JUDGMENT Allah Bukhsh J.-1. Packages Limited, Lahore moved a petition under sections 162 and 163 of the Companies Act, 1913, for winding up of Khyber Electric Lamps Manufacturing Company Limited, Peshawar and the matter was admitted on 8-12-1982. It was directed that the petition be advertised 14 clear days before the next date of hearing, one in the local official Gazette and one in two newspapers. It was on 23-12-1982 that Khyber Electric Lamps Manufacturing Company Limited (hereinafter called the Company) moved C.M. No. 10/82 under section 151, C.P.C, read with sections 162 and 163 of the Companies Act for modification of the order of this Court dated 8-12-1982 and for the stay of the advertisement. The C.M- was contested by the opposite-party and both the learned counsels were heard.
2. The learned counsel for the Company strenuously contended that there was a bona fide dispute between the parties and the petition for winding up was not maintainable in the eye of law. The learned counsel for the respondent, on the other hand, maintained that the dispute was not a bona fide one. Both the learned counsel addressed full-fledged arguments on this point but I would refrain from expressing myself on it at this stage as the matter is sub judice and a passing remark on the merits of the case may not be welcomed by either of the parties. I would, therefore, confine myself to the sole point at issue, namely, whether the order for advertisement of the petition may or may not be stayed.
3. The learned counsel for the respondent raised an objection with regard to the competency of this C. M. Under section 151, C.P.C, and urged that an order for advertisement was appealable under section 202 of the Companies Act. He placed reliance on Western India Theatres Ltd. Vs. Associated Bombay Cinema Ltd AIR 1959 Bom. 170 and Western India Theatres Ltd. Vs. Ishwarbhai Somabhai Patel AIR 1959 Bom. 386 wherein it is held that an order for advertisement of the petition was appealable under section 202 of the Companies Act. The latter authority was approved of in Shankarlal Aggarwala and others v. Shankarlal Poddar and others AIR 1965 SC 507. Both these authorities are from the Indian jurisdiction and none from our case law was cited at the Bar.
4. The learned counsel for the Company referred to Messrs Adage Advertising, Lahore vs. Messrs Shezan International Ltd., Lahore 1970 SCMK 184 and contended that there being a genuine dispute between the parties the petition may be dismissed or the order of advertisement be suspended.
Their Lordships referred to the following statement of law on the subject as contained in Halsbury's Laws of England (Vol. 6) :- A winding-up order will not be made on a debt which is bona fide disputed by the company, but the Court must see that the dispute is based on a substantial ground. If there is a genuine dispute, the petition may be dismissed or stayed and an injunction may be granted restraining the advertisement of the petition.
The learned counsel for the Company urged that in view of the above the advertisement should be stayed. 1 would like to refer to the observation made in M. Y. Siddiqui vs. Bavaqar Co. Ltd. PLD 1968 Kar. 231 in which the subject has been sufficiently dealt with. It would be profitable to reproduce para. 16 of the judgment which reads as under : - Reverting to the question as to whether section 151, C.P.C., is applicable to company proceedings by virtue of section 141 of that Act, I should note that section 151, is a procedural provision: See Padam Sen vs. State of U. P. AIR 1961 SC 218. The Court can, no doubt, in a special sense, review an order under it. See Kawdu vs. Berar Ginning Co. AIR 1929 Nag. 185 and Muhammad Hussain Khan vs. Rasool Bux AIR 1948 Sind 124. But this does not make the provision substantive because such an order is not intended to correct a . Decision on merits, but merely to rectify what the Court did not or A could not intend to do had it been apprised of the correct situation. This is the sense in which the relevant observations in Syed Tuffozzool Hussain Khan vs. Rughoonath Pershad (1871) 14 MIA 40 and Gurdeo Singh vs. Chandrikah Singh and Chandrikah Singh vs. Rashbehary Singh ILR 36 Cal. 193 should, in my humble opinion, be understood.
It is clear that the provisions of section 151, C.P.C, can be invoked to rectify an error committed by the Court in advertently. In the instant case the petition was admitted on 8-12-1982 without notice to the company and according to AIR 1959 Bom. 170 ; a notice to the company was essential as "it is a very serious matter for any company to have the petition advertised without the company being heard in its defence." It was remarked that "it is precisely because of this that our practice insists upon a notice being issued to the company to enable the company to put before the Court its contention why the petition should not be proceeded with, if that is the contention the respondent wishes to put forward." It is evident that the practice of the Bombay High Court has been that a notice was issued to the company before the petition for winding up was admitted or rejected. No case-law was made available on the practice prevailing in our country.
So far as this High Court is concerned I could not lay my hands on any authority nor the learned counsel for the parties could produce any precedent of the other High Courts with regard to the said practice. I am, however, of the view that this practice is governed by salutary principle and should be followed by this Court in order to safeguard the interest of the companies against whom petitions for winding up are moved on fake or genuine grounds. If the petition is found frivolous or fails to make out a proper case for winding-up of the company it may be rejected but if some substance is found in it a notice should be given to the company concerned. The latter may urged that for any justifiable reason the petition should not be proceeded with. Since notice was not issued to the company before the petition was admitted, in my opinion, it was an error on my part to direct advertisement and, as such, this error can be rectified by an application under section 151, C.P.C.
5. That the advertisement could be manifest from the statement of law reproduced from Halsbury's Laws of England which has been relied upon by the Supreme Court. It is observed in Bhagwati vs. New Bank of ladin AIR 1950 East Pb. Ill that "Company legislation in India has followed the legislation in England. That being so, Courts in India are bound to follow the principles laid down in English Courts with regard to the same matter." It follows that advertisement can be stayed by the Court| and since serious questions have been agitated in the instant case it would be C in the interest of justice that the advertisement of the petition be stayed.
6. In the result, the C.M. Is allowed and the advertisement of the petition stayed.