TMI Blog1984 (8) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... Chits (India) Ltd., appellant herein ("company", for short), is governed by the Companies Act, 1956. Three petitions, being Company Petitions Nos. 9 of 1981 and 8 of 1981 and 49 of 1981, were moved by the creditors of the company under section 439 of the Companies Act praying for winding-up of the company on the ground that it was unable to pay its debts. The learned company judge passed an order winding up the company and appointed the official liquidator to be the liquidator of the company. This order was challenged in MFA Nos. 578, 579 and 520 of 1981, which came up for hearing before a Division Bench of the Kerala High Court. The judgment of the Division Bench is reported in Sudarsan Chits ( India ) Ltd. v. G. Sukumaran Pillai, ILR [1983] 1 Ker. 700. The appeals were disposed of, after approving the scheme of compromise and arrangement under section 391 of the Companies Act, directing that the winding-up order shall be held in abeyance on certain undertakings to be filed by the company before the court within the prescribed time to abide by the conditions imposed in the judgment and if there be any default in the matter of performing of the conditions so imposed, and/or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emedy by filing a claim petition conferred by clause ( b ) of section 446(2) can be availed of only in a court which is winding up the company. Hence, this appeal by special leave. After the special leave was granted, a notice was served upon the provisional liquidator informing him that the appeal will be listed for final hearing on August 1, 1984. Even after the intimation, the provisional liquidator did not choose to appear at the hearing. C. M. P. No. 6062 of 1984 was moved on behalf of All India Subscribers Association of Chits through its secretary, Mr. S. K. Jain, seeking intervention in the matter. Intervention was permitted. Upon its true construction, what is the scope and ambit of the jurisdiction conferred on the court winding up a company by section 446(2Xb) is the only question of law that arises in this appeal and may be answered in the facts and circumstances of the case. Section 446(2) reads as under : "446(2). The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of ( a )any suit or proceeding by or against the company ; ( b )any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 456. Section 457 confers power on him to institute or defend any suit, prosecution, or other legal proceedings, civil or criminal, in the name and on behalf of the company. Power is conferred upon him to sell the properties, both movable and immovable of the company, and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claimants. Now, at a stage when a winding-up order is made, the company may as well have subsisting claims and to realise these claims, the liquidator will have to file suits. To avoid this eventuality and to keep all incidental proceedings in winding up before the court which is winding up the company, its jurisdiction was enlarged to entertain a petition, amongst others, for recovering the claims of the company. In the absence of a provision like section 446(2) under the repealed Indian Companies Act, 1913, the official liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. These suits, as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt or District Courts subordinate to that High Court in pursuance of sub-section (2). The winding-up petition has thus to be presented in the High Court before the judge who is assigned the work under the Companies Act. Therefore, the court which is winding up the company will be the court to whom the petition for winding up was presented and which passed the order for winding up the company. In this case, the order was made by the learned company judge in the Kerala High Court directing winding up of the company. An appeal lies against the order for winding up the company under section 483 to the same court to which and in the same manner in which and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction. In exercise of this appellate jurisdiction, the Appellate Bench entertained the appeals and directed that the winding-up order shall be held in abeyance till the scheme is implemented and if any default was committed, the winding-up order made by the learned company judge would be revived. The Appellate Bench declined to direct the provisional liquidator to file claim petition at the instance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Undoubtedly, a look at the language of section 446(1) and (2) and its setting in Part VII, which deals with winding-up proceedings, would clearly show that the jurisdiction of the court to entertain and dispose of proceedings set out in sub-clauses ( a ) to ( d ) of sub- section (2) can be invoked in the court which is winding up the company. Reverting to the facts of this case, the Appellate Bench held that as the winding-up proceeding in respect of the appellant-company is no more pending, and there is no court which could be said to be the court winding up the company and, therefore, the claim petition on behalf of the company which is not being wound up could not be instituted as contemplated by section 446(2). In reaching this conclusion, the Appellate Bench gave a restricted meaning to the expression "court which is winding up the company" in sub-section (2) by restricting it to the first situation in section 446(1), namely, when an order of winding up has been made. The Appellate Bench appeared to be of the view that where the official liquidator has been appointed as the provisional liquidator which implies that no winding-up order has been made, jurisdiction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Bench froze the winding up order by keeping it in abeyance ? Let it be made at once clear that the winding up order made by the learned company judge in respect of the appellant-company has neither been quashed, set aside, cancelled, revoked nor recalled. On the contrary after directing that the winding up order shall be held in abeyance, the Appellate Bench directed that the official liquidator shall continue to act as provisional liquidator as provided by section 450 and that itself is a stage in the winding up proceedings. When the winding up order is kept in abeyance, it is in a state of suspended animation. The fact that the Appellate Bench directed that pending the implementation of the scheme as sanctioned by the High Court, the winding up order will be kept in abeyance itself without anything more shows that the order was neither cancelled nor recalled nor revoked nor set aside. It continued to exist but was inoperative. Any default on the part of the company in carrying out its obligation under the scheme by itself without anything more would revive the winding up order. Therefore, the winding up order was effectively subsisting but inoperative for the time being, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
