2006 (4) TMI 262 - HC - Companies Law

Issues Involved:
1. Petition to stay the special resolutions of voluntary winding up.
2. Restoration of management powers to the directors.
3. Discharge of the liquidator from further proceedings.
4. Court's power to stay voluntary winding-up proceedings under the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Petition to stay the special resolutions of voluntary winding up:
The company, Dhankari Investments Ltd., filed a petition under sections 466/518 of the Companies Act, 1956, to permanently stay the special resolutions of voluntary winding up passed by the shareholders on June 2, 2005. The petition aimed to rescind the resolution for voluntary winding up and to revive the company based on a subsequent resolution passed on January 31, 2006, by shareholders representing 89.18% in number and 99.05% of the total voting power.

2. Restoration of management powers to the directors:
The petition sought to restore the management of the company's affairs to the directors and to permit the liquidator to hand over charge of the company to the directors. The directors had resolved their differences, which initially led to the voluntary winding up, and decided to explore new business opportunities or alternate uses for the company's assets, particularly the land acquired for setting up a sugar factory.

3. Discharge of the liquidator from further proceedings:
Shri V.P. Ghuliani, the liquidator, was appointed with all powers under section 512 of the Act. However, he had not taken any steps towards the dissolution of the company or the sale of its assets. The petition requested the court to discharge the liquidator from proceeding further with the winding up of the company and to hand over the charge to the directors.

4. Court's power to stay voluntary winding-up proceedings under the Companies Act, 1956:
The court examined its powers under section 518(1)(b) of the Companies Act, 1956, which allows the court to stay the proceedings of voluntary winding up. The court referred to precedents where it was held that the court possesses the power to stay the winding up even in cases of voluntary winding up. The court found that the company was solvent, had no secured creditors, and had sufficient assets to continue its business. The court also considered the resolution passed by the majority of shareholders to rescind the voluntary winding up and revive the company.

Judgment:
The court found it just, beneficial, and expedient to stay the proceedings of the voluntary winding up initiated by the resolution dated June 2, 2005. The court allowed the petition, stayed the voluntary winding up proceedings altogether, restored the directors with the powers to manage the company's affairs, and directed the liquidator to hand over the charge of the company to the directors. The liquidator was discharged from the proceedings, and the order was to be communicated to the Registrar of Companies. The court did not pass any order as to costs.

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