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2018 (8) TMI 1539 - HC - Companies LawComplete stay on the voluntary winding up of the respondent company - Held that - This court does have the power to stay voluntary winding up process. See VOLUNTARY LIQUIDATOR, DIMPLES (P.) LTD., S.P. SOOD VERSUS REGISTRAR OF COMPANIES 1977 (3) TMI 97 - HIGH COURT OF DELHI In opinion therefore this is a fit case to exercise power under Section 518(i)(b) of the Act to permanently stay the voluntary winding up of the said company. The Company is solvent. It is likely to receive funds in the litigation against MCL. The petition is accordingly allowed. The respondent company will file all the statutory reports before the ROC, as per law. The powers of the Ex-directors of the aforesaid company are restored. The liquidator will hand over the charge of the said company to the Ex.Directors pursuant to which the liquidator will be discharged from further proceedings in the winding up process. After the filing of returns by the said Company, ROC will mark the said company as active in their records.
Issues involved:
1. Petition for complete stay on voluntary winding up of respondent company under Companies Act, 1956. 2. Power of the court to stay voluntary winding up proceedings. 3. Company's solvency and likelihood of receiving funds from ongoing litigation. Analysis: 1. The petition was filed under section 518(1)(b) of the Companies Act, 1956, seeking a complete stay on the voluntary winding up of the respondent company. The Board of Directors had decided to initiate Member's Voluntary Winding-Up proceedings, and a special resolution was passed for the commencement of the winding up of the company. The company was declared solvent, with a surplus in its last Audited Balance Sheet. 2. The court considered the power to stay voluntary winding up proceedings, citing the judgment in S.P. Sood Vs. Registrar of Companies, ILR 1977 Delhi 474. The court noted that there are precedents where voluntary winding up was stayed, emphasizing that the court must assess all circumstances before granting a stay. It was established that the court indeed possesses the power to stay the winding up process, even in cases of voluntary winding up. 3. After evaluating the facts and circumstances, the court determined that it was a fit case to exercise power under Section 518(i)(b) of the Act to permanently stay the voluntary winding up of the company. The court considered the company's solvency and the likelihood of receiving funds from the litigation against Mahanadi Coal Field Limited. Consequently, the petition was allowed, and the respondent company was directed to file all statutory reports before the Registrar of Companies. The powers of the Ex-directors were restored, and the liquidator was instructed to hand over the charge of the company to the Ex-Directors, leading to the company being marked as active in the records of the Registrar of Companies. In conclusion, the court's judgment granted a permanent stay on the voluntary winding up of the company, highlighting the importance of assessing solvency and potential financial outcomes from ongoing legal disputes.
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