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TMI Blog2002 (5) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner herein, and the defendant No. 5 who is the present respondent No. 1 herein. While the application is silent about the applicable provision of the Companies Act, the learned senior counsel for the applicant, Shri Rajiv Nayyar has submitted that the application falls within the scope and ambit of section 442 of the Companies Act, 1956 ('the Act') and may be treated as such. 2. The application avers :- (a)That winding up has been sought by the applicant/petitioner of the joint venture company, i.e., the respondent No.1 under section 433(f) on just and equitable grounds due to the equal shareholding and equal representation on the board of directors in the joint venture company between the petitioner (BFML) and respondent No. 2 (Jagatji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nforce monetary claims said to be due against the joint venture company against the other share holders and the other group of companies belonging to BFML, i.e., non-applicant Nos. 3 to 5. (d)The replies to the winding-up petition filed by Jagatjit and the pleadings in the plaint in the civil suit are similar and many paragraphs in the plaint and the reply are common. (e)The following pleas are common in the averments made in the plaint in the civil suit and the reply filed to the winding-up petition by Jagatjit. (i)Mismanagement of the affairs of the joint venture company by the petitioner and its nominee directors; (ii)Poor financial state of joint venture company based on imprudent decisions and policies of the petitioner ; (iii)BFM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 company in the suit, this application is an abuse of the process of Court. He has further submitted that section 442(b) does not contemplate a stay of such a suit and, thus, cannot be used to delay the adjudication of the claims raised in the suit filed in Kapurthala by his client, Jagatjit. The learned counsel for the respondent has relied upon a judgment of the Hon'ble Supreme Court reported as Official Liquidator v. Dharti Dhan (P.) Ltd. [1977] 47 Comp. Cas. 420 to contend that in section 442, the use of word 'may' ought not to be construed as 'shall'. In particular Dr. Singhvi has sought to place reliance upon the following passage of the above judgment which interprets section 442 and section 446 : "Sections 442 and 446 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context which can attach the obligation to the power compelling its exercise in a certain way. The context, both legal and factual, may impart to the power that obligatoriness". (p. 425) 6. Dr. Singhvi has, thus, contended that since no relief has been claimed against the respondent-company, in the suit, section 442 cannot be automatically invoked in the present case and the totality of the facts indicate that an interim order as prayed for stay of the civil suit in Kapurthala is not called for. It is further submitted that since the decree of the Court even if granted in the suit, cannot be executed against the company which is facing proceedings for winding-up, the relief claimed by the applicant in the present application cannot be gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst company.-At any time after presentation of a winding up petition and before a winding up order has been made, the company, or any creditor or contributory, may- (a)****** (b)where any suit or proceeding is pending against the company in any other Court, apply to the Court having jurisdiction to wind-up the company, to restrain further proceedings in the suit or proceeding ; and the Court to which application is so made may stay or restrain the proceedings accordingly, on such terms as it thinks fit." 10. The plea of Dr. Singhvi that it is not mandatory to stay proceedings under section 442 and the power is discretionary is absolutely correct in view of the phraseology of section 442 and the judgment of the Hon'ble Supreme Court in D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) has eloquently described the requirement of section 442 to mean that the proceedings sought to be stayed must have a bearing on the winding-up proceedings. 12. The Hon'ble Supreme Court has interpreted section 442 to mean that the proceedings sought to be stayed ought to have a bearing on the proceedings pending in the Company Court. Such a meaning of the impact of section 442 is broader than the ambit of section 10 of the CPC. Consequently, considering the scope and ambit of the plaint and the pleadings contained therein, I have no doubt that the civil suit while not claiming directly any relief against the respondent No. 1 company, nevertheless has a bearing on the winding-up petition in view of the common stance in both proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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