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Issues:
Stay of proceedings in a civil suit under section 442 of the Companies Act, 1956. Analysis: 1. The applicant, a joint venture company, sought a stay of proceedings in a civil suit filed by another party against it and other shareholders. The applicant invoked section 442 of the Companies Act, claiming that the civil suit had a direct impact on the winding-up petition due to common issues raised in both proceedings. 2. The applicant argued that the civil suit aimed to enforce monetary claims against the joint venture company, not against the applicant, and shareholders cannot be held liable for company debts. The timing of the civil suit's filing was questioned, suggesting an intention to delay the winding-up proceedings. 3. The respondent contended that the civil suit's outcome would not affect the winding-up process and accused the applicant of abusing the court process. Citing a Supreme Court judgment, the respondent argued that section 442 did not mandate a stay and that the relief sought in the civil suit could not be granted. 4. The court analyzed the provisions of section 442(b) and the Supreme Court's interpretation in a relevant case. It emphasized that the civil suit need not directly claim relief against the company for a stay to be justified, as long as it had a bearing on the winding-up proceedings. 5. Considering the common issues in both the winding-up petition and the civil suit, the court found that the civil suit, although not seeking a decree against the company, would impact the winding-up process. The court concluded that the applicant was entitled to the stay of the civil suit until further orders. 6. The court's decision was based on the broader interpretation of section 442, emphasizing the need for a stay when proceedings in another court affect the liabilities of a company facing winding-up. The court found the applicant's arguments valid and ordered the stay of the civil suit pending in Kapurthala Court.
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