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TMI Blog1972 (2) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil Mills Ltd. Jodhpur and Ors. requires reconsideration. In that case also a similar question had arisen, but was answered in the negative. 2. Section 536 of the Companies Act, 1956, hereinafter referred to as the Act , occurs in that portion of Chapter V of Part VII which deals with the effect of winding up on antecedent and other transactions. Sub Section (2) of that section provides as follows: 536 (2). In the case of a winding up by or subject to the supervision of the Court any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company, or alteration in the status of its members, made after the commencement of the winding up shall, unless the Court otherwise orders, be v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract persons who would accept a disposition of its property, during the pendency of the winding up petition, even when it acts honestly. Thus, in a given case, the company may not find it possible to save a valuable property from distress sale, on account of the reluctance of any other party to agree to a transaction which may not be upheld by the Court in case of a winding up In such a case, that party would like to fortify itself by an assurance that the disposition would be upheld by the Court and shall not be void abintio on the making of the winding up order. It appears to us that in such a case these is no reason why it should not be permissible for the Court to authorise the disposition before the making of the winding up order. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 227 of the Companies Act, 1948. is quite similar to Section 536(2) of our Act. There Section 227 has replaced Section 173 of the Companies Act, 1929, which was similar in material particulars. Those provisions of the English Acts have been examined at length by Buckley J. in In re A.I. Levy (Holdings) Ltd. (1964) 1 Ch. 19. He has considered all the reported and unreported cases on the point, including the view of Vaisay J. in Re Miles Aircraft Ltd. (1948) 1 A.E.R. 225 that the Court had no jurisdiction to make an order under Section 173 of the Companies Act, 1929, in the absence of a winding up order. Buckley J. has effectively dealt with the argument which prevailed with Vaisey J. and expressed his own view as follows: It does not appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thirdly, it thought that if the winding up order is passed, then also it would find itself in a difficult situation if its earlier order is found to be erroneous in any way . It therefore took the view that the Court should not pass any order with regard to the property of the company unless it comes to the conclusion that the appointment of a provisional liquidator is necessary. 8. With all respect to the learned Judges, we may point out that, as has been stated already, there is nothing in Section 536(2) to justify the observation that the situation visualised by it does not arise before the passing of the finding up order. On the other hand, as we have stated, such a situation may well arise in case where the company finds it nece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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