Udeni Kadawatha Auctions(Pvt.)Ltd. and Another vs.
Jayatlllake and Others
UDENI KADAWATHA AUCTIONS (PVT.) LTD. AND ANOTHERVS.JAYATHILAKE AND OTHERSCOURT OF APPEAL.
SOMAWANSA, J. (P/CA).
Companies Act, No. 17 of 1982 – Section 255, section 257(1) – Company Wind-ing up Rules 7, 7(2), 7(3),- Procedure to be followed – Court of Appeal AppellateProcedure Rules of 1990-Applicability to leave to appeal applications-Rule3(1) (a) – Civil Procedure Code-Section 757- Constitution Articles. 140, 141.
The petitioner-respondent filed an application in terms of section 257(1) ofthe Companies Act for the liquidation of the Petitioner Company. The respon-dent-petitioners objected to the maintainability of the said action on the groundof non compliance with Winding up Rules. The District Court removed the saidapplication from the Roll in terms of Rule 7(3) on the basis of non compliancewith Winding up Rules. Subsequently the petitioner-respondents tendered anamended petition and affidavit. The respondent-petitioners objected to same.The District Judge overruled the objection and restored the application to theroll. On leave being sought, it was contended by the petitioner respondent that,
the petitioners have failed to annex certified copies of the petitiion anddocuments – Rule 3(1) of CA Rules 1990 ;
there is no provision to amend the petition under the CompaniesWinding up Rules ;
a Company could be wound up only for the reasons set out in section255 and that the present application is based on the allegation that adispute has arisen-which is not a ground to wind up a Company ;
the advertisement published was not in accordance with Rule 7(2);
there is non compliance of imperative Rule 9 which requires a certify-ing affidavit to be filed within four days after the petitioner is Presented.
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(2006) 2 Sri L. R.
Rules of Court of Appeal (Appellate Procedure) Rules of 1990 do notapply to leave to appeal applications, as leave to appeal applicationsare governed by procedure laid down in section 757 of the Civil Proce-dure Code.
Removal from the roll enunciated in Rule 7(3) of the CompaniesWinding up Rules does not have the effect of dismissal. There is noprovision whatsoever prohibiting the amendment of the petition un-der the Winding up Rules.
On the objection that the present application is based on the allega-tion that a dispute has arisen and it is not a ground for winding up it isa matter that has to be gone into at the inquiry in the application forwinding up. In any event, the order canvassed is not an order forwinding up but was only an order fixing for inquiry, the objection ispremature.
On the objection that, the advertisement does not give sufficient infor-mation about the winding up application. Rule 7 does not speciallysay that, notice should be given to the petitioner as well as to hisAttorney but only says notice should be given to the petitioner or hisProctor ; the advertisement contains the petitioner's name and ad-dress as well as his registered Attorney-at-law's name and addressthough it does not say that, notice could be served on the Attomey-at-Law also-there is no prejudice caused to any one.
The verifying affidavit required under Rule 9 has to be filed only on therectified application being accepted. This is a step to be compliedwith, after the impugned order was made-this objection is premature.
APPLICATION for leave to appeal from an order of the District Court of Gampaha.
Cases referred to:
K. A. Dayaratne Perera vs. K. A. Thilakaratne Perera – CALA 224/2004- D. C. Mt. Lavinia. 63/91 – CAM 21.10.2005
Brown & Co. Ltd., vs. Ratnayake -1994 – 3 SLR 91.
//cram Mohamed PC with Waruna Mallawarachchi for 1st and 3rd respondent-
P. L. Gunawardane with Sarath Weerakone for petitioners-respondents.
Udeni Kadawatha Auctions(Pvt.)Ltd. and Another vs.
Jayatitiake and Others (Andrew Somawansa J. (P/CA))
February 17th, 2006.
