2013 (10) TMI 1590 - HC - Companies Law

Issues Involved:

1. Authority and powers of a provisional liquidator to invite claims.
2. Legal implications of inviting claims before the winding-up order.
3. The impact of pending proceedings on the actions of the provisional liquidator.
4. Jurisdiction of the court in winding-up proceedings.

Detailed Analysis:

1. Authority and Powers of a Provisional Liquidator to Invite Claims:

The primary issue revolves around whether a provisional liquidator has the authority to invite claims from creditors before a formal winding-up order is passed. The judgment explores the statutory framework under Sections 450 and 457 of the Companies Act, which outline the powers of a provisional liquidator. The court notes that a provisional liquidator, appointed under Section 450, generally possesses the same powers as a liquidator unless specifically restricted by the court. The judgment references the case of In re A.B.C. Coupler & Engineering Co. Ltd. where it was suggested that the powers of a provisional liquidator are akin to those of a liquidator, emphasizing that the term "provisional" relates more to the tenure rather than the scope of powers. The court ultimately concludes that a provisional liquidator can indeed invite claims, aligning with the statutory provisions that allow such actions with court sanction.

2. Legal Implications of Inviting Claims Before the Winding-Up Order:

The judgment addresses the argument that inviting claims should only occur post-winding-up order, as the distribution of assets typically follows such an order. The court examines the statutory provisions and previous judgments, including the Full Bench decision in Faridabad Cold Storage, which suggested that the right to file claims arises only after a winding-up order. However, the court distinguishes the present case by citing the Supreme Court's decision in Sudarsan Chits, which interprets the phrase "the court which is winding up the company" to include courts where winding-up petitions are pending and provisional liquidators are appointed. This interpretation supports the provisional liquidator's actions in inviting claims even before a winding-up order is formally issued.

3. The Impact of Pending Proceedings on the Actions of the Provisional Liquidator:

The judgment considers the argument that ongoing proceedings, specifically CA 1713/2009 challenging the sale of properties by the bank, should preclude the provisional liquidator from inviting claims. The court clarifies that while the sale is under challenge, this does not legally bar the provisional liquidator from initiating the claims process. However, the court exercises discretion by instructing the provisional liquidator not to proceed beyond inviting claims until the pending application is resolved. This ensures that the process does not interfere with the outcome of the challenge to the property sale.

4. Jurisdiction of the Court in Winding-Up Proceedings:

The court discusses its jurisdiction under Section 446(2) of the Companies Act, which allows it to entertain and dispose of claims made by or against the company. The judgment clarifies that the jurisdiction extends to courts where winding-up petitions are pending, and provisional liquidators are appointed, as per the Supreme Court's interpretation in Sudarsan Chits. This broader understanding of jurisdiction supports the court's decision to allow the provisional liquidator to invite claims, reinforcing the court's role in overseeing the winding-up process even before a formal order is issued.

In conclusion, the court dismisses the applications seeking to recall the order permitting the provisional liquidator to invite claims, affirming the provisional liquidator's powers and the court's jurisdiction in the context of pending winding-up proceedings. The decision balances statutory interpretation with practical considerations, ensuring that the process aligns with legal principles while safeguarding creditors' interests.

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