Liquidator's Report dated 22.6.2010
for compliance else adopt contempt proceedings.
On 20.7.2010 individual declarations have been filed by all
four ex-directors of Geeta Marine Services Pvt. Ltd. (In liquidation)
before the Official Liquidator regarding assets of the company in reply
to the Official Liquidator's letter dated 16.7.2010.
On 16.9.2010 this court had ordered in OL Report dated
31.8.2010 permitting Contempt proceedings as per clause-(a) of the
Report.
On 31.3.2011 Memorandum of Understanding was signed
by Geeta Marine Services Pvt. Ltd through Mr.Shivkant V.Chaudhary
as director with a Consortium to salvage sunken vessel Ventura and
received Rs.1 crore from consortium for operation. This was without
disclosing that company was ordered to be wound up on 19.3.2009.
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On 15.7.2011 Letter of ROC to Official Liquidator advising
that obtaining modification of charge by Geeta Marine Services Pvt.
Ltd. after winding up order was passed is fit case for initiating
misfeasance proceedings against the Ex-directors of Geeta Marine
Services Pvt. Ltd. (in liquidation).
On 5.3.2012 letter of Yash Associates Advocates for Ex-
directors with balance-sheets of Geeta Marine Services Pvt. Ltd. was
submitted to Official Liquidator.
On 12.3.2012 this court had passed order in Official
Liquidator's Report No.99 of 2012 permitting to engage lawyer for
contempt proceedings against the Ex-director of the company.
On 22.3.2012 letter was sent from Advocates Yash
Associates to Official Liquidator submitting balance-sheets of Geeta
marine Services Pvt. Ltd. in compliance of Order dated 12.3.2012.
On 9.4.2012 affidavit was filed by S.V.Chaudhary through
SBG & Associates, Advocates for Ex-director in compliance of order
dated 12.3.2012.
Appeal (L) no.680 of 2012 filed on 15.9.2012 by Geeta
Marine Services was disposed on 22.11.2012.
On 29.11.2012 Official Liquidator had filed Report No.442
of 2012/VI.
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On 31.1.2013 this court has passed an order in Official
Liquidator's Report No.442 of 2012/VI permitting Official Liquidator
to file complaint against Ex-directors of company (in liquidation)
under Section 454(5) of Companies Act.
On 6.2.2013 Complaint No.3 of 2013 under Section 454(5)
of the Companies Act was filed by the Official Liquidator.
On 15.3.2013 Company Application (L) No.139 of 2013
was numbered as Company Application No.532 of 2014 and Company
Application (L) No.139 of 2013 was numbered as Company
Application No.533 of 2014. On 9.5.2013 this court ordered in both
the applications to comply with office objections and also issued fresh
summons to accused no.2 Sudhir S.Chaudhary in Complaint No.3 of
2013. On 20.6.2013 both the applications and complaint made
returnable on 1.8.2013 by this court.
On 6.7.2013 Mr.Shivkant V.Chaudhary Ex-director of
Company (in liquidation) has filed an affidavit in reply to Official
Liquidator's report No.442 of 2012/VI dated 29.11.2012 opposing the
report. On 8.8.2013 this court has passed in both the applications and
complaint issuing process under complaint 3/2013 and issued
summons under Section 542(1) and 543(1) of Companies Act.
On 3.10.2013 Mr.S.V.Chaudhary has engaged an Advocate
in both the applications and matter was stood over to 24.10.2013.
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On 24.10.2013 this court had passed an order in Company
Application (L) No.139 of 2013 and Company Application (L) NO.140
of 2013 to serve notice on accused/respondent no.3 at his new
address.
On 3.12.2013 this Court had passed an order to serve the
directors the points of claim attached to order and matter was stood
over to 7.1.2014.
On 5.12.2013 this court had passed an order disposing of
Official Liquidator's Report No.442 of 2012/VI with liberty to file
afresh.
On 13.2.2014 this court issued notice to all the 4 accused
to personally remain present in court on 6.3.2014 in both the
Company applications and in complaint.
On 10.4.2014 this court ordered for compliance by
7.5.2014 as per the undertaking by Advocate Saeed Akhtar and also
waived service on all accused.
On 6.5.2014 an affidavit was filed by S.V.Chaudhary
stating compliance of order dated 10.4.2014 and for the first time
filed Form 57 giving statement of affairs of the company. Copy of first
affidavit in reply was served upon counsel for petitioner in court by
Advocate Saeed Akhtar.
