1968 (2) TMI 69 - HC - Companies Law

Issues Involved:
1. Amendment of the plaint.
2. Applicability of Section 446 of the Companies Act, 1956.
3. Applicability of Rules 241 and 256 of the Court's Original Side Rules.
4. Applicability of Section 518 and related rules of the Companies (Court) Rules, 1959.
5. Interpretation of Sections 512 and 457 regarding the power of liquidators.
6. Compliance with Section 512, sub-section (4) regarding signatures of liquidators.
7. Bona fides of the petition for amendment.
8. Necessity of the amendment in light of Section 487 of the Companies Act.

Detailed Analysis:

1. Amendment of the Plaint:
The plaintiff, Eastern Coal Co. Ltd., sought to amend the plaint to reflect that the company went into members' voluntary liquidation on June 26, 1958. The court found that the amendment was procedural and necessary for clarity, allowing the petition for amendment.

2. Applicability of Section 446 of the Companies Act, 1956:
The defendant argued that Section 446, which mandates the transfer of proceedings to the company court upon a winding-up order, should apply. However, the court clarified that Section 446 pertains to winding-up by the court, not to members' voluntary winding-up, making it irrelevant in this context.

3. Applicability of Rules 241 and 256 of the Court's Original Side Rules:
The defendant referenced Rules 241 and 256, which are similar to Section 446, for transferring proceedings to the company court. The court dismissed this argument, noting that these rules apply to court-supervised winding-up, not to voluntary winding-up.

4. Applicability of Section 518 and Related Rules of the Companies (Court) Rules, 1959:
The defendant cited Section 518, which allows liquidators to apply to the court for various powers. The court ruled that Section 518 does not govern the amendment application and that the liquidators have the freedom to use this provision if necessary. The court also dismissed references to Rules 312, 315, 321, and 323, noting that any infractions of these rules do not affect the amendment.

5. Interpretation of Sections 512 and 457 Regarding the Power of Liquidators:
The court examined whether the liquidators needed the court's sanction to continue the suit. It concluded that "to institute a suit" does not mean "to continue a suit." Therefore, the liquidators did not need the court's sanction to continue the suit already instituted before the voluntary winding-up.

6. Compliance with Section 512, Sub-section (4) Regarding Signatures of Liquidators:
The defendant argued that the petition for amendment should be signed by at least two liquidators as per Section 512, sub-section (4). The court found that the liquidators were appointed jointly and severally, allowing any one of them to act individually. The court accepted the affidavit of one liquidator, Sen, which confirmed the collective decision, thus meeting the requirement.

7. Bona Fides of the Petition for Amendment:
The defendant questioned the bona fides of the petition due to the absence of an affidavit in reply. The court found this contention baseless, noting that the affidavit in reply was indeed present but overlooked.

8. Necessity of the Amendment in Light of Section 487 of the Companies Act:
The court questioned the necessity of the amendment, citing Section 487, which states that the corporate powers of the company continue until dissolution. The court noted that the suit could proceed without amendment, as the liquidators would simply take over from the directors. However, the court allowed the amendment for procedural clarity.

Conclusion:
The court allowed the petition for amendment, finding all contentions against it to be without merit. The amendment was deemed a routine procedural matter, aiding in the clarity of the proceedings. The order was to carry out the amendment within a fortnight, with no costs awarded.

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