2010 (3) TMI 668 - HC - Companies Law

Compromise and arrangement - Held that - The committee of management under the special officer appointed by the order dated 2-7-2008 will continue only for the purpose of guarding the assets of the company (in liquidation) till such time that the Official Liquidator takes possession thereof. The special officer heading the committee of management will forthwith call upon the Official Liquidator to take possession of all assets of the company (in liquidation). The special officer, who has meticulously prepared a report that has been placed in Court, will tally the list of inventories prepared at the time that he had taken possession and will make over all assets of the company (in liquidation) matching such list of inventories to the Official Liquidator as expeditiously as possible, and preferably within a period of four days from the date of receipt of an authenticated copy of this order.

Issues:
1. Application invoking sections 391, 394, and 466 of the Companies Act, 1956 for running a company in liquidation.
2. Mistake in procedure and substance in subsequent applications related to the company in liquidation.
3. Lack of compliance with legal procedures and requirements for controlling assets of a company in liquidation.
4. Failure to obtain necessary approvals from contributories and secured creditors for proposed schemes.
5. False claims regarding shareholding in the company in liquidation.
6. Discrepancies in the scheme proposed by the petitioners and lack of support from secured creditors.
7. Dismissal of applications due to incomplete and unfeasible schemes.
8. Continuation of the committee of management for asset protection until taken over by the Official Liquidator.
9. Imposition of costs on the principal person responsible for the misadventures in the applications.

Detailed Analysis:
1. The judgment involves an application under sections 391, 394, and 466 of the Companies Act, 1956, where workers and a well-wisher sought to run a company in liquidation. An interim order was granted, but subsequent actions lacked legal sanction, raising concerns about asset control without proper authority.
2. Procedural errors were noted in subsequent applications related to the company in liquidation, indicating a lack of adherence to legal requirements and the correct sequence of filings under the Companies Act.
3. The failure to comply with legal procedures and obtain necessary approvals from contributories and secured creditors for controlling assets of a company in liquidation was highlighted as a violation of public policy and legality.
4. False claims regarding shareholding in the company in liquidation, especially after the order of winding up, were deemed invalid, emphasizing the legal restrictions on share transfers during liquidation.
5. Discrepancies in the proposed scheme by the petitioners, lack of support from secured creditors, and the withdrawal of a strategic partner led to the dismissal of applications due to incomplete and unfeasible schemes.
6. The continuation of the committee of management for asset protection until taken over by the Official Liquidator was ordered, ensuring proper safeguarding of company assets during the transition.
7. Costs were imposed on the principal person responsible for the misadventures in the applications, emphasizing accountability for legal missteps and inappropriate actions in the context of company liquidation proceedings.

← Previous Next →