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Issues: Jurisdiction of ordinary civil court in matters related to winding up of a company under the Companies Act.
The judgment revolves around the jurisdiction of an ordinary civil court in a case concerning the winding up of a company governed by the Companies Act. The company in question went into voluntary liquidation 25 years ago, and the voluntary liquidators appointed were accused of misfeasance and non-feasance. A suit was filed seeking accounts from the liquidators and distribution of surplus assets among shareholders. The contesting defendants argued that only the court under the Companies Act had jurisdiction over such matters. The lower court overruled this objection, leading to the revision petition. The key contention raised was regarding the jurisdiction of the ordinary civil court in matters related to the winding up of a company under the Companies Act. The petitioners argued that the provisions of the Companies Act of 1956, specifically section 647(2), mandated that winding up proceedings for the company in question were to be governed by the provisions of the Act of 1913. Sections 208 to 220 of the Act outlined the powers and duties of liquidators and provided for the removal and appointment of liquidators by the court. The court was empowered to determine questions arising in voluntary winding up, and its powers were akin to those in a winding up by the court. The judgment delved into the interpretation of statutory provisions and legal principles governing the jurisdiction of ordinary civil courts in company winding up matters. It highlighted that while the Companies Act did not expressly bar the jurisdiction of ordinary civil courts in matters covered by the Act, there was a general principle that such jurisdiction could be excluded if expressly stated or necessarily implied. The court emphasized that cases related to the winding up of a company, even in voluntary winding up scenarios, were traditionally dealt with by the court under the Act, particularly in cases involving allegations of misfeasance and non-feasance against liquidators. The judgment referenced the special provision in section 235 of the Act of 1913, which conferred the court with the power to assess and award damages against delinquent company officers or liquidators. It cited legal precedent to support the argument that liabilities created by statute, such as those for misfeasance or non-feasance by liquidators, required remedies provided by the statute itself. The court concluded that shareholders seeking such remedies must approach the court under the Companies Act to obtain them, rather than an ordinary civil court. Consequently, the lower court's decision to entertain the suit was deemed erroneous, and the revision petition was accepted, directing the return of the plaint to the plaintiffs, with costs to be borne by the parties.
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