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TMI Blog2019 (9) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... mpower the Company Judge to appoint a provisional liquidator even without issuing notice to the Company Concerned, however, for that incumbent it is for the Company Judge to have recorded reasons which are conspicuously absent in the case at hand. Further contention on behalf of respondent that the procedure prescribed under section 450 of 1956 Act and the Rules applies at initial stage of proceedings is taken note of and rejected at the outset. Fair reading of section 450 of 1956 Act does not contemplate that pendency of the petition under sections 433 and 434 of 1956 Act, the procedure is to be given a go bye - when the impugned order dated 8.7.2019 is tested on the anvil of the stipulations contained under section 450 of the Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order has been passed by the learned Company Judge in purported exercise of powers under Section 448 of Company Act, 1956 (for brevity Act, 1956 ) which envisages: 448. Appointment of Official Liquidator.-(1) For the purposes of this Act, so far as it relates to the winding up of a company by the Tribunal, there shall be an Official Liquidator who- (a) may be appointed from a panel of professional firms of chartered accountants, advocates, company secretaries, costs and works accountants or firms having a combination of these professions, which the Central Government shall constitute for the Tribunal; or (b) may be a body corporate consisting of such professionals as may be approved by the Central Government from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or referred to in sub-section (3), as the case may be. (5) The amount of the remuneration payable shall- (a) form part of the winding up order made by the Tribunal; (b) be treated as first charge on the realisation of the assets and be paid to the Official Liquidator or to the Central Government, as the case may be. (6) The Official Liquidator shall conduct proceedings in the winding up of a company and perform such duties in reference thereto as the Tribunal may specify in this behalf: Provided that the Tribunal may- (a) transfer the work assigned from one Official Liquidator to another Official Liquidator for the reasons to be recorded in writing; (b) remove the Official Liquidator on sufficient cause being sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally.... Appointment of a provisional liquidator is a drastic measure and should not be restored to except in special circumstances, i.e. in cases of urgency. Though the section does not lay down any criteria, the principles governing the subject are well settled. In re London, Hamburg, and Continental Exchange Bank, LR (1866) 2 Eq. 231. Lord Romilly in as much quoted passage, stated,- It is perhaps convenient that I should state what my practice is with reference to the appointment of provisional liquidators. Where there is no opposition to the winding up, I appoint a provisional liquidator as a matter of course, on the presentation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinarily allowed except on the petition of a creditor who has been unable to obtain payment of his money, or unless the company asks for or agrees to the appointment. The dangers involved in appointing a provisional liquidator and then finding that there is no justification for making a winding up order are obvious. The consequences to the company of the making of a wrong order in such a matter are far more serious than the granting of an injunction which has ultimately to be dissolved. The principle that emerges is this: Before the Court takes such a drastic step it must be satisfied that such an order is absolutely necessary. The appointment of a provisional liquidator for a company which is carrying on business and functioning, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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