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TMI Blog1978 (5) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... by the creditors on the same date. According to the application, there were six directors on that date. According to the application, Shri O. P. Malhotra, respondent No. 1, was removed by the creditors at a meeting held on 11th August, 1973. I may here mention that, in separate proceedings, I have since removed both Shri O.P. Malhotra and Shri B. L. Sharma and appointed the official liquidator and the company is being wound up under the supervision of the court. The objection of the petitioners is that Shri O. P. Malhotra has filed a false complaint under section 454(5) of the Companies Act, 1956, in the court of Shri R.N. Jindal, Magistrate, 1st Class, Delhi. A copy of that complaint has also been filed. The validity of the complaint and the jurisdiction of the Magistrate have been challenged in this petition. A counter-affidavit was filed by Shri O. P. Malhotra and some certified copies of the orders passed by Shri R. N. Jindal, Metropolitan Magistrate have also been filed. I may mention that the Magistrate has held that there is substance in the complaint and it should be proceeded with. There are really four points for decision in this case: (1)Whether the Magistrate h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 1956, which have also to be examined for finding out what happens when a company is in voluntary winding up as opposed to being wound up by the court. The scheme of the Companies Act is that when a winding-up order has been passed, a statement of affairs has to be given to the official liquidator and failure to make such a statement by the persons mentioned in section 454 is a penal offence created by section 454(5) which is punishable and has to be tried by the court which passed the winding-up order. This, in short, is the effect of section 454 when applied to a winding-up by the court. When a company goes into voluntary winding-up, this section cannot be read in this way and has to be read in the light of section 511A of the Act, which changes the requirements of section 454 when applied to a voluntary winding-up. This section was added by section 56 of the Companies (Amendment) Act of 1965. The new section reads: "511A. Application of section 454 to voluntary winding-up. The provisions of section 454 shall, so far as may be, apply to every voluntary winding up as they apply to the winding up by the court except that references to ( a )the court shall be omitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sections 523 and 526(2) of the Act is that even for the purposes of section 454, the company has to be deemed to be in compulsory winding up by the court, and, hence, the jurisdiction to try under section 454(5) is transferred to the High Court which is the court under whose supervision the winding up is to proceed. This brings me to examine the date on which the supervision order was passed, because, in my view, the High Court's jurisdiction only starts after the supervision order is passed on the analysis I have just made. As it happens, the supervision order was passed in C.P. No. 85 of 1974 on 13th November, 1975, and as the complaint had been filed some time in 1974, although I am not able to find out the exact date, it was clearly filed long before the supervision order was passed. Hence, I come to the conclusion that the Magistrate did have jurisdiction to proceed with the complaint and the present petition cannot succeed on this ground. I now take up the second question which is whether the accused persons are the proper parties in the complaint. As appears from the complaint, the accused are Shri B. L. Sharma, joint liquidator, and Shri Ram Rakha Chopra, ex-directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidator, this direction might have been issued, but it cannot be issued by one liquidator to another, because no liquidator can be called upon to file a statement of affairs before himself. In fact, as Shri O. P. Malhotra was only a joint liquidator, the statement of affairs could only be filed joint and even the demand under section 454(2) had to be met jointly by both liquidators. Hence, from every point of view, the complaint cannot proceed against Shri B. L. Sharma, because he is not the proper accused. It is then submitted that by reason of the supervision order, a subsequent event has intervened to make the main complaint invalid. I think, this submission is not justified. As stated earlier, there is a supervision order which means that this court has now to deal with the winding up as if a winding-up order has been passed by this court. However, this only allows further proceedings being dealt with in this way. All previously pending petitions and cases do not become invalid. In my view, in the present case, this gives the power to this court to transfer the complaint to this court under section 446(3), but it does not mean that the complaint becomes invalid. I now tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harma started acting alone as liquidator. As this was a decision of the creditors, Shri B.L. Sharma might have stated that his appointment allowed him to act alone, but no such authority was ever given by any one to Shri O.P. Malhotra. In any event, the difficulties faced by the joint liquidators who were disagreeing with each other were the subject-matter of some other proceedings, which led me to pass orders separately. I removed both of them and appointed the official liquidator as the sole liquidator to continue the voluntary winding up under the supervision of the court, otherwise the liquidation could not proceed. This situation seems to have existed even in this case where a complaint by only one liquidator was filed. In my view, one liquidator could not file a complaint, because of the way section 512(4) has to be read with section 621(2) of the Act. In other words, the complaint has to be held to be improperly filed, and, hence, is hit by section 621 being a complaint not filed by a proper person. If Shri O. P. Malhotra was a shareholder, perhaps, though I am a little doubtful whether a shareholder remains a shareholder after the winding-up proceedings start, because then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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