On 7.5.2014 letter was given from Advocate Saeed Akhtar
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to Official Liquidator for serving affidavit of Ex-director.
On 6.6.2014 2nd affidavit in reply filed by S.V.Chaudhary
forwarded by Advocate Saeed Akhtar vide his letter to counsel for
petitioner.
On 20.6.2014 this court passed an order in Complaint No.3
of 2013 directing Official Liquidator to submit report on compliance
of previous orders.
On 9.7.2014 Official Liquidator reporting non-compliance
received by advocate of respondents in court on 1.9.2014.
On 29.9.2014 Mr.Shivkant V.Chaudhary submitted a letter
to Official Liquidator for submission of files of the company.
On 27.11.2014 affidavit was filed by S.V.Chaudhary in
reply to Official Liquidator's Report dated 9.7.2014 through Advocate
Saeed Akhtar.
On 12.12.2014 meeting took place in the office of Official
Liquidator and minutes was recorded.
On 26.12.2014 letter was sent by Advocate Saeed Akhtar
to Official Liquidator regarding Company Petition No.628 of 2008
seeking extension of time to file affidavit.
On 14.1.2015 letter was sent from S.V.Chaudhary
Ex-director to the Official Liquidator regarding Company Petition
No.628 of 2008 seeking extension of time for compliance.
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On 27.1.2015 letter was sent by the Official Liquidator to
Mr.Shivkant V.Chaudhary refusing extension of time for compliance.
On 12.2.2015 letter was sent to Official Liquidator by
Advocate Saeed Akhtar submitting revised Form 57 towards statement
of affairs of company.
On 18.2.2015 letter was sent by Advocate Saeed Akhtar to
the Official Liquidator for submission of affidavit of Ex.Director of
company (in liquidation) explaining observations made in meeting
dated 12.12.2014.
On 19.3.2015 letter was sent by the Official Liquidator to
Shivkant V.Chaudhary asking to hand over assets as per balance-
sheet.
On 25.5.2015 the present Company Application (L) No.402
of 2015 was filed and registered as Company Application No.735 of
2015 on 24.7.2015.
3 It is the case of the applicant and the relief sought is the
order passed on 19.3.2009 winding up the company should be re-
called because notice as required under Rule-28 of Companies (Court)
Rules 1959 was not served upon the company, serving such a notice
was mandatory and failure to serve such notice was fatal to the
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petition.
4 Counsel for the applicant relied upon a judgment of a
single Judge of this court (R.M.Lodha,J as he then was) in 1Skol
Breweries Ltd. & Anr. vs. Sanman Distributors Pvt. Ltd.
5 According to Shri Akhtar counsel for original respondent,
this court has held that non compliance of the mandatory provision in
issuance and service of the notice under Rule 28 by itself is sufficient
for setting aside the ex-parte winding up order. It was also submitted
that the Court had held that omission or inaction on the part of the
Company Registrar in due compliance cannot operate prejudicially to
the interest of the company.
6 Mr.Vernekar counsel appearing for original petitioner
submitted that though he respectfully agrees with the judgment in
Skol Breweries (supra) on the mandatory nature of service under Rule
28, Mr.Vernekar also submitted that the court in Skol Breweries
(supra) also observed that notice under Rule 28 can be waived and
relying upon a judgment of the Apex Court in 2M/s.Galada Power
and Telecommunication Ltd. V/s. United India Insurance Co. Ltd.
& Anr., submitted that such a statutory right may also be waived by
1. AIR 1999 Bom. 249
2. 2016 SCC online 839
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conduct of a party. In the further affidavit in reply, original petitioner
has also taken specific plea of estoppel and waiver.
7 It will be necessary to keep in mind the facts that prevailed
in the matter of Skol Breweries. In Skol Breweries (supra) the
company petition was accepted and notice was issued to the
applicant-company. On 2.3.1995 when the matter came up for
admission, the counsel who was appearing for the company appeared
and stated that she was unable to take instructions from the company
in view of an order passed by City Civil Court, Bangalore on
21.11.1994 and, therefore, she prayed for her discharge in the matter.
This court after recording this fact, ordered admission of the company
petition and its advertisement in 2 newspapers and the Maharashtra
Government Gazettee for hearing of the company petition on
20.4.1995. However, the matter was posted for hearing on 25.4.1997.
Nobody appeared on behalf of the company on that date and this
court passed an ex-parte order of winding up and consequential order.