ANDREW SOMAWANSA, J.(P/CA)This is an application for leave to appeal from the order of the AdditionalDistrict Judge of Gampaha dated 18.05.2004 over-ruling the preliminaryobjection taken by the 1 st and 3rd respondents-petitioners and if leave isgranted to set aside the aforesaid order dated 18.05.2004 and dismiss theinstant application of the petitioner-respondent for winding up of the 1 strespondent-petitioner Company.
Leave to appeal has been granted and both parties having agreed toresolve the main matter byway of written submissions have tendered theirwritten submissions.
The relevant facts are, the petitioner-respondent filed an application interms of section 257(1) of the Companies Act No. 17 of 1982 for theliquidation of the 1 st respondent-petitioner Company on the grounds setout in the petition. Upon notice being served the respondents-petitionersfiled objections to the maintainability of the said action for non-complianceof winding up Rules in that no verifying 'affidavit was filed and noadvertisement was published. The learned Additional District Judge havingconsidered the objections by his order dated 25.06.2003 removed the saidapplication from the roll in terms of Rule 7(3) of the Companies Winding upRules of 1939 on the basis of non compliance with winding up rules.Subsequently the petitioner-respondent tendered an amended petition andaffidavit along with draft of notification for approval by the Registrar of Courtand moved for permission to support it. In the meantime, the 1 st and 3rdrespondents-petitioners filed a statement of objection to the said secondapplication of the petitioner-respondent. Of consent, both parties agreedto conclude the inquiry by written submissions. The learned AdditionalDistrict Judge having considered the written submissions tendered by bothparties made the aforesaid order dated 18.05.2004 over-ruling the objection’taken by the 1st and 3rd respondents-petitioners and restoring theapplication to the roll. It is from this order that the 1 st and 3rd respondents-petitioners have preferred this leave to appeal application.
By way of a preliminary objection, counsel for the petitioner-respondentsubmits that the 1 st and 3rd respondents-petitioners have failed to annexcertified copies of the petition and the documents P1 to P8 (a-f) and therefore
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the petition of the 1 st and 3rd respondents-petitioners should be dismissedin limine for want of compliance with section 3(1 )(a) of the Supreme Court(itshould be Court of Appeal) Appellate Procedure Rules of 1990.1 am not atall impressed with this argument.
In K. A. Dayaratne Perera vs. K. A. Thilakaratne Perera(,)
I have given reasons as to why rules of Court of theAppeal(AppellateProcedure) Rules of 1990 do not apply to an application for leave to appeal.Applications for leave to appeal are governed by procedure as laid down inthe Civil Procedure Code section 757 onwards. In any event, even in termsof Rule 3(1 )(a) of the Court of Appeal (Appellate Procedure) Rule 1990 onlydocuments material to the application need be filed and no more. In Brown<5 Co. Ltd. vs. Ratnayake(2)
“Rule 46 is applicable to writ applications also. An application(for writ) under Articles 140 and 141 of the Constitution has tobe accompanied by a duly certified copy of the proceedings inthe Court of first instance, tribunal or other institution if thecopy is material to the case but not otherwise.”
Another objection taken by the 1st and 3rd respondents-petitioners isthat there is no provision whatsoever to amend the petition under theCompanies Winding up Rules and or the rules do not permit an amendedpetition being filed and that in any event no amended petition can be filedwithout permission of Court. In the circumstances, he submits that theamended petition filed cannot and should not be accepted and shouldnecessarily be rejected. Here again, I am not impressed with the objectiontaken and submission made by counsel for the 1 st and 3rd respondents-petitioners for the reason that removal from the roll enunciated in Rule 7(3)of the Companies Winding up Rules does not have the effect of dismissal.
In any event, there is no provision whatsoever prohibiting the amendmentof the petition under the Companies Winding up rules. Furthermore, byorder dated 25.06.2003 the original petition filed by the petitioners-respondents was only removed from the roll in terms of section 7(3) of theCompanies Winding up Rules of 1939 but not dismissed and I am yet to
Udeni Kadawatha Auctions(Pvt.)Ltd. and Another t/s.
