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TMI Blog2009 (5) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany application has been filed, pursuant to the special resolution passed at the meeting dated 11-2-2009, of the contributories of Gautam Sarabhai (P.) Ltd. ( the company ) for permanently staying the voluntary liquidation of the company and thereupon seeking discharge of the liquidators. The company was in voluntary liquidation in terms of the special resolution passed at the meeting of its shareholders held on 20-1-1970. By the present application, the applicants also seek to revive and restart the company in terms of the clauses of its memorandum of association and articles of association and to permit the shareholders of the company to elect the members of the board of directors. 2. The company was incorporated under the Indian Companies Act, 1913 (7 of 1913) and was registered with the Registrar of Companies, Bombay. The objects for which the company was established have been stated in paragraph 3 of the application. 3. The company had in March, 1947, purchased an immovable property at Mount Pleasant Road, Mumbai, which was let out up to December, 1950. Thereafter, the said immovable property was demolished and the area of the land was opened up. The land came to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a under the preliminary mortgage decree. The company had failed to pay any dividend on its equity as well as on preference shares and the company s only source of income was the immovable property which was the subject-matter of litigation. On such considerations, it appears that the then directors of the company decided to take the company into voluntary liquidation and called for an extraordinary general meeting on 22-12-1969. It was decided to pass the following resolutions : "Resolved that an extraordinary general meeting of the shareholders of the company be called on January 20, 1970 at the Calico Mills Premises, Outside Jamalpur Gate, Ahmedabad, to consider and if thought fit, to pass the following resolution as a special resolution. Resolved that the company be wound up voluntarily and that Mr. Gautam Sarabhai and Mr. C. C. Kapadia be and are hereby appointed liquidators for the purpose of such winding up with powers to each one of them to exercise all the powers of liquidators and that the remuneration of such liquidators for their services in winding up be fixed at Rs. nil. " 10. At the meeting of the board of directors of the company it was resolved to make comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company in the proportion of 33.34 per cent and 66.66 per cent, respectively. ( iii )for a mechanism to determine the pricing of FSI. ( iv )that the company has pre-emptive right to repay the FSI and use it provided the company parts with 33.34 per cent of the price so discovered or Rs. 30 lakhs whichever is higher. 12. From the record, it appears that the order of the Co-operative Court based on the consent terms dated 30-4-2001, was challenged by one of the members of the society by filing a writ petition before the Bombay High Court. However, the same came to be disposed of in terms of consent terms dated 24-10-2001 (annexure G). 13. The company while preparing its financial statements as on 19-7-2001, has included its rights in the FSI at a cost of Rs. 1,69,065 and is shown as the value of the outstanding still to be realised other than the bank balance and deposit at call. In the financial statement (annexure H), the rights have been estimated to realise Rs. 60 lakhs. 14. By an application made in March 2004, a firm of architects have submitted plans to the Municipal Corporation proposing usage of FSI in the society. The said application is under process and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f FSI in Darshan Apartment of the society. That, it is possible to encash this right or to acquire and utilise it for the commercial usage by the company. ( vi )That, the company, if be revived, value of the FSI in Darshan Apartment can be leverage to restart its business as per the object clause of its memorandum of association. ( vii )That, the contributories/equity shareholders of the company have expressed their willingness to subscribe to the equity share capital of the company as may be determined by the reconstituted board of directors (subject to the provisions of the Companies Act, 1956). 18. On the aforesaid basis, it is submitted by Mr. Soparkar that this Court has the power and must stay the voluntary winding up of the company. Reliance is placed upon sections 466 and 518 of the Companies Act, 1956. It is also submitted that the material/documents on record is adequate proof for this court to record satisfaction that the voluntary winding up of the company should be permanently stayed. Mr. Soparkar has accordingly submitted that the application deserves to be granted. 19. On notice being issued to the liquidator attached to this court, the liquidator has fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p by the court, can also be exercised in the course of voluntary winding up. Thus, the question for consideration is whether the power to stay the winding up exercisable under section 466 in relation to the companies being wound up by the Court, can also be exercised when a company is in voluntary winding up? This Court is of the view that though the aforesaid question is required to be answered in the affirmative, mere consent of the party is not enough but the Court should also consider all other circumstances. There is no doubt that the court thus possesses the power to stay winding up even when it is a case of voluntary winding up. There must however be facts justifying the stay. The language of section 466 is "on proof to the satisfaction of the court that all proceedings in relation to the winding up ought to be stayed". Thus, what is required to be ascertained is whether in the facts of the present case, the winding up ought to be stayed or the company should be finally wound up/the resolution to voluntarily winding up the company should not be interfered with. In the aforesaid context insofar as the pleadings in the present application and material for the purposes of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. B. Purohit v. Gadag Jambukeshwara [1984] 56 Comp. Cas. 360 , wherein the court has considered the following quotation from the Pennington s Company Law, 4th edition, page 709 : "Once a resolution for voluntary winding up has been passed, the members of the company cannot rescind it and restore the directors powers to them so as to enable the company to carry on its business as before. But an application may be made to the Court to stay the winding up in the same way, and with the same consequences, as if the company were being wound up compulsorily." (p. 364) 24. After considering the judgment of the Delhi High Court referred to above and the observations made in Pennington s Company Law, the court took the view that voluntary winding up proceedings at whatever stage they are can be stayed absolutely. Accordingly, winding up proceedings were stayed by the court and the shareholders were held to be free to elect a new board of directors and do all that was necessary in order to achieve the object for which the company had been incorporated. 25. Even in the present case, during the course of hearing, the court has asked certain details so as to satisfy the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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