8 Soon thereafter, the applicant company took out company
application No.364 of 1997 (since it is registered as 364 of 1997 and
the winding up order was of 25.4.1997 it would be correct to assume
that application was taken out soon after the order of winding up was
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passed) praying for setting aside ex-parte winding up order dated
25.4.1997 and for consequential reliefs. It was based on these facts
that the company application was heard and the court was pleased to
observe that the requirements of Rules-27, 28, 29, 30 & 31 being
mandatory in nature and the counsel for company, not having waived
issuance of service and notice after admission of the petition, the ex-
parte order of winding up of company has to be recalled and the court
recalled the order.
9 What is required to be noted is that it is an accepted
position that service under Rule 28 can be waived. Whether the
waiver has to be express or implied by conduct, has to be seen. In my
view, waiver even of statutory right can also be implied by conduct
and I find support for this in the judgment of the Apex court in
M/s.Galada Power (supra). It will be useful to reproduce paragraph
nos.15 & 16 of this judgment.
"15 Yet again, in Krishna Bhadur v.Purna Theatre, it has
been ruled that :-
"A right can be waived by the party for whose benefit
certain requirements or conditions had been provided for
by a statute subject to the condition that no public
interest is involved therein. Whenever waiver is pleaded
it is for the party pleading the same to show that an
agreement waiving the right in consideration of some
compromise came into being. Statutory right, however,
may also be waived by his conduct."
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16. In State of Punjab v. Davinder Pal singh Bhullar, a
two-Judge Bench speaking about the waiver has opined :-
"41. Waiver is an International relinquishment of a right.
In involves conscious abandonment of an existing legal
right, advantage, benefit, claim or privilege, which except
for such a waiver, a party could have enjoyed. In fact, it
is an agreement not to assert a right. There can be no
waiver unless the person who is said to have waived, is
fully informed as to his rights and with full knowledge
about the same, he intentionally abandons them. (Vide
Dawsons Bank Ltd. V. Nippon Menkwa Kabushiki Kalsha,
Basheshar Nath V. CIT, Mademsetty Satyanarayana
V.G.Yelloji Rao, Associated Hotels of India Ltd. v.
S.b.Sardar Ranjit Singh, Jawswantsingh Mathurasingh v.
Ahmedabad Municipal Corpn. Sikkim Subba Associates v.
State of Sikkim and Krishna Bahadur v. Purna Theatre.)
42. This Court in Municipal Corpn. of Greater Bombay v.
Dr.Hakimwadi Tenants Assn. considered the issue of
waiver/acquiescence by the non-parties to the proceedings
and held : (SCC p.65, paras 14-15)
14. IN order to constitute waiver, there must be
voluntary and intentional relinquishment of a right. The
essence of a waiver is an estoppel and where there is no
estoppel, there is no waiver. Estoppel and waiver are
questions of conduct and must necessarily be determined
on the facts of each case.
15. There is no question of estopped, waiver or
abandonment. There is no specific plea of waiver,
acquiescence or estoppel, much less a plea of
abandonment of right. That apart, the question of
waiver really does not arise in the case. Admittedly, the
tenants were not parties to the earlier proceedings. There
is, therefore, no question of waiver of rights by
Respondents 4-7 nor would this disentitle the tenants
from maintaining the writ petition."
10 Mr.Akhtar counsel for applicant relied upon a judgment of
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the Apex court in 3Motilal Padampat Sugar Mills Co. Ltd. vs. State
of Uttar Pradesh and ors. to submit that the waiver is a question of
fact and it must be properly pleaded and proved and no plea of waiver
can be allowed to be raised unless it is pleaded; and secondly waiver
means abandonment of a right and though it may be either express or
implied by conduct, its basic requirement is that it must be an
intentional act with knowledge. Mr.Akhtar submitted that the
applicant was not aware that notice as required under Rule 28 has not
been served and therefore, it cannot be stated that the applicant had
knowledge and he had waived the same having knowledge of his
rights. Even in this judgment of Motilal Padampat (supra) it is held
waiver may be either express or implied by conduct.
