Mr. Anand Singh vs M/S Pearl (India) Publishing ...
2010 Latest Caselaw 3866 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI


+      CO.PET. 370/2009
                                             Date of Decision: 19th August, 2010

MR. ANAND SINGH                         ..... Petitioner
         Through                   Ms. Kajal Chandra, Advocate.

                     versus


M/S PEARL (INDIA) PUBLISHING HOUSE PVT LTD ..... Respondent
     Through          Mr. Sandeep Bhuraria, Advocate for
                      Mr. R. N. Malhotra, ex-director.
                      Mr. S. K. Kalia, Advocate for
                      Mr. Y. N. Malhotra, ex-director.
                      Mr. S. S. Tomar, Advocate for applicant in
                      CAs 960-63/10.
                      Ms. Rajdipa Behura, Advocate for
                      Official Liquidator.
                      Ms. Kanika Singh, Advocate for applicants in
                      CA No.519/10.

       CORAM:
       HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA



1.     Whether Reporters of local papers may be allowed to see the
       judgment? Yes
2.     To be referred to the Reporter or not? Yes
3.     Whether the judgment should be reported in the Digest? Yes


SUDERSHAN KUMAR MISRA, J. (Oral)

Co.Appln.No.519/2010 in Co.Pet.No.370/2009

1. By this application, the applicants seek impleadment as petitioners

in this petition on the ground that they are unpaid workers of the

respondent company. In this regard, they rely on the decision of the

Supreme Court in the case of National Textile Workers' Union v. P.R.

Ramakrishnan & Ors., (1983) 1 SCC 228, in particular paragraph 14

thereof.

2. In the National Textile Workers' Union case (supra), all that the

Supreme Court has said is that, given the right set of circumstances, a

worker may also be treated as a creditor of the company for the purpose

of S.433 and 434 of the Companies Act, 1956. It merely affirms the right

of a worker to bring a petition for the winding up of a company on

account of unpaid wages. That is unexceptionable. However, the question

here is quite different, which is whether a worker who claims non-

payment of wages is entitled to be impleaded as a co-petitioner in a

petition instituted by some other person, on entirely different facts,

seeking winding up of the company.

3. For the reasons that follow, to my mind, the case of such a worker

must be examined in an independent petition. Even if a person satisfies

the Court that he is a creditor, that fact by itself is not enough to invoke

the jurisdiction of the Company Court. He must also satisfy the Court,

prima facie, of the existence of certain other facts, which will enable the

Court to exercise its jurisdiction in the matter, such as having sent the

statutory notice of winding up under S.434 and thereafter having waited

for 21 days without resolution of his demand for payment.

4. When any of the persons mentioned in Section 439(1) of the

Companies Act, 1956 invokes the jurisdiction of the Company Court to

wind up a company, the Company Court examines the petition to satisfy

itself whether facts that, prima facie, warrant the exercise of its

jurisdiction, exist. After carrying out this preliminary exercise, usually, an

opportunity to file a reply to the show cause notice is granted to the

respondent, and the matter is examined again in the light of the

respondent's reply on the facts and law. The court then decides whether

to admit the petition. If a bona fide defence is raised by the respondent,

demonstrating a genuine dispute about the liability to pay, the winding

up petition may be dismissed. If no bona fide defence is raised by the

respondent, and there is also no settlement, the petition is admitted and

the court appoints a provisional liquidator.

5. To join any other claimant as a co-petitioner, merely on an

application, without testing the availability of his cause of action, and

without obliging him to go through the requisite preliminary steps, would

amount to giving him an unfair advantage. This is because the existence

of those preliminary facts which enabled the Company Court to exercise

jurisdiction in the original matter, would not have been tested by this

Court, and no opportunity would have been given to the respondent to

contest the new party's case, at the preliminary stage.

6. In the present case, the applicants claim to be employees of the

company. However, their claim has not been scrutinized. While the right

to move the court under Section 433 & 434 of the Companies Act cannot

be denied to a petitioning creditor; however, if the applicants were to file

an independent petition for the winding up of the respondent company,

then the company would be put to notice to respond to the facts alleged

by the applicants to invoke the jurisdiction of this Court, and perhaps the

same order would follow. If that were to happen, the present petition, as

well as the one filed by the applicants, could be heard together. Here,

there has been no opportunity for this Court to examine the applicants'

claim, since the applicants have not filed a separate winding up petition.

In the instant case, admittedly, none of the applicants are claimed to

have issued a notice of demand under Sections 433 and 434 of the

Companies Act, 1956 to the respondent company.

7. At the same time, the stand of the Official Liquidator that the

application be dismissed because it is always open to the applicants to

file their claims before the Official Liquidator whenever they are invited,

also does not commend itself. This is because, at any stage before the

passing of the final winding up order, it is always possible that the

petitioner at whose behest the proceedings are going on may settle with

the company thus ending the proceedings. In such a situation, the stage

of invitation of claims would never reach, and the applicants would have

waited in vain. It would also be wholly unjust to expect any creditor to

keep waiting and watching, and approach the Court via an independent

petition, only after the pending petition is disposed off without any

winding up order being passed. To expect any other creditor, be it a

worker or otherwise, to keep waiting for the possibility of winding up

being first ordered in the pending petition, and then of the Official

Liquidator inviting claims in that matter, would amount to denying him

the statutory right of instituting an independent petition seeking winding

up of the same company. I might add that in this case, the right to file

claims is unavailable today since there is no order directing winding up

and no claims have been invited as yet.

8. Furthermore, if workers and other creditors, who may be hundreds,

or even thousands, are added by the Court as petitioners in the same

petition, at different points of time, before the winding up order is

passed, it is likely to lead to increasing inconvenience & confusion at

each hearing. This is because the facts and circumstances of each

creditor, agitated at different points of time, would have to then be

separated from the others in what is bound to become a very bulky

record, before the Court can effectively hear and dispose off the petition.

Even if the Court were to carry out this exercise; any appeal by a single

creditor would entail impleadment of all co-petitioners and the need for

serving everyone before any meaningful progress can be made. Any

further proceedings would only complicate matters and bog down the

decision making process. Rules of administration of justice and

procedure are universally aimed at facilitating credible, yet efficient,

decision making. Therefore, to my mind, there are also sound

administrative reasons against setting such a precedent.

9. Counsel for the Official Liquidator then contends that even if the

petitioner in this matter settled with the respondent company and the

petition stood disposed of, this would result in the company functioning

normally, in which case the other creditors, such as the workers, would

be paid. To my mind, this does not necessarily follow. The employees of

the company may still be not paid for any reason. Therefore, it is always

open to the applicants to move a petition for winding up of the company

on their own facts, at any time, regardless.

10. It is for all the above reasons that, although the right of any

creditor or worker to approach the Court independently must remain

sacrosanct, the applicants cannot be permitted to join these proceedings

as co-petitioners.

11. This application is, therefore, dismissed with the above

observations.

SUDERSHAN KUMAR MISRA, J.

August 19, 2010 dr