CIER

e-Journal
The E-Journal of Corporate Intelligence Education & Research (CIER) for budding corporate professionals

VOL.VI ISSUE
No.42 JAN 2008

COACHING CLASSES & ALLIED SERVICES IN CORPORATE LAWS SINCE 1998

www.cieronline.com

CIER E-Journal (CeJ) – January 2009 1

Dear Professional Colleagues,

The corporate legal scenario is going to face a sea change once the new
companies’ bill is passed in the Parliament. The new concepts introduced in
the Bill, such as one Person Company, key managerial personnel etc. will
surely create a new corporate era. The concept of self-regulation by
companies is clearly envisaged in the proposed Bill.

Another flagship initiative by the Ministry of Corporate Affairs is the LLP Bill,
2008. It will surely change the mood of practicing professionals in India. With
the passing of LLP Act, practicing CAs, CSs etc. can constitute mega
partnership firms, having un-limited numbers in their partners, at the same
time privileging from the limited liability. The draft LLP Rules, gives various
opportunities for professionals, specially practicing company secretaries, in
the matter of pre-certification of e-forms.

The MCA has also mooted the concept of Council of Valuation Professionals, in
order to professionalize valuation industry. Clause 13 of the proposed Bill
recognizes, ICAI, ICSI & ICWAI as recognized institution for conducting
valuation courses. Friends, CIER welcome all the above initiatives, and assure
you that CIER will take all efforts to education the new laws to the budding
corporate professionals.

On 5th November, 2008 CIER convened one-day seminar on Companies Bill,

2008, in the theme ‘The Company Law Convergence’, which was a huge hit.
CIER proposes to conduct one-day seminar in LLP in the month of January,
2009.

With kind regards

CS. B. Bilu
Founder, CIER
bilu@ciermail.com

CIER E-Journal (CeJ) – January 2009 2

WTO & Anti-
dumping duties
Contributed by Ms Arathy Nair, CS Finalist

Dumping generally occurs when the goods are exported by a country to

another country at a price lower than its normal value. This is an unfair trade
practice, which can cause a distortive effect on international trade. Anti
dumping is a measure, permitted by WTO, to rectify this distortive effect of
dumping and re-establish fair trade. It provides relief to the domestic industry
against the injury caused by dumping.

Under the existing WTO arrangement, anti-dumping and allied measures

constitute a legal framework, within which the domestic industry can seek
necessary relief and protection against dumping.. The anti-dumping action
cannot be taken based on mere presumptions. The requisite parameters of law
have to be duly complied with and be supported with facts and figures before
any action could be initiated i.e. in order to constitute dumping, there must be
sufficient evidence relating to the following:

1.there must be an injury to the domestic industry; and

2.there exists a causal link between the dumping and the injury, that is to say,
that the dumped imports have caused the alleged injury.

Broadly, injury may be analyzed in terms of the volume effect and price effect
of the dumped imports. The parameters by which injury to the domestic
industry is to be assessed in the anti dumping proceedings are such economic
indicators having a bearing upon the state of industry as the magnitude of
dumping, decline in sales, selling price, profits, market share, production
utilization of capacity etc.

COMMITTEE ON ANTI-DUMPING PRACTICES.

There is a Committee on anti-dumping practices, which meets at least twice a

year. It provides Members of the WTO the opportunity to discuss any matters
relating to the Anti-Dumping Agreement, viz, the operation of national anti-
dumping laws and regulations, and the consistency of national practice with
the Anti-Dumping Agreement etc. The Committee has also undertaken the
CIER E-Journal (CeJ) – January 2009 3
review of national legislations notified to the WTO.

LAWS OF ANTI-DUMPING IN INDIA

These anti-dumping measures also have assumed a great deal of relevance in

India in recent times.

