2026 Supreme(Bom) 455

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SHARMILA U. DESHMUKH, J.
Grand View Estates Private Limited – Appellant 
Versus
The Official Liquidator of the Swadeshi Mills Company Limited (in liqn.) and Others – Respondents
Interim Application No. 6953 of 2025 In Company Petition No. 385 of 2002
Decided On : 23-02-2026

Stay of winding-up under s.466 Companies Act, 1956 demands revival proposal satisfy bona fides, commercial morality, public interest; real estate diversification on mill land rejected as ruse for majority to exploit assets cheaply, defer own dues, despite settlements and feasibility reports.

Headnote:(A) Companies Act, 1956 - Sections 466, 529A, 457 - Stay of winding-up order - Application by majority shareholder and claimed secured creditor assignee to stay winding-up of textile company for revival via real estate development on prime mill land - Proposal defers own massive dues post-development, settles workers via deposit, claims changed circumstances like object clause amendment, feasibility reports, worker consents - Prior identical proposals rejected applying tests of bona fides, commercial morality, public interest; findings binding as proposal ruse to acquire assets cheaply avoiding public auction; inflated dues via high interest post-winding-up impermissible; acceptance of dividend undermines outside-winding-up status; no informed shareholder consent via proper scheme process; feasibility does not prohibit textile relocation; liquidation delays not due to inherent impossibility. (Paras 39-108)

(B) Winding-up - Secured creditor - Assignee of pre-winding-up debts with recovery certificate stands outside if security not relinquished; but acceptance of dividend from liquidator indicates standing inside, capping interest at 4% p.a. under Rule 179; DRT substitution does not override company court process. (Paras 71-81)

Facts of the case:
Textile company wound up in 2005 post-BIFR recommendation; plant/machinery sold, land (approx. 48 acres prime urban) under liquidator possession but partially encroached; applicant acquires debts/70% unsecured claims/shareholding post-winding-up, deposits funds for worker/statutory settlements, seeks permanent stay for real estate diversification after two failed attempts; opposed by minority shareholders favouring auction; liquidator reports valuation/sale impediments.

Findings of Court:
No satisfaction that winding-up proceedings ought to be stayed; revival not genuine business resumption but asset grab benefiting majority via deferred dues from development profits; workers better off under proposal but minority/contributory rights prejudiced without value maximisation.

Issues: Whether triple tests (bona fides, commercial morality, public interest) satisfied for s.466 stay; changed circumstances (feasibility reports, EGM, settlements) dispel prior findings of oblique intent; secured creditor status permits equity of redemption sale only; liquidation failure justifies revival over auction.

Ratio Decidendi: Under s.466, court satisfies itself proceedings ought to stay only if revival proposal genuinely revives business/utilises assets for all stakeholders per public interest/commercial morality/bona fides, not majority's undervalued exploitation bypassing transparent auction; prior adverse findings bind absent material variation; suppressed facts like dividend acceptance vitiate; shareholder EGM sans full disclosure no consent equivalent.

Result: Interim Application dismissed.