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TMI Blog1951 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... regular and void and that as the orders of attachment were put into force before the commencement of the alleged winding up, they cannot be set aside under section 216(2). Learned counsel for the petitioners argues that at an extraordinary general meeting of the company held on 17th March, 1950, a special resolution that the company be voluntarily wound up and the petitioners be appointed as liquidators, was passed; and that the liquidation was a members' liquidation because the special resolution itself stated that the company was solvent and able to meet all its liabilities. It is conceded on behalf of the petitioners that a notice of the resolution was not published in the official Gazette as required by section 206 and that the provisions of section 207 of the Companies Act were not complied with and no declaration of solvency was filed. But it is argued that these omissions are not fatal; they are mere irregularities and not illegalities which vitiate the resolution winding up the company or the appointment of the petitioners as liquidators. It is further contended that the opponent creditors have no locus standi to question the legality of the voluntary liquidation by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court, must accept the fact that the voluntary winding up is valid. He cannot apply for orders under section 216 to assist the winding up or for a supervision order under section 221, and at the same time challenge the voluntary winding up proceedings as being void. The position of an opponent to such a petition is, however, different. His object is to secure the rejection of the petition and for that end, he is entitled to urge that the winding up proceedings in relation to which the court has been moved to exercise the powers are void or for that reason, the petitioner is not entitled to apply. In such cases the opponents' attack on the winding up is in the main with the object of showing that the conditions requisite for the exercise of the powers under section 215 or 221 of the Companies Act do not exist. It is on this ground that the decision reported in Kameshwar Singh v. Ambler Slate and Stone Co., Ltd., A.I.R. (23) 1936 Pat. 468 is distinguishable. In that case two creditors of a company in voluntary liquidation applied to the court for the appointment of "an official liquidator with the voluntary liquidator and for restraining the voluntary liquidator from parting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n subject to the supervision of the court was without jurisdiction as the liquidation itself was illegal in so far as the provision of section 207 were not complied with. On behalf of the company, in the case, it was said relying on Kameshwar Singh v. Ambler Slate and Stone Co. Ltd., that it was not open to a creditor to question the legality of the voluntary liquidation of the members. The contention of the company was not accepted. The learned Judge of the Punjab High Court observed that the Patna case did not help the company and held that "if a voluntary winding up is bad in so far as it does not conform to the provisions of section 207 then the appointment of a liquidator is bad and a fortiori the continuance of the voluntary liquidation". The Punjab case lends support to the view I have taken about the competency of a creditor to challenge in certain circumstances the voluntary liquidation proceedings as being void. I, therefore, hold that the non-applicants in the present case are entitled to say the petitioners are not competent to make the application because the voluntary liquidation in which they were appointed as liquidators, is void. Coming now to the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the company never intended to have a creditors' voluntary winding up and did not pass an extraordinary resolution to that effect that it could not by reason of its liabilities continue its business, it was not necessary to follow the provisions of sections 209A to 209 H. Applying the general rule that a company cannot do that which is prohibited by the Act, but in cases where it is empowered to do a thing and it does it irregularly, then the irregularity can be cured, it is no doubt possible to take the view that the failure to conform to the provisions of section 206, which only directs the advertisement of the resolution of winding up after its passing and which prescribes a penalty in the event of a default in complying with the provisions of the section, is only an irregularity and not an illegality which vitiates the resolution to wind up the company. But I do not think that it could be argued with any degree of force that even when the provisions of section 207 (1) and (2) are not complied with, there is a valid "members' voluntary winding up". Under section 207 (1) and (2), a members' winding up can be constituted only when there is a declaration of solvency as laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X
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