1977 (3) TMI 97 - HC - Companies Law

Winding up Power of tribunal to stay winding-up, Power to apply to court to have questions determined or powers exercised

Summary

Issues:
1. Power of the court to bring a voluntary winding-up to an end.

Analysis:
The judgment pertains to a petition under sections 518 and 466 of the Companies Act, 1956, concerning the power of the court to bring a voluntary winding-up to an end. The case involves a company, M/s. Dimples Private Ltd., with a paid-up capital of Rs. 34,200, incorporated in 1957, which ceased business in 1962-63. Subsequently, a special resolution was passed in 1967 for a members' voluntary winding-up, with a voluntary liquidator appointed. The liquidator realized all amounts due, leaving Rs. 34,032.28 with him. Two shareholders, Mrs. Leela Puri and Movies Private Ltd., resolved in 1976 to stay the winding-up, leading to the current petition seeking a permanent stay.

The main issue revolves around whether the court has the authority to stay a voluntary winding-up. Section 466 of the Companies Act, 1956, grants the court power to stay proceedings in a winding-up order passed by itself, upon application by the official liquidator, creditor, or contributory. The petitioner relies on section 518, which allows the court to exercise powers applicable to court-ordered winding-up in the context of voluntary winding-up. The petitioner's argument is supported by precedents such as In re Punjab Cooperative Bank Ltd. and In the matter of East India Cotton Mills Ltd., indicating that the court can indeed stay a voluntary winding-up.

The judgment further discusses the principles guiding the court's decision to stay a winding-up, emphasizing the need for justifiable grounds. The petitioner's plea to stay the winding-up is supported by the company's willingness to revive its business, absence of liabilities or creditors, and the availability of funds. The company's objectives as a hire-purchase and investment firm, coupled with its financial standing, indicate a potential for successful revival without detriment to any party. Consequently, the court allows the petition, staying the winding-up proceedings altogether due to the absence of opposition and the favorable circumstances presented in the case.