The first Indian Anti-dumping legislation came into existence in 1985 when the
Customs Tariff (Identification, Assessment and Collection of duty or Additional
duty on Dumped Articles and for Determination of Injury) Rules, 1985 were
notified. However, the laws of anti-dumping in India are based on:

• Article VI of GATT 1994 (commonly known as Agreement on

Anti- Dumping)
• Customs Tariff Act, 1975 - Sec 9A, 9B (as amended in 1995)
• Anti-Dumping Rules [Customs Tariff (Identification,
Assessment and Collection of Anti-Dumping Duty on
Dumped Articles and for Determination of Injury) Rules,
1995]
• Investigations and Recommendations by Designated
Authority, Ministry of Commerce
• Imposition and Collection by Ministry of Finance.

RELIEF AGAINST DUMPING

The relief to the domestic industry against dumping of goods from a particular
country is in the form of anti dumping duty imposed against that country,
which could go up to the dumping margin. However, the remedy against
dumping is not always in the form of anti dumping duty. Apart from dumping,
some of the countries also resort to subsidization of their exports to other
countries. Export subsidies, under the WTO agreement, are treated as unfair
trade practice and such subsidies are actionable by way of levy of anti-subsidy
countervailing duty. There is one more trade remedial measure called
"safeguards" which are applied as an emergency measure in response to
surge in imports of a particular item.

The Authority may terminate or suspend investigation after the preliminary

findings if the exporter concerned furnishes an undertaking to revise his price
to remove the dumping or the injurious effect of dumping as the case may be.

ADMINISTRATION OF ANTI-DUMPING MEASURES

Anti dumping and anti subsidies & countervailing measures in India are
administered by the Directorate General of Anti dumping and Allied Duties
(DGAD) functioning in the Dept. of Commerce in the Ministry of Commerce and
Industry and the same is headed by the "Designated Authority". The
Designated Authority’s function, however, is only to conduct the anti
dumping/anti subsidy & countervailing duty investigation and make
recommendation to the Government for imposition of anti dumping or anti
subsidy measures. Such duty is finally imposed/levied by a Notification of the
Ministry of Finance. Thus, while the Department of Commerce recommends
CIER E-Journal (CeJ) – January 2009 4
the Anti-dumping duty, it is the Ministry of Finance, which levies such duty.

Safeguard measures are administered by another Authority namely, Director

General (Safeguard), which functions under the Dept. of Revenue, Ministry of
Finance. The Standing Board of Safeguards (chaired by the Commerce
Secretary) considers the recommendations of the DG (Safeguards) and then
recommends the impositions of the Safeguard Duty as it deems fit, to the
Ministry of Finance, which levies the duty.

Applications can be made by or on behalf of the concerned domestic industry

to the Designated Authority in the Dept. of Commerce for an investigation into
alleged dumping of a product into India. Under the Rules, a valid application
can be made only by those petitioners/domestic producers who expressly
support the application, and account for more than 25% of total domestic
production of the like article in question.

The application is deemed to have been made by or on behalf of the domestic

industry, if it is supported by those domestic producers whose collective
output constitutes more than fifty percent of the total production of the like
article produced by that portion of the domestic industry expressing either
support for or opposition as the case may be, to the application.

However, such producers may exclude those who are related to the exporters
or importers of the alleged dumped article or are themselves importers
thereof. In other words, a domestic producer who is related to the exporter or
importer of the dumped article or is himself an importer thereof may not be
treated as part of the domestic industry even if he files or supports an anti-
dumping petition.

INTERESTED PARTIES TO AN ANTI-DUMPING INVESTIGATION

Interested parties include:

1. The domestic industry on whose complaint the proceedings are initiated;

2. The exporters or the foreign producers of the like articles subject to
investigation;
3. The importers of the same article allegedly dumped into India;
4. The Government of the exporting country/ countries.
5. The trade or business associations of the domestic
producers/importers/user industries of the dumped product.

Any representative duly authorised by the petitioner/ interested parties/

Association etc. can appear in the Anti-dumping cases to represent the
concerned parties.

