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TMI Blog1977 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ay, was said to be one of the debtors of the Golcha Company to the extent of Rs. 11,69,043, together with interest and commission which was said to be still due on 1st August, 1969. Agreements dated June 25,1966, and January 17, 1967, between the two companies regulated the method of repayment by annual instalments of Rs. 2,50,000 according to the appellant. As the respondent, Dhan Company, is said to have defaulted in the payment of two of its instalments, a claim under section 446(2) of the Companies Act (hereinafter referred to as "the Act") for the recovery of a sum of Rs. 5,00,000 was made before the company judge of the High Court of Rajasthan by the appellant. On 20th September, 1969, the; Registrar of Companies in Maharashtra had to file a winding-up petition against the respondent, Dhan Company, in the Bombay High Court. The company judge in the Bombay High Court on 3rd January, 1970, directed advertisement of the winding-up petition. The respondent, Dhan Company, appealed against the decision of the company judge and obtained an order dated 3rd February, 1970, from a Division Bench staying the operation of the order for advertisement of the winding-up petition. An appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 483 of the Act, which lays down : "483. Appeals from any order made, or decision given, in the matter of the winding up of a company by the court shall lie to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction". The Solicitor-General, however, submits that, on merits, the order of the learned company judge, dismissing the application of the Dhan Company for stay of proceedings under section 442(b) of the Act, deserves to be restored as no grounds for interference with the proper exercise of his discretion by the learned company judge existed at all. We highly appreciate the brevity of this submission, after the Solicitor-General had, very rightly and properly, conceded that he could not urge that the Division Bench had no jurisdiction to hear the appeal before it. No effective answer could be given to the Solicitor-General's submission by the learned counsel for the respondent. We will, however, deal with the strenuous arguments advanced on behalf of the respondent even if it be to disclose how untenable they are. Firstly, learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany ; whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960. (3) Any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for time being in force, be transferred to and disposed of by that court. (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court". Sections 442 and 446 of the Act have to be read together. It is only where the object of the two sections, when read together, is served by a stay order that the stay order could be justified. That object is to expeditiously decide and dispose of pending claims in the course of winding-up proceedings. A stay is not to be granted if the object of applying for it appears to be, as it does in the case before us, merely to delay adjudication on a claim, and thereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Julius, in the case mentioned above, had made an application to the Bishop of Oxford against the Rector of a Parish, asking the Bishop to issue a commission under the Church Discipline Act to enquire against certain unauthorised deviations from the ritual in a Church by the Rector. The relevant statute merely conferred a power by laying down that "it shall be lawful" to issue a commission. The Courts of Queen's Bench and of Appeal in England had differed on the question whether a mandamus from the court could go to the Bishop commanding him to issue a commission for the purpose of making the enquiry. The House of Lords held that the power to issue the commission was not coupled with a duty to exercise it in every case although there may be cases where duties towards members of the public to exercise a power may also be coupled with a duty to exercise it in a particular way on fulfillment of certain specified conditions. The statute considered there had not specified those conditions. Hence, it was a bare power to issue or not to issue the commission. Lord Blackburn said (at page 241): "I do not think the words 'it shall be lawful' are in themselves ambiguous at all. They are apt w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application is made. If the applicant can make out, on facts, that the objects of the power conferred by sections 442 and 446 of the Act can only be carried out by a stay order, it could perhaps be urged that an obligation to do so has become annexed to it by proof of those facts. That would be the position not because the word "may" itself must be equated with "shall" but because judicial power has necessarily to be exercised justly, properly and reasonably to enforce the principle that rights created must be enforced. In the case before us, the only right which could be said to have been created is the right to get speedier adjudication from the court where the winding-up proceeding is taking place. That is the object of the provisions. On facts disclosed in this case, we find that the application seems to have been made with the object of delaying decisions on claims made. In such a case, there could be no doubt that the application should be rejected outright as the learned company judge did. Secondly, an attempt was made to urge that as the power to grant or not to grant or to grant a stay upon certain conditions, assuming the power to be discretionary, is to be exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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