Dr. D.Y. Chandrachud, J.

A company application under Section 466 of the Companies Act, 1956 was made before the Company Court by the Appellants seeking a permanent stay of an order of winding up passed by the Company Judge on 5 September 2005, by which the Svadeshi Mills Company Limited had been ordered to be wound up. Certain consequential reliefs were sought. The learned Company Judge by a judgment dated 14 October 2011 held that no ground enabling the exercise of the discretion under Section 466 has been made out and dismissed the application. The order of the Company Judge has been called in question in appeal.

2. The Svadeshi Mills Company Limited was incorporated under Act VI of 1882 and for a period of ten decades operated a composite textile mill with spinning, weaving and processing sections for the manufacture of cotton, synthetic, interlining and non-woven fabrics. In 1997, a petition for winding up was filed by Ralli Brothers & Coney, a company incorporated under the laws of the UK. Several other petitions for winding up were filed. In February 1998, the company made a reference to the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 which declared it to be a sick company. The BIFR recommended, by an order dated 5 February 2001, that the company should be wound up and an appeal inter alia by the representative union was dismissed by the AAIFR on 14 May 2001. In pursuance of a GR dated 20 September 2001 of the State Government, a High Power Committee was appointed to look into the affairs of the company including the payment of the dues of the workers, banks and financial institutions. On 21 June 2002, this Court authorised the committee to dispose of the assets of the company following which the plant and machinery was sold. The sale was confirmed by this Court on 17 September 2003. In the meantime, on 13 February 2002, a Provisional Liquidator was appointed at the behest of the creditors in the winding up petitions. Eventually, by an order dated 5 September 2005, the company was ordered to be wound up. During the course of the winding up proceedings, the Official Liquidator has adjudicated upon some of the claims of the creditors and employees. Against the adjudication of the claims of the workmen, proceedings have been taken out before the Company Judge.

3. The Appellants moved a company application for a permanent stay on winding up on 15 April 2011. The affidavit in support of the company application was affirmed by the Company Secretary of Forbes & Company Limited, a company which held together with its subsidiary 22.70% of the equity capital of the company and by the Chief Executive Officer of Grand View Estates Private Limited which had come to hold 29.29% of the total shareholding of the company. The Second Applicant had acquired its shareholding after the order of the winding up, though with the leave of the Company court. The Applicants, who are now in appeal, state that they hold an aggregate of 52% of the equity shares and are also secured creditors. Both the Applicants are part of the Shapoorji Pallonji Group, a corporate entity which engages in construction, infrastructure and real estate development business. The First Applicant stated that between 1998 and 2001, it had provided financial assistance of Rs.42 crores to the erstwhile company. The affidavit in support of the application states that on inspection of the reports of the Official Liquidator, it was found that the total liability of the company as on 31 March 2011 was Rs. 375.33 crores out of which the amount due and owing to the Applicants was Rs.280.90 crores. Apart from the First applicant, IDBI and Bank of Baroda were secured creditors of the company. The Applicants claim to have obtained an assignment of the debts due and owing to the other secured creditors which had been crystallised in a decree of the Debt Recovery Tribunal. The Applicants stated that the liabilities of the company comprised of; (i)