ANTI-DUMPING PROCEDURE

CIER E-Journal (CeJ) – January 2009 5

 The Designated Authority shall not initiate an anti-dumping investigation
unless it receives a well-documented application/petition, which should help it
determine:

1. That the domestic producers/petitioners filing the petition and/or

expressly supporting the petition account for at least 25% of total
domestic production of the like article in question.
2. The application is deemed to have been made by or on behalf of the
domestic industry, if it is supported by those domestic producers whose
collective output constitutes more than fifty percent of the total
production of the like article produced by that portion of the domestic
industry expressing either support for or opposition as the case may be,
to the application; and

3. That there is sufficient evidence furnished by petitioners regarding:

1. Dumping of goods in question;

2. Injury to the domestic industry;
3. A causal link between the dumped imports and alleged injury.

However, Rule 5(4) of the Anti Dumping Rules provides for suo-motu initiation
of anti dumping proceedings by the Designated Authority on the basis of
information received from the Collector of Customs appointed under the
Customs Act, 1962 or from any other source.

In such circumstances, the Authority initiates the anti dumping investigation

on its own without any complaint/petition filed in this regard, provided the
Authority is satisfied that sufficient evidence exists as to the existence of
dumping, injury and causal link between the dumped imports and the alleged
injury.

APPLICATION FOR INVESTIGATION ON DUMPING

An application for investigation into any alleged dumping filed by the

aggrieved domestic industry must contain sufficient evidence (like Bill of
Entry, Invoices, letter from the Indian Mission in the subject country, data from
secondary sources like specialized commodity journals etc.) as to the
existence of dumping in relation to the goods imported from the subject
country and the fact that such dumped imports are causing or threatening to
cause material injury to the Indian Industry producing the like goods or are
materially retarding the establishment of an industry..

All the information and evidence furnished in the application in relation to

dumping, injury and causal link must pertain to a definite period, which is
called the period of investigation. Broadly, there are indications that such
period should not be, in any case, less than six months and not more than
eighteen months. It is, however, important that the period taken into
consideration for detailed investigation into dumping and injury should be as
representative and as recent as possible. The most desirable period of

CIER E-Journal (CeJ) – January 2009 6

investigation is a financial year provided there is reasonable proximity
between the end of the financial year and the filing of the application.
However, for the purposes of injury analysis, the domestic industry has to
furnish the relevant data for the past three years. The Designated Authority
may recommend an interim relief, which is provided to the affected domestic
industry in the form of provisional anti dumping duty pending the finalisation
of investigation proceedings. The provisional anti dumping duty is
recommended by the Authority in its preliminary findings and the same is
levied by the Ministry of Finance, Dept. of Revenue. This serves as immediate
relief to the domestic industry against the injury caused to it by the dumping
of goods.

APPEAL

The law provides that an order of determination of degree and effect of

dumping is appealable before the Customs, Excise and Gold (Control)
Appellate Tribunal (CEGAT). However, as per the judicial view, only the final
findings/order of the Designated Authority / Ministry of Finance can be
appealed against before the CEGAT. However appeal cannot lie against the
Preliminary findings of the Authority and the provisional duty imposed on the
basis thereof. The Appeal to the CEGAT should be filed within 90 days. ◙

Source: Paper presented by Ms Arathy Nair, CIER Student, as part of CIER Paper
Presentation Competition on WTO held on 06.07.2008. The views expressed are that
of the author, & not of CIER.

Oppression &
Mis-management
Contributed by A V Krishnamani, CS Inter Student

OPPRESSION:

The term ‘oppression’ is not defined under the Act. It is understood as an act
or omission on the part of management, which implies majority, inasmuch as
it is the majority, which holds or controls the management. Right to apply is,
though, not confined to minority. An oppressed majority can also apply. The
act or omission should not only be prejudicial but also unfair, harsh and
burdensome to minority. In case of prejudice to the company, which is equal
prejudice to all members, it is not an unfair prejudice to minority. There has to
be advantage to one at the cost of the other for being oppression. There
should be lack of probity and good faith. The essence of the matter seems to
be that the conduct complained of should at the lowest involve a visible

