CIER E-journal - January 2009 Issue

8/14/2019 CIER E-journal - January 2009 Issue

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CIER E-Journal (CeJ) January 2009 1

tttTTTThe E-Journal ofCorporate 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

C I E Re-Journal
http://www.cieronline.com/http://www.cieronline.com/


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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, [email protected]
mailto:[email protected]:[email protected]


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WTO & Anti-

dumping dutiesContributed byMs 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 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.


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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 Authoritys 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 finallyimposed/levied by a Notification of the Ministry of Finance. Thus, while the Department of

Commerce recommends 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


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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 domesticindustry 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 INVESTIGATIONInterested 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

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;


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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 representativeand as recent as possible. The most desirable period of 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.


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Oppression &

Mis-managementContributed 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 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 companys 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


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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.

(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 toincrease 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 companys articles in favour of any member enabling him to renouncehis 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,


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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

(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 anopinion 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 Governments 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


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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)]

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 CLBalone [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, ACSCompany Secretary

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

ADMISSION TO 19TH

BATCH OF CIERS CORPORATE LAWS

COACHING CLASSES FOR

CS FINAL, CS INTER/EXECUTIVE, CA FINAL ARE OPEN

Interested students may register online atwww.bblawclass.com

Join the finest educationexperience


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Winding-up of

companies under

the Companies

Act, 1956Contributed 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. TheCompanies 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;

* If the Court is under the opinion that the company should be wound up under the circumstances

specified under the Sec. 424G.


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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 liquidators 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.

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.


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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 dischargingits existing liabilities. There is presumption of inability.

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


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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

.12:/('*(

CiER


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- CIER Team-

FOUNDER:

CS. Balarishnan Bilu,MFM, MHRM, ACS, ASI (UK)

MANAGEMENT COUNCIL:

CS. Balarishnan Bilu,MFM, MHRM, ACS, ASI (UK)Ms. P. Rajani, M.Com

ADVISORY COUNCIL:

CS. (Dr.) D. K. Jain, FCS, AICSA (UK), Ph.DCS. R. Harikrishnan, FCSCS. K. Jayan, ACSCS. R .S. Krishna Prasad, ACSCA. M. J. Anand, ACACS. Liju K Johnson, ACSMr V. K. Praveen, CAIIBMr Timmy AntonyMr M. V. Ajesh (Online Editor)

CIER Regional Information Representatives:

Mr J. C. Biju BangaloreCS. R. Rajesh, ACS Mumbai

CS. K. Jayan, ACS ErnakulamMr V. Sreeprasad Thrissur

Mr R. Pratheep Baharian (Middle-East)

CONTACT US:

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CIER E-journal - January 2009 Issue

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