1973 (8) TMI 91 - HC - Companies Law

Winding up - Power of company to appoint and fix remuneration of liquidator, Power to order winding up subject to supervision

Summary

Issues:
Can the remuneration of a liquidator in a voluntary winding-up be increased after the winding-up is brought under court supervision?

Analysis:
The judgment revolves around the question of whether the remuneration of a liquidator appointed during a voluntary winding-up can be increased once the winding-up comes under court supervision. The case involved a company that passed a resolution for voluntary winding-up, appointing a liquidator with fixed remuneration. Subsequently, due to increased workload, the liquidator sought a revision of his remuneration to match that of the official liquidator. However, the court, citing section 490 of the Companies Act, 1956, which prohibits any increase in the fixed remuneration of a liquidator, rejected the application for a raise.

The appellant's argument, based on English authorities allowing an increase in a liquidator's remuneration, was deemed irrelevant as the Indian law, specifically section 490 of the Companies Act, 1956, explicitly prohibits any increase in the fixed remuneration under any circumstances. The court emphasized that even when a voluntary winding-up is brought under court supervision, it remains voluntary winding-up, subject to the limitations of section 490.

The judgment further delves into the provisions of the Companies Act related to winding-up under court supervision, highlighting that the court's powers do not extend to increasing a liquidator's remuneration. Sections 524, 525, 526(2), and 527 outline the court's authority to appoint or remove liquidators under supervision but do not grant the power to alter remuneration. The court clarified that even when winding-up is under supervision, the restrictions of section 490 regarding remuneration remain applicable.

The appellant's plea for an increase in remuneration based on the extensive work and duration of liquidation proceedings was acknowledged by the court. However, the court reiterated the strict prohibition under section 490 against increasing a liquidator's remuneration once fixed by the company, emphasizing that the court cannot alter the statutory provision. Despite recognizing the challenges faced by the liquidator, the court upheld the law's rigidity, ruling against any increase in remuneration.

In conclusion, the court dismissed the appeal, emphasizing the mandatory nature of section 490 and the prohibition on increasing a liquidator's remuneration in any circumstances. The judgment underscores the importance of adhering to statutory provisions, even in challenging situations, and upholds the principle that the court cannot modify the law to allow for an increase in remuneration, thereby affirming the decision against revising the liquidator's fixed remuneration.