CIER E-Journal (CeJ) – January 2009 7

departure from the standards of fair dealing, and violations of conditions of fair
play. The act otherwise in accordance with the law and procedure but mala
fide with intent to deny legitimate expectations of minority is an oppression. In
order that the court may make an order under section 397 of the Act, the
court must be satisfied, firstly, that the company’s affairs are being managed
in a manner oppressive to any member or members; secondly, that the facts
would justify the making of a winding up order, on the ground that it is just
and equitable to wind up the company and thirdly, that a winding up order
would unfairly prejudice the said members. The phrase “are being conducted”
implies that there must be continuous acts constituting oppression up to the
date of petition. The relevant interests are the interests of members as
members, but such interests are not necessarily limited to strict legal rights
and the court may take into account wider equitable considerations such as
any legitimate expectation, which a member has. Mere illegal, invalid or
irregular acts by themselves would not constitute oppression. The following
acts or omissions have been considered as oppression by the courts/Company
Law Board:

(i) An attempt to force new and more risky objects upon an unwilling minority
may in
some circumstances amount to oppression.

(ii) Loans given to other companies in which directors are interested out of
borrowed funds, at
interest lower than the interest on borrowed fund.

(iii) Causing benefit to other companies where one of the groups has interest.

(iv) Non-declaration of dividend, when there is adequate profit in the

background of
understanding between the parties that they will have some regular
income.

(v) Removal of director in accordance with law, where there was agreement
that all
parties will have right to participate in the management.

(vi) Systematic elimination of notice to some of its members.

(vii) Further issue of shares in such a way that existing percentage holding
gets changed
to the disadvantage of one group (Most petitions have come up on this
ground)
.
(viii) Payment of excessive remuneration to director

(ix) An attempt to deprive a member of his ordinary membership rights.

(x) Person not appointed as director when it was understood that he would be
entitled to
participate in the management.

CIER E-Journal (CeJ) – January 2009 8

(xi) Cornering shares by one group to disturb the percentage holding the other
group or
transferring or refusing to transfer of shares.

(xii) Amending the articles or refusing to amend the articles contrary to

understanding

(xiii) Usurpation of office of Director.

(xiv) Short notice of meeting intended to overshadow minority shareholders.

A case that can be discussed to illustrate the approach taken by the courts is
Needle Industries Ltd.v. Needle Industries Newey (India) Holding Ltd.

The articles of a private company contained a clause that when the directors
decided to increase the capital of the company by issue of new shares the
same should be offered to the shareholders proportionately and if they failed
to take, they may be offered to others in such a manner as may be beneficial
to the company. The company was a wholly owned subsidiary of English
Company. A government policy to dilute foreign holdings came into force. The
company accordingly issued shares. The English company wanted to allot the
reduction in its holding to one of the Indian companies in which it had an
interest. A meeting of the board of directors took a contrary stand. The notice
of the meeting of directors was received in England on the date of the
meeting, because of the delay taken in sending it. It was not able to attend
the crucial board meeting. The holding company complained of oppression.
The court held that there was no right in the company’s articles in favour of
any member enabling him to renounce his rights shares in favour of others.
But, the holding company suffered a loss in terms of the market value of the
shares, which fell to its share. Accordingly, the Supreme Court held that the
Indian allottees of the shares must compensate the “unjust enrichment” they
had obtained. This case is also authority for the fact that an action in
contravention of law is not per se oppressive.

MISMANAGEMENT

The term ‘mismanagement’ is used only in the headings and not in the body
of sections. It must be established for a successful petition under section 398
that the affairs of the company are being conducted in a manner prejudicial to
the interest of the company or public interest, or that, by reason of any
change in the management or control of the company, it is likely that the
affairs will be conducted in such manner. Relief against mismanagement runs
in favour of the company and not to any particular member or members. It is
not necessary for the court to find cause for winding up in order to grant relief.
The section enables the court to take into consideration outside interests
affected by corporate operations. There must be present and continuous
mismanagement. Some of the instances, which have been held to be
mismanagement, are:

(i) Absence of basic records

CIER E-Journal (CeJ) – January 2009 9
(ii) Drawing considerable amounts for personal purposes
.
(iii) Misuse and misapplication of companies finances.

