1982 (2) TMI 237 - HC - Companies Law

Summary

Issues: Application under section 466 of the Companies Act, 1956 for voluntary winding-up, revival of the company, permanent stay of winding-up proceedings, authority to present the application, justifiable reasons for stay of winding-up proceedings.

The judgment pertains to an application under section 466 of the Companies Act, 1956, seeking a permanent stay of voluntary winding-up proceedings and revival of the company. The applicant, a shareholder of the company, highlighted that the company had resolved for voluntary winding-up due to financial constraints. However, the shareholders, including the applicant, decided to revive the company for establishing a cement plant. An extraordinary general meeting was held, resolving to approach the court for a permanent stay of the winding-up proceedings under sections 518 and 466 of the Companies Act, 1956. The applicant was authorized to present this application, seeking a stay of the winding-up process and directions for the revival of the company. The court considered the stage of the winding-up proceedings and referred to a Delhi High Court case where a voluntary liquidator had applied for a stay upon shareholders' decision to revive the company before its dissolution. The court emphasized that the shareholders could revive the company themselves to prevent further winding-up steps.

Regarding the authority to present the application, the court noted that the applicant was duly authorized at the general body meeting to file the application. The court acknowledged the potential of the company's limestone quarry lease and the national interest in increased cement production. It emphasized that the shareholders' resolution to revive the company for establishing a cement factory should not be denied. The court granted the prayers in the application, staying the winding-up proceedings at any stage absolutely. This decision allowed the shareholders to elect a new board of directors and take necessary steps to achieve the company's objectives.

The judgment also mentioned that the counsel for the official liquidator was heard before passing the order. Consequently, the court ruled that the Company Application No. 1838/1911 did not survive for separate consideration in light of the order granting a permanent stay of the voluntary winding-up proceedings. The decision highlighted the court's power to stay a voluntary winding-up process based on justifiable reasons, especially when shareholders aim to revive the company for a significant purpose like establishing a cement plant.