11 If one considers the chronology of dates and events as
narrated above, it is very easy to come to a conclusion that the
applicant has impliedly waived by conduct issuance of notice under
Rule 28. The applicant was aware that an order of winding up of the
company has been passed on 19.3.2009. It is not the applicant's case
that the applicant was not aware of a legal provision of Rule 28 under
Company Courts Rules and of course that cannot be a defence
because ignorance of law is not an excuse. But it is the case of the
3. (1979) 2 SCC 409
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applicant that the applicant did not know that notice under Rule 28
has not been served. Nothing prevented the applicant or his then legal
advisors to verify or take inspection of the records in the office of the
Company Registrar and take out the application that is now taken out
more than 6 years and 4 months after the order of winding up has
been passed. It should be noted that the very first meeting on
4.8.2009 called by the Official Liquidator in his office was attended by
the applicant who has also signed the minutes of the meeting. There
are subsequent events where the applicant has personally attended.
The applicant had engaged services of Yash Associates Advocates and
Advocate Dilip Shukla etc. Applicant has now introduced a new
advocate Shri Saeed Akhtar who himself has appeared in connected
matters and from the chronology Mr.Akhtar has appeared for the first
time on 10.4.2014. Still the current application has been taken out on
25.5.2015.
12 The purpose of notice under Rule-28 that is required to be
sent by the Company Registrar is to inform the company that a
petition against the company has been admitted so that the company
can take steps to be defended effectively, primarily because at the
stage of admission the court only forms prima facie or ex facie
opinion. The law considered the situation where it is possible that the
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company is not represented while the petition was admitted and
therefore, to give one more opportunity to the company because an
order winding up the company is a death knell to the company. Give
an opportunity to the company to come and show cause as to why the
petition should not be allowed and why company should not be
wound up. In fact, when a company is represented at the time of
admission, invariably orders are passed recording waiver by the
company of notice under Rule 28.
13 In my view, even though the order of admission does not
record waiver of notice under Rule 28, the company impliedly by its
conduct has waived notice under Rule 28. It should also be noted
that on 15.7.2010 an order has been passed in Official Liquidator
Report dated 22.6.2010 for compliance or else to adopt contempt
proceedings. On 20.7.2010, individual declarations have been filed by
all 4 ex-directors of the company before the Official Liquidator
regarding assets of company in response to the letter dated 16.7.2010
from the Official Liquidator and these declarations have also been
signed by the applicant herein Mr.Shivkant V.Chaudhari. On
16.9.2010 an order dated 31.8.2010 in Official Liquidator Report has
been passed permitting contempt proceeding as per prayer clause-(a)
of the report. It should also be noted that even after the company
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has been ordered to be wound up, on 31.3.2011 the applicant herein
had signed Memorandum of Understanding on behalf of the company
as director with a consortium to salvage sunken vessel Ventura and
received Rs.1 crore from consortium. This was done by the applicant
without disclosing company was ordered to be wound up on
19.3.2009. On 5.3.2012, one Yash Associates advocates for
ex-directors submitted to Official Liquidator balance-sheets of
company in liquidation. On 12.3.2012 this court passed an order in
Official Liquidator Report No.99 of 2012 permitting to engage lawyer
advocate Shri Dilip Shukla for applicant in the contempt proceeding
against ex-director of the company. It should be noted that even
Shri Akhtar who is now representing the applicant has appeared on
numerous instances before this court and also corresponded with the
Official Liquidator between 10.3.2014 and 25.5.2015 when the
current application was taken out. One of the last communication
from Mr.Akhtar is dated 18.2.2015 for submission of affidavit of ex-
director of the company in liquidation explaining observations made
in the meeting dated 12.12.2014 in the Official Liquidator's office.
14 In the circumstances, though the notice as required under
Rule-28 of the Company Courts Rules is mandatory, such a notice can
be waived expressly or impliedly by conduct. In my view, the
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applicant/company impliedly by conduct has waived the notice
required under Rule 28. Therefore, question of recalling the order of
winding up on an application taken out after 6 years and 4 months of
the winding up order being passed on the specious ground that notice
under Rule 28 was not served, cannot be granted.
15 Application dismissed with costs. Applicant to pay sum of
Rs.1,00,000/- as cost to the original petitioner by way of cheque
drawn in favour of advocate on record for the original petitioner.
Amount to be paid within two weeks from today.
Mr.Akhtar seeks stay of this order. Winding up order was
passed on 19.3.2009. This application has been filed on 25.5.2015
and more than 2 & ½ years have passed since the application itself
has been taken out. I have no intention to trip the winding up
proceedings. Stay refused.
(K.R.SHRIRAM,J)
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