1980 (4) TMI 253 - HC - Companies Law

Winding up Suits stayed on winding-up order, Power to apply to court to have questions determined or powers exercised, Avoidance of certain attachments, executions, etc.

Summary

Issues Involved:
1. Whether the order dated January 19, 1970, granted leave to the decree-holders to take out execution and get the property attached and sold.
2. Whether the company judge had jurisdiction to entertain the application of the liquidator after the liquidator failed to file an appeal against the order of the executing court.
3. Whether the liquidator in voluntary winding-up proceedings waived his right by allowing the executing court to conduct the auction sale.

Detailed Analysis:

Point No. 1:
The company, M/s. Tanwar Finance Private Ltd., was under voluntary winding-up supervised by the court. The attachment of the company's land occurred on July 15, 1968, before the special resolution for winding-up was passed on November 16, 1968. The company judge, by order dated April 15, 1969, stayed execution proceedings and directed that the property should not be sold without court leave under section 537 of the Companies Act. The decree-holders sought leave again, and the company judge's order dated January 19, 1970, allowed only the attachment of the land, not its sale. The order was interpreted to mean that the six decree-holders could attach the land but not sell it. Kanwar Ram Chander, who had attached the land before winding-up, was also not granted leave to sell. Thus, no leave was granted for the sale of the land in execution of any decrees against the company.

Point No. 2:
The liquidator filed objections under Order 21, rule 90 of the CPC, which were dismissed. The liquidator's appeal was returned for presentation to the appropriate court, and no further appeal was pursued. The appellant argued that the liquidator was debarred from approaching the company judge, but the court held that proceedings under the Companies Act are independent of the CPC. The company court has exclusive jurisdiction under section 446(2)(d) and section 518 to set aside sales conducted without its leave. The sale without leave is void under section 537. The executing court's order confirming the sale was nonest, and the company court's order is binding. The company judge rightly held the sale to be void.

Point No. 3:
Section 526 of the Companies Act allows the liquidator in voluntary winding-up to exercise powers without court intervention unless restricted by the court. The appellant argued that the liquidator's failure to pursue an appeal implied consent to the sale. However, the liquidator contested the sale and filed objections. The liquidator, accountable to the court, could move the court under section 518 to declare the sale void. The court held that the liquidator did not waive his right and dismissed the appeal, agreeing with the company judge's order.

Conclusion:
The appeal was dismissed, and the company judge's order declaring the auction sale void was upheld. The liquidator did not waive his rights, and the company court had jurisdiction to determine the validity of the sale. The sale conducted without leave of the court was void.