(iv) Not filing documents with Registrar Of Companies

(v) Continuation in office by director beyond the term

(vi) Directors not holding qualification shares

(vii) Sale of assets at glaringly low price

(viii) Neglecting the assets

(ix) Sale by tender in collusion with borrower company

(x) Violations of provisions of law and of memorandum or articles of

association

(xi) Making of secret profits.

(xii) Siphoning of funds, etc.

Case Laws:

 For maintainability of petition u/s 397/398 of the Companies Act, 1956,

there
is no requirement of making averments in petition that facts would justify
making an order of winding up on just and equitable grounds or that there
is
a dead lock in the affairs of the company. It is for the CLB to form an
opinion as to whether the alleged facts would justify making a winding up
order on just and equitable grounds – DR. S Mangalam Srinivasan v Mani
Forgings (P) Ltd. [2006] 65 SCL 163 (CLB – Chennai)

 Even if CG applies to CLB, requesting to entertain an application and give

direction under Section 397/398 to take action against oppression and
mismanagement in a private limited company which is not carrying on any
business, CLB can reject Government’s application if it is not in public
interest or if no case is made out [Union of India v CRB Resources (P) Ltd.
2006 67 SCL 289 (CLB – New Delhi)]

 Petitioners being a group of small shareholders, limitation for filing

company petition
will begun to run only from the date they had the knowledge of the alleged
facts
committed by the respondent and not from the date of transactions.
[Ramesh B Desai
v Bipin Vadilal Mehta [2006] 69 SCL 211 (SC)]

CIER E-Journal (CeJ) – January 2009 10

 The issues relating to oppression and mismanagement and non compliance
with the
statutory provisions could not be granted by the arbitrator and such relief
are
available under the provisions of Section 397/398 of the Companies Act
from the CLB
alone [Sporting Pastime India Ltd. v Kasthuri & Sons. Ltd. [2006] 70 SCL
158
(MAD)]

 Complaints relating to the transfer of shares have to be agitated in petition

under section 111 and not in a petition under section 397/398 would be
valid
if only transfer of shares was alleged in isolation - [Hillcrest Realty Sdn.
Bhd.v Hotel Queen Road (P) Ltd. [2006] 71 SCL 41 (CLB – New Delhi)]

 The petitioner having acted upon the deed of arrangement and declaration
was bound to act in accordance with various terms of the deed - [K.S.P.
Valli v Richfield Agencies (P.) Ltd. [2006] 71 SCL 33 (CLB – Chennai)].

NEW ADVISORY COUNCIL MEMBER

CS. Liju K Johnson, ACS

Company Secretary

Has been inducted to CIER Advisor Council w.e.f 19.12.2008

ADMISSION TO 19TH BATCH OF CIER’S CORPORATE LAWS

COACHING CLASSES FOR
CS FINAL, CS INTER/EXECUTIVE, CA FINAL ARE OPEN

Interested students may register online at

www.bblawclass.com

Join the finest education

experience

CIER E-Journal (CeJ) – January 2009 11

Winding-up of
companies under
the Companies
Act, 1956
Contributed by Asha S Kumar, CS Finalist

“Winding-up” in literal sense, means to bring to a conclusion or an end by putting in

order. It is defined as the process by which the life of a company is ended and its
property is administered for the benefit of its members and creditors. Winding-up is
different from insolvency and dissolution. The Companies Act, 1956 provides for
following kinds of winding up:

1. The winding-up by the Court

2. Voluntary winding-up, which itself is of two kinds, namely,
· Members voluntary winding-up,
· Creditors voluntary winding-up.

