1977 Supreme(SC) 88

SUPREME COURT OF INDIA
M.H. BEG, C.J.I. AND P.S. KAILASAM, J.
The Official Liquidator, Appellant
Versus
Dharti Dhan (P) Ltd., Respondent.
Civil Appeal No. 126 of 1976,
D/- 10-2-1977.
Advocates appeared
Mr. L. N. Sinha Sol. Genl. (Mr. Suresh Sethi Advocate with him), for Appellant: Mr. C. K. Garg, S. S. Khanduja and C. L. Sahu, for Respondent.

Headnote:

Companies Act - Section 446 (2) – Constitution of India, 1950 - Article 136 – Claim of compensation - Entire documentary evidence - Ordinary jurisdiction - whether of law or fact, which may relate to or arise in course of the winding up of the company - whether such suit or proceeding has been instituted 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, 1960 - whether the power conferred by the use of the word may" has, annexed to it, an obligation that, on the fulfilment of certain legally prescribed conditions, to be shown by evidence, a particular kind of order must be made - Registrar of Companies in Maharashtra had to file a winding up petition against the respondent Dhan Company in the Bombay High Court. The Company Judge in the Bombay High Court on 3rd January, 1970, directed advertisement of the winding up petition. The respondent Dhan Company appealed against the decision of the Company Judge and obtained an order, dated 3rd February, 1970, from a Division Bench staying the operation of the order for advertisement of the winding up petition. An appeal against that order is said to be still pending so that a stay of those proceedings operates - After obtaining an order of stay of the proceedings against it in the Bombay High Court, the Dhan Company made an application under S. 442 (b) of the Act in the Rajasthan High Court for stay of proceedings against it under Section 446 (2) on the ground that a compulsory winding up petition was pending against it in the Bombay High Court. The object of the respondent Dhan Company appeared to be to obtain an indefinite stay of proceedings against it, in both High Courts. If this is a correct inference, as it appears to us to be, the stay application under Sec. 442 (b) of the Companies Act could not be a bona fide one. It looks more like an abuse of the processes of the Court – Held, In the statutory provision under consideration now before us the power to stay a proceeding is not annexed with the obligation to necessarily stay on proof of certain conditions although there are conditions prescribed for the making of the application for stay and the period during which the power to stay can be exercised. The question whether it should, on the facts of a particular case, be exercised or not will have to be examined and then decided by the Court to which the application is made.If the applicant can make out, on facts, that the objects of the power conferred by Sections 442 and 446 of the Act. can only be carried out by a stay order, it could perhaps be urged that an obligation to do has become annexed to it by proof of those facts. That would be the position not because the word "may" itself must be equated with "shall" but because judicial power has necessarily to be exercised justly. properly, and reasonably to enforce the principle that rights created must be enforced - An attempt was made to urge that the power to grant or not to grant or to grant a stay upon certain conditions, assuming the power to be discretionary, is to be exercised by the Courts in which that discretion is vested, this Court should not interfere with the exercise of discretion by the Division Bench to which an appeal from the order of the Company Judge lay. The effective answer to this contention is that, where the learned Company Judge had himself exercised his discretion on a correct appreciation of the object of the provisions of Sections 442 and 446 of the Act, even though he did not state the object or refer to all the facts, the Appellate Court should not have interfered by granting a conditional stay without giving sufficient reasons to override the discretion of the learned Company Judge to refuse stay. We think that a question of general principle arises in this case which has to be clarified so that an interference by this Court under Article 136 of the Constitution, in order to vindicate a correct principle and to meet the ends of justice, is called for - Learned counsel for the respondent submitted that the order under appeal before us is not final so that we need not interfere under Art. 136 of the Constitution for this reason. It is true that, this Court does not, as a rule, interfere with interlocutory orders. It is not necessary for us to embark on this occasion on a discussion of the meaning of a "final" order. That is certainly a question fraught with difficulties. It is sufficient for us to observe that our powers of interference under Art. 136 of the Constitution are not confined to those in respect of final orders, although finality of an order is a test which this Court generally applies in considering whether it should interfere under Article 136 of the Constitution with it. We think that we have indicated sufficiently why, despite the fact that an order staying proceedings under Section 442 (b) of the Act may not, strictly speaking. be final yet a question of general principle of wide application, as to the circumstances in which an apparently discretionary power may become annexed with a duty to exercise it in a particular way, having arisen here, we consider this to be a fit case for interference under Article 136 of the Constitution - Appeal allowed