1985 (2) TMI 217 - HC - Companies Law

Circumstances in which a company may be wound up, Power to investigate into affairs of a company-in-liquidation

Summary

Issues:
1. Interpretation of section 15A of the Industries (Development and Regulation) Act, 1951.
2. Maintainability of the application under section 15A.
3. Authority of the Central Government to investigate and restart industrial undertakings.
4. Relevance of pending winding-up petition under section 433 of the Companies Act.

Analysis:
1. The judgment by K. Shanmukham, J., dealt with the interpretation of section 15A of the Industries (Development and Regulation) Act, 1951. The applicant, Union of India, sought permission to investigate the possibility of restarting a closed manufacturing unit. The court analyzed the language of section 15A, emphasizing the phrase "being wound up by or under the supervision of the High Court." While referencing a decision of the Calcutta High Court, the judge noted that the expression implied a company directed to be wound up. However, the judge did not dismiss the application solely based on this interpretation, considering the Act as an enabling statute empowering the Central Government to deal with companies for the benefit of the public and the economy.

2. The issue of the maintainability of the application under section 15A was raised, contending that the application did not strictly fall within the scope of the provision. Despite the objection, the court held that even though the application did not align perfectly with section 15A, the broader objectives of the Act allowed for a flexible interpretation. Sections 18FA, 18FC, 18FD, 18FE, 18FF, 18FG, and 18FH of the Act were cited to support the view that the Central Government had the authority to intervene in such matters.

3. The judgment delved into the authority of the Central Government to investigate and restart industrial undertakings. It highlighted provisions such as section 18AA, which granted the government similar rights as section 15A. The court emphasized that the Act aimed to serve the interests of the public and the economy, allowing for actions to be taken to safeguard the working class affected by company closures. The judge concluded that the government could seek court orders for actions related to company disposition or reorganization.

4. Regarding the relevance of a pending winding-up petition under section 433 of the Companies Act, the court opined that it would not be practical to compel the Central Government to exercise its powers without resorting to section 15A and then seek similar relief from the court through a separate proceeding. The judgment underscored that any actions taken by the government concerning the company would ultimately require court approval, whether through winding-up or reorganization processes. The court dismissed objections based on directions from the Supreme Court, noting that the application aimed to comply with the Supreme Court's directives. Ultimately, the court granted the application as requested by the Union of India.