Bombay High Court
Ramniklal & Co.
Versus
Wallace Flour Mills Co. Ltd.
Decided On:

Headnote:Sections 22 and 31-Winding up petition pending-Effect of applicability of Section 22.

       It is clear from the provisions of the Act that a winding-up petition is required to be kept merely in abeyance pending the enquiry under Section 16 or framing of the scheme under the Act or pending the implementation of the scheme framed there under. The marginal note to Section 22 of the Act provides an indication that the proceedings in question are merely required to be suspended. The operative part of Section 22 (1) of the Act provides that the winding-up proceedings may continue with the consent of the Board or the consent of the Appellate Authority. If the proceedings can continue with the consent of the Board or consent of the Appellate Authority or in the event of the conditions precedent prescribed under Section 22 (1) of the Act ceasing to exist, there is no reason as to why the pending winding-up petitions must necessarily abate or must necessarily be dismissed. Section 31 of the Act provides that certain pending proceedings shall not abate where the receiver or the official liquidator was already appointed before the commencement of the Act. 1 his Section cannot be reasonably pressed into service for the purpose of making a submission to the effect that in all other cases the proceedings abate when the operative part of Section 22 of the Act can be reasonably interpreted to mean that the winding-up proceedings are merely required to be suspended and kept in abeyance and are not required to be dismissed and they do not abate.

       Sections 22 and 17- Proposed scheme under preparation by company for being considered by Board under Sections 17 (1) and 17 (2)-Section 22 clearly attracted and applicable as proposed scheme referable to implied power of Board under Sections 17 (1) and 17 (2)-First part of Section 22 (1) does not state that Section 22 shall apply only if scheme under Section 17 (3) is under preparation and not otherwise.

       It is not correct to say that the expression any scheme referred to under Section 17 is under preparation appearing in Section 22 means only the scheme to be prepared by operating agency in pursuance of order of the Board under Section 17 (3).

       Before the Board makes up its mind under Section 17 (1) Or Section 17 (2) of the Act, the Board can consider a scheme which may be proposed by the parties and then decide as to whether it is reasonably practicable for the Company to make its net worth positive. The first part of Section 22 (1) of the Act does not state that the said Section shall apply only if the scheme under Section 17 (3) of the Act is under preparation and not otherwise. The proposed scheme which is under preparation by the Company for being considered by the Board is a step preparatory to taking of a decision by the Board under Section 17 (1) and Section 17 (2) of the Act. All ancillary powers are always implicit in the conferment of the main power. Accordingly, Section 22 of the Act is clearly attracted and is applicable, as the proposed scheme is referable to the implied power of the Board under Section 17 (1) and 17 (2) of the Act.

       For Citation : AIR 1922 Bom 207 at 212, 213