1984 (6) TMI 181 - HC - Companies Law

Winding up Disclaimer of onerous property, etc., after commencement of, Winding up Avoidance of transfer, etc., after commencement of

Issues Involved:
1. Locus Standi of the Appellants
2. Validity of Share Transfers
3. Proposed Scheme for Revival of the Company
4. Disclaimer of Leasehold Interest
5. Applicability of Rule 268 of the Companies (Court) Rules, 1959
6. Effect of Notifications under the West Bengal Relief Undertakings (Special Provisions) Act, 1972

Issue-wise Detailed Analysis:

1. Locus Standi of the Appellants:
The appellants filed an application under sections 446 and 466 of the Companies Act, 1956, seeking a stay of all further proceedings in respect of the winding-up of the company and the order of disclaimer of the hotel building of the company. The court considered whether the appellants had the locus standi to make such an application. Appellant No. 1 claimed to be the authorized representative and constituted attorney of appellants Nos. 2 and 3, who were contributories of the company. The court noted that while appellants Nos. 2 and 3 were indeed contributories and thus had the standing to file the application, appellant No. 1's standing was questionable due to the invalidity of the share transfers (discussed below).

2. Validity of Share Transfers:
The transfers of shares by appellants Nos. 2 and 3 to appellant No. 1 were made after the commencement of the winding-up proceeding. According to section 536(2) of the Companies Act, such transfers are void unless sanctioned by the court. The court held that the transfers made long after the winding-up order without any direction of the court were void. Thus, the application under sections 446 and 466 of the Companies Act was not maintainable at the instance of appellant No. 1 alone.

3. Proposed Scheme for Revival of the Company:
The appellants proposed a scheme to revive and run the hotel business of the company, including a proposal to the LIC for the liquidation of its dues. The court found the proposed scheme lacking in assurance and financial adequacy. The appellants' claim of owning assets worth Rs. 40,00,000 was unsupported by clear proof. The court was not impressed with the scheme and noted that the appellants had not taken any steps under section 391 of the Companies Act.

4. Disclaimer of Leasehold Interest:
The core issue was the disclaimer of the leasehold interest of the company in the premises belonging to the LIC. The official liquidator, following court orders, disclaimed the property. The appellants sought to stay the operation of this disclaimer. The court reaffirmed that the disclaimer had become operative from the date the appeal court directed the official liquidator to disclaim the property or, at the latest, from the date the official liquidator served the disclaimer on the LIC.

5. Applicability of Rule 268 of the Companies (Court) Rules, 1959:
The appellants argued that under rule 268, the disclaimer had not yet become operative as it had not been filed in court. The court clarified that rule 268 applies when the disclaimer is made at the instance of the official liquidator with the court's leave. In this case, the disclaimer was directed by the court at the instance of the LIC, not the official liquidator. Hence, the order of the court itself acted as the disclaimer, making the disclaimer operative irrespective of its filing in court.

6. Effect of Notifications under the West Bengal Relief Undertakings (Special Provisions) Act, 1972:
The appellants contended that the notifications issued under the Relief Undertakings Act should affect the winding-up proceeding and the disclaimer. The court found that since the disclaimer had become operative before the issuance of these notifications, the Relief Undertakings Act and the notifications had no effect on the disclaimer. Consequently, the court did not need to consider the appellants' submissions based on the Relief Undertakings Act.

Conclusion:
The court dismissed the appeal with costs, upholding the disclaimer of the leasehold interest and rejecting the appellants' proposed scheme for revival. The prayer for stay of the operation of the judgment was also disallowed.

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