THE WINDING-UP BY THE COURT. [(Sec 433) of Companies Act, 1956]

* If the company has, by special resolution, resolved that the company may be
wound-up by the Court;
* If default is made in delivering the statutory report to the registrar or in holding the
statutory meeting;
* If the company does not commence its business within a year from its
incorporation, or suspends its business for whole of a year;
* If the number of members are reduced then their required number;
* If the company is unable to pay its debts (specified in Sec 434)
* If the Court is of the opinion that it is just and equitable that the company should
be wound –up;
* If the company is in default in filing up with the Registrar its balance sheet and
profit and loss account for five consecutive financial years;
* If the company has acted against the interests of the sovereignty and integrity of
India or security of any state, friendly relation with foreign States, public order,
decency and morality;

CIER E-Journal (CeJ) – January 2009 12

* If the Court is under the opinion that the company should be wound up under the
circumstances specified under the Sec. 424G.

WHO CAN APPLY TO COURT, FOR WINDING UP PETITION? (SEC 439)

• The company itself

• The creditor
• Any Contributory
• Registrar
• Any person authorised by central government, in case of oppression or
mismanagement (397)

PROCEDURE FOR WINDING UP

 Admission of the petition

 Appointment of liquidator
 Court to hear parties
 Court to make suitable orders
 Suits stayed up in the winding up order
 Committee of inspection
 Audit of liquidator’s account
 Preparation of statement of affairs and submit the same to official liquidator
 Public examination of promoters, directors, etc.
 Dissolution of company
 Winding up order to be filed with registrar of companies

IS WINDING UP POSSIBLE DURING THE PENDENCY OF A CIVIL SUIT?

Section 433 of the Act provides for the circumstances in which a company may be
wound up by court. Here arises a question that if there are parallel proceedings for
the same subject matter i.e., for the recovery of debt, where one is a civil suit and the
other is for winding up of the company, should they be allowed to subsist together?

The act nowhere prohibits that the proceedings under the act shall or could not lie,
where civil suits are pending or they subsequently be filed. There is no provision in
the Act to oust the jurisdiction of the court and decide the winding up proceedings.
Since the winding up proceeding is not merely for the benefit of the petitioner but of
all its shareholders, creditors or contributories. The pendency of a civil suit is not a
bar to the admission of winding up petition based on same debt. The proceeding for
winding up will not be invalidated if a suit is filed by the petitioner by way of
abundant caution to save the claim getting barred by limitation.
The winding up proceedings can be continued in a company court once it has come to
the conclusion that it has not been a case of bona fide and tenable defense is made
out.

WHAT ORDERS, THE COURT MAY PASS? (SEC 443)

The court may pass any one of the following orders on hearing the winding up
petition.
 Dismiss it, with or without costs
 Make any interim order, as it thinks fit, or
 Pass an order for winding up of the company with or without costs.

CIER E-Journal (CeJ) – January 2009 13

 While dismissing the petition for winding up the following principals have to be relied
upon by the Court:
1) The defence of the company is in good faith and one of substance.
2) The defence is likely to succeed in point of law.
3) The company adduces prima facie proof of the facts on which the defence
depends.
4) Where the debt is undisputed, the Court will not act upon a defence that the
company has the ability to pay the debt but the company chooses not to pay that
particular amount and.
5) Where, the company owes the creditor a debt entitling him to a winding up order.
But the exact amount of the debt is disputed; the Court will make the winding up
order without requiring the creditor to quantify the debt precisely.

CONSEQUENCES OF COURT PASSING AN ORDER FOR WINDING UP:

1. Court will send notice to an official liquidator, to take change of the company. He
shall carry out the process of winding up, (sec. 444)
2. The winding up order, shall be applicable on all the creditors and contributories,
whether they have filed the winding up petition or not.
3. The official liquidator is appointed by central Government (sec. 448)
4. The company shall relevant particulars, relating to, assets, cash in hand, bank
balance, liabilities, particulars of creditors etc, to the official liquidator. (sec. 454)
5. The official liquidator shall within six months, from the date of winding up order,
submit a preliminary report to the court regarding:
 Particulars of Capital
 Cash and negotiable securities
 Liabilities
 Movable and immovable properties
 Unpaid calls, and
 An opinion, whether further inquiry is required or not ( 455)
- The Central Govt. shall keep a cognizance over the functioning of official liquidator,
and may require him to answer any inquiry. (463)

DISSOLUTION OF COMPANY (481)

Finally the court will order for dissolution of the company, when:

• the affairs of the company are completely wound up, or

• the official liquidator is unable to carry on the winding up procedure for want of
funds.

