Skip to content


Jaipal Singh Vs. Tanwar Finance (P) Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberCivil Appeal No. 620 of 1975
Judge
Reported in[1978]48CompCas149(Delhi); 12(1976)DLT90; 1976RLR477
ActsCompanies Act, 1956 - Sections 446
AppellantJaipal Singh
RespondentTanwar Finance (P) Ltd. and anr.
Advocates: M.S. Mathur,; S.K. Mehra and; K. Kapur, Advs
Excerpt:
.....of the court since 15th april, 1969 :; that the application is not maintainable under section 446 of the companies act, 1956. the opening words of the section show that the provisions of section 446 are only available to the court when it is winding up a company. in other words, there must be winding up proceeding before the court gets any jurisdiction under section 446(2) of the act.; thereforee, that this application cannot be heard by the court under section 446(2) of the act, and if it can at all be heard, it must be heard by the court by means of some other proceedings. - .....companies act, 1956, deals with the jurisdiction of the court for staying proceedings during the winding up proceedings and also provides in sub-sections (2) and (3) a procedure for the e decision of certain questions arising during the winding up and for the transfer of proceedings pending in other court. it is stated in subsection (2)of the above section as follows :'(2)the court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of (a) any suit or proceeding by or against the company; (b)any claim made by or against the company (including claims bor against any of its branches in india). (e)any application made under section 391 by or in respect of the company; (d)any.....
Judgment:

(1) This is a petition under section 446 of the Companies Act, 1956, moved by Jaipal Singh alleging himself to be. contributory of the company because he is a depositor. The application has been moved on 30th October, 1975, and seeks to challenge a resolution of M/s. Tanwar Finance (P) Ltd., passed on 16th November. 1968, by which the company was sent into liquidation. According I to the application, it is stated that the declaration of solvency was made after the meeting and is, thereforee, ineffective. The applicant wants the liquidation to be set aside although it has been proceeding under the supervision of the Court since 15th April, 1969, as per orders passed in C.P. No. 1/1969. Without going into the merits of the case and the reply filed by the Voluntary Liquidator, the question arises whether this petition is maintainable under section 446 of the Companies Act, 1956.

(2) I find from the orders passed on record that this application has not been admitted, but the respondent was asked to file a reply. This happened because these proceedings were somehow filed along with .A.No.269/1973 before Shankar J. (as he then was). It was not noticed that it was a separate petition which has no connection with the main petition, C.A.269/1973. I have, teherefore, considered the question whether this application lies under Section 446 of the Companies Act, 1956, before proceeding with it any further, I have come to the conclusion that this application does not lie under section 446 of the Companies Act, 1956, and I set out my reasons. thereforee, it is necessary to proceed any further with the decision of the questions raised in the application.

(3) Section 446 of the Companies Act, 1956, deals with the jurisdiction of the Court for staying proceedings during the winding up proceedings and also provides in sub-sections (2) and (3) a procedure for the E decision of certain questions arising during the winding up and for the transfer of proceedings pending in other Court. It is stated in subsection

(2)of the above section as follows :

'(2)The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of (a) any suit or proceeding by or against the company;

(B)any claim made by or against the company (including claims bor against any of its branches in India).

(E)any application made under Section 391 by or in respect of the company;

(D)any question of properties or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company;

WHETHERsuch suit or proceeding has been instructed or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment Act, I960)'. This provision shows that the Court's jurisdiction arises concurrently with other courts in respect of suits or proceedings by or against the company. The present proceeding is not a proceeding by or against the company. It is a proceeding wherein the petitioner is seeking to have the winding up of the company declared invalid.

THEopening words of the section show that the provisions of Section 446 are only available to the court when it is winding up a company. In other words, there must be a winding up proceeding before the Court gets any jurisdiction under Section 446(2) of the Act.

The winding up may be achieved in several ways. There may be a winding up order, i.e., a compulsory liquidation of a company by reason of an order passed by the Court under Section 439 read with section 443 of the Companies Act, 1956. Only after a winding up order is passed by the Court., only then the Court gets jurisdiction to proceed under Section 446(2) of the Act. Furthermore, if a company is being wound up under the supervision of the Court, that is to say in a case in which an order has been passed under Section 522 of the Act, then the provisions of Section 526 come into effect and the Court has power to proceed under Section 446(2). thereforee, a second condition in which section 446 becomes applicable is when a winding up takes place subject to the supervision of the Court, and the Court commences to exercise jurisdiction under Section 526 and in consequence Section 446(2) becomes applicable and the Court is able to hear disputes falling within the scope of Section 446(2).

ITso happens that the petitioner in this case seeks to go behind the order by which the company was put under supervision. His allegation is that there was in fact no winding up and, thereforee, there could be no supervision and thereforee the Court could not exercise any jurisdiction at all It so happens, that the supervision order was passed on 15th April, 1969, in C.P. No. 1/1969, and a considerable period has passed since then. Ever since then, the Court has been supervising the winding of this Company. If the petitioner is right, then there was no winding up and there was no liquidator and there could not have been a supervision order and consequently, this Court would have no jurisdiction under Section 446(2) because the starting point of the jurisdiction is the existence of a winding up proceeding. If there is no winding up, this Court has no jurisdiction. This Court is not entitled, in exercise of powers under Section 446(2) while winding up a company, to say that there is: no winding up, because, as I read the Section, it requires that there must be a winding up before the Court can exercise jurisdiction. In this view of the matter I come to the conclusion that this application cannot be heard by the Court under Section 446(2) of the Act, and if it can at all be heard, it must be beard by the Court by means of some other proceedings. I do not go into the question whether the petition is barred by time on the ground that the cause of action arose some time in 1968 or 1969, and the proceedings have been instituted several years later. I have also considered whether the application should be returned for representation, but I find that the ground on which I am rejecting the application does not strictly fall within the provisions of Order 7, Rule 11 of the Code of Civil Procedure. On the other hand, I have been referred to some reported judgments, in which a challenge to a voluntary liquidation has been sustained before the Company Court. None of these proceedings were under Section 446 of the Act. It is quite possible that the petitioner may be able to maintain a petition under some other provisions of the Companies Act, 1956, or under some other law for the purpose of disputing the validity of the winding up. I, thereforee, give liberty to the petitioner to move any other proceedings that he may be advised for enforcing the right claimed in the application. This liberty will not in any way extend the limitation otherwise available to the ptitioner. The petition is dismissed but without costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //