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TMI Blog2006 (4) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidator to hand over charge of the company to the directors and to discharge him from proceeding further with the winding up of the company and to pass such other and further orders as the court may deem fit, to give effect to the special resolution passed by the shareholders/contributories in their meeting held on January 31, 2006, rescinding the resolution for voluntary winding up and to commence the business of the company as well as directing the liquidator to hand over the charge of the company to its directors and if necessary file a petition in the High Court of judicature at Allahabad under section 466/518 and other applicable provisions of theCompanies Act for seeking permanent stay of voluntary winding up of the company. 3. The company was incorporated on April 18, 1984, in the name of Charisma Investment (India) Ltd. and commenced its business on January 24, 1985. The name of the company was changed to its present name, i.e., Dhankari Investments Ltd. on November 24, 1994, and a fresh certificate of incorporation was issued by the Registrar of Companies, Delhi, and Haryana on November 24, 1994. The company shifted its registered office to the State of U.P. aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with section 485(1) of the Act was published in the Official Gazette dated June 11, 2005. The notice of appointment of the liquidator was also given in Forms Nos. 151 and 152 on June 9, 2005, to the Registrar of Companies and on April 30, 2005, the declaration of solvency was filed by the directors with the Registrar of Companies completing the formalities of voluntary winding up. Shri V.P. Ghuliani, however, has not taken any further steps for dissolution of the company. He has not proceeded for sale of assets and distribution of sale proceeds. 6. It is contended that after protracted negotiations and discussions the differences between the directors have been resolved, and that the directors have decided to explore the possibility of some suitable new project or alternate use of land to rescind the voluntary winding up resolution and to revive the company. The resolution dated January 31, 2006, was passed unanimously in a meeting attended by shareholders representing 89.18 per cent, in number and 99.05 per cent, of the total voting power. 7. Notices were issued to the official liquidator, U.P. and Uttranchal and the Registrar of Companies, U.P. and Uttranch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p the company. The company can, however, in the circumstances when it is just and beneficial to do so either bring a scheme under section 391 of the Companies Act, 1956, for its revival or request the court, to stay the proceedings of voluntary winding up altogether. He has relied upon Voluntary Liquidator, Dimples (P.) Ltd. v. Registrar of Companies [1978] 48 Comp. Cas. 98 (Delhi) and V.B. Purohit v. Gadag and Jambukeshzvara [1984] 56 Comp. Cas. 360 (Kar.). In these two cases the Delhi High Court and the Karnataka High Court considered the powers of the court to stay the winding up exercisable under section 466 in relation to companies being wound up by the court, to be applicable when a company is in a voluntary winding up. Relying upon East India Cotton Mills Ltd., In re, [1949] 19 Comp. Cas. 61; AIR 1949 Cal. 69, South Barrule Slate Quarry Co., In re [1869] LR 8 Eq. Cas. 688, Titian Steamship Co., In re [1888] WN 17 and Telescriptor Syndicate Ltd., In re [1903] 2 Ch. 174, the Delhi High Court held that there is no doubt that the court does possess the power to stay the winding up even when it is a case of voluntary winding up. The Delhi High Court in the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. The court does not have much to say in the matter of members voluntary winding up, which gives the company, its contributories and creditors, to settle their affairs, without coming to the court. The Act, however, confers limited powers to have questions determined or power exercised even in the case of voluntary winding up without resorting to compulsory winding up or a supervision order. The scope of the section is, however, limited. The High Court on such an application cannot determine the questions, which primarily involve questions of facts. The resolution of voluntary winding up does not, like an order of winding up by, or under the supervision of the court, stay the proceedings or prevent suits or proceedings brought or continued against the company without reference to the court. The court, however, under sub-section (2) has powers on an application by liquidator, creditor or contributory to stay and set aside any attachment distress or execution against the company, which has passed resolution for voluntary winding up after the commencement of the winding up. The court will not determine the disputes between the liquidator and creditor. It may, however, interfere if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing stayed, and the court will not impose a stay if the liquidator repudiates all liability of the company to the plaintiff, for in that event if the plaintiff were remitted to proving in the winding up, the liquidator would reject his proof, and the court would have to try the issue on an appeal from the liquidator s decision Currie v. Consolidated Kent Colliers Corpn. [1906] 1 KB 134 ; Cook v. X Chair Patents Co. Ltd. [1959] 3 All ER 906; [1960] 1 WLR 60. Furthermore, in no circumstances will the court stay an action by a creditor if the company is solvent, because it will not prejudice the other creditors to allow him to proceed, and the members have no justification for depriving him of his right to exact payment by obtaining judgment and levying execution in the normal way Gerard v. Worth of Paris Ltd. [1936] 2 All ER 905. Finally, the court may make an order on an application in a voluntary winding up only if it would be just and beneficial to do so : this means just and beneficial to the creditors or contributories generally or, at least, to certain of them, and the court will not make an order if its only effect will be to protect directors of the company from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever in circumstances, when it is just and beneficial to do so to the creditors or contributories, make an order, if its effect is to protect the directors of the company from personal liability or a creditor by statute or otherwise. This power includes the power to stay the voluntary winding up itself altogether, when the court is satisfied that the causes for which the voluntary winding up resolution was passed, if any disclosed to the court, no longer exist, the company is not indebted and commercially solvent and a bona fide effort has been made to revive the company. The court will, however, not act on a mere change of opinion of the members/ contributories and would like to be satisfied with the change in conditions in which such resolution is passed. The power should be exercised sparingly and only where it is just, beneficial and expedient to do so taking into consideration the object of formation of the company, the resolution of the differences, if any, the availability of the assets, in support of the resolution to continue with the business, and the stage at which such resolution has been passed namely that the liquidator has not proceeded to sell the assets, and to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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