The following points have to be considered while dealing with winding-up:

1) A petition presented ostensibly for a winding-up order; but really to exercise

pressure will be dismissed, and under the circumstances, may be stigmatized as a
scandalous abuse of the process of the Court The modern practice has been to
dismiss such petitions. If the debt is not disputed on some substantial ground, the
Court may decide it on the petition and make the order.
2) The company may be wound up even if it has large assets. The crux is to see if it is
unable to meet its current demands i.e., if the current liabilities are more than the
current assets. If the company is financially sound and in a position to pay its liability,
it cannot be ordered to be wound up under Section 433(e) of the Companies Act. But
the company should establish that it is capable of discharging its existing liabilities.
There is presumption of inability.

CIER E-Journal (CeJ) – January 2009 14

3) Although a winding up petition is an appropriate remedy and a mode of execution
against a company unable to pay its debt, it is not an alternative to the ordinary
procedure for realization of the debts due from the company. Since, the creditor had
already resorted to the civil suit; the court in its discretion can dismiss the petition.
4) It has been observed that the pendency of a civil suit as such is not merely a
ground to oppose a winding up petition.

ROLE OF COMPANY SECRETARY IN WINDING UP

 A qualified C S can be appointed as official liquidator

 Appearing before NCLT
 Appearing before Appellate Court
 A qualified C S can be appointed as a technical member of the Tribunal

WHO CAN BE APPOINTED AS THE OFFICIAL LIQUIDATOR?

 A Member from the panel of professional firms of Chartered Accountants,

Advocates, Company Secretaries, Cost and Work Accountants which the
Central government may constitute.
 Body Corporate approved by the Central Government.

RECENT CASE LAWS:

ICICI LOMBARD GENERAL INSURANCE CO. v. AFL P. LTD. [(2008) 141 COMP CAS 188
(BOM)]
MRIDULA GUPTA v. SHREE DATTA STONE CRUSHERS (P) LTD. [(2007) 75 SCL 452
(RAJ.)]
AHMEDABAD ELECTRICITY CO. LTD. v. SANGHI SPINNERS (INDIA) LTD. [(2007) 74 SCL
95 (AP)]
SHAKTI AGENCIES v. MANSHUK BHAI INDUSTRIES LTD [(2007) 74 SCL 332 (RAJ)]

CONCLUSION

After analyzing and observing various legal propositions and situations, it is found
that the right to apply for winding up is the creature of statute and not of contract,
and the winding up orders passed by the court are not judgments in rem. In the
absence of any prohibited provisions in the Act winding up proceedings u/s 433(e),
434,439 can be allowed even if a civil suit is already pending against the debtor
company. But it should be marked that the winding up proceeding are greatly
affected by the facts and circumstances of a particular case. The machinery of
winding-up cannot be used as a pressure tactics, where a suit has already been
instituted for recovery of debt, under such circumstances, the proceeding are in the
nature of parallel proceedings in respect of the same cause of action. As a result,
such course should not be considered by the court •

CIER E-Journal (CeJ) – January 2009 15

FOUNDER:

CS. Balarishnan Bilu,

MFM, MHRM, ACS, ASI (UK)

MANAGEMENT COUNCIL:
- CIER Team-
CS. Balarishnan Bilu,
MFM, MHRM, ACS, ASI (UK)
Ms. P. Rajani, M.Com

ADVISORY COUNCIL:

CS. (Dr.) D. K. Jain, FCS, AICSA (UK), Ph.D

CS. R. Harikrishnan, FCS
CS. K. Jayan, ACS
CS. R .S. Krishna Prasad, ACS
CA. M. J. Anand, ACA
CS. Liju K Johnson, ACS
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