Jayatillake and Others (Andrew Somawansa J. (P/CA))
come across any positive rule of law preventing the amendment of a petitionthat has been taken off the roll in terms of Rule 7(3) or in supporting suchamended petition having complied with the mandatory requirements of theprovisions in the Companies winding up rules. I see no merit in the argumentof counsel for the 1st and 3rd respondents-petitioners.
Another matter that is raised by the 1 st and 3rd respondents-petitionersis that in terms of section 255 of the Companies Act No. 17 of 1982 acompany could be wound up only for the reasons set out therein and it issubmitted by counsel for the 1 st and 3rd respondents-petitioners that thepresent applicaion is based on the allegation that a dispute has arisenbetween the petitioner-respondent and the 2nd respondent-petitioner andthat this is not a ground to wind up a company. Section 255 has set outsix instances in which a company may be woundup by court and it is thecontention of the petitioner-respondent that this application falls within thesituation set out as per paragraph 'f Court can give an order for winding upif the “Court is of opinion that it is just and equitable”. However this is amatter that has to be gone into at the inquiry into the application for windingup. In any event the order canvassed is not an order for winding up but wasonly an order fixing for inquiry the application for winding up and the aforesaidobjection appears to be premature.
Another objection taken by counsel for the 1st and 3rd respondents-petitioners is that the advertisement published marked B was not incompliance with the provisions in Rule 7(2) of the Companies Winding upRules as the advertisement states that such a notice be given to thepetitioner and the need for same to be given to the Proctor/Attorney is notspelt out therein. In the circumstances, it is submitted by the counsel thatthe application should be dismissed in limine for non-compliance of Rule7. The said Rule 7 reads as follows :
Rule 7 "The advertisement shall state the day on which theadvertisement was presented and the name and address ofthe petitioner and of his proctor and shall contain at the footthereof stating that any person who intends to appear on thehearing of the petition, either to oppose or support must sendnotice of his intention to the petitioner or to his proctor within
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the time and manner prescribed by Rule 14 and an advertisementof a petition for the winding up of a company which does notcontain such a notice shall be deemed irregular."
On an examination of the advertisement marked B it is to be seen thatit gives sufficient information about the petitioner-respondent’s applicationand adequate opportunity to any interested party to lodge their objectionseither with the petitioner-respondent or his Attorney-at-law. Rule 7 doesnot specifically say that notice should be given to the petitioner as well ashis Attorney but only says notice should be given either to the petitioner orhis Proctor and the advertisement marked B contains the petitioner’s nameand address as well as his registered Attomey-at-Law’s name and addressthough it does not say that notice could be served on the Attorney-at-Lawalso. I am unable to agree that anyone would be prejudiced by the aforesaidadvertisement marked B.
Another objection taken by counsel for the 1st and 3rd respondents-petitioners is that of non-compliance with imperative Rule No. 09 whichrequires a certifying affidavit to be filed within 4 days after the petition ispresented verifying the same. Here again, the order of the learned AdditionalDistrict Judge accepting the rectified application and restoring it to the rollhas been made on 18.05.2004. It is from this order that the 1st and 2ndrespondents-petitioners have preferred this appeal. In any event, the verifyingaffidavit required under Rule 9 of the liquidation Rules have to be filed onlyon the rectified application being accepted. Therefore this again is a stepthat has to be complied with after the impugned order was made and nota matter that needs to be considered at this stage. This again is an objectionthat could be taken up at the winding up inquiry and accordingly thisobjection too is premature.
For the foregoing reasons, the appeal of the 1 st and 2nd respondents-petitioners is without any merit and I see no basis to interfere with theorder of the learned Additional District Judge. Accordingly the appeal willstand dismissed with costs fixed at Rs. 15,000/-
WIMALACHANDRA, J. — / agree.Application dismissed.
UDENI KADAWATHA AUCTION (PVT) LTD . AN ANOTHER vs. JAYATILAKE AND OTHERS