Back
1995 Supreme(Cal) 334
High Court Of Calcutta
BABOO LALL JAIN
NILKANTA KOLAY - Appellant
Versus
OFFICIAL LIQUIDATOR - Respondent
COMPANY PETITION 120 Of 1986
Decided On : 08/30/1995
In order to obtain a stay of winding up proceedings under Section 466 of the Companies Act, 1956, the applicant must satisfy certain conditions precedent, including filing the statement of affairs and making an attempt to set aside the winding up order within the prescribed time limit.
Headnote:
COMPANIES ACT - SECTION 466 - STAY OF WINDING UP - SALE OF COMPANY'S ASSETS - JURISDICTION - COMPANY COURT - CONDITIONS PRECEDENT - PRINCIPLES.
Fact of the Case:
Petitioner, a contributory, filed an application under Section 466 of the Companies Act, 1956, seeking a stay of the winding up proceedings and to set aside the winding up order. The company was ordered to be wound up in 1988 due to non-payment of debts. The Official Liquidator took possession of the company's assets in 1990. In 1991, the company's assets were sold to Shiva Shakti Iron and Steel Industries after several rounds of bidding and legal challenges. The petitioner claimed that he was not aware of the winding up proceedings and that the sale was conducted without his knowledge. He also alleged that the company had the potential to be revived and that the sale should be set aside.
Finding of the Court:
The court held that the petitioner had not made out a case for staying the winding up proceedings or setting aside the sale of the company's assets. The court found that the petitioner had not filed the statement of affairs as required under the Companies Act, 1956, and that he had not made any attempt to set aside the winding up order within the prescribed time limit. The court also found that the petitioner had not provided any concrete evidence to support his claim that the company could be revived. The court further held that the sale of the company's assets was conducted in accordance with the law and that the petitioner had not demonstrated any prejudice or injustice caused to him as a result of the sale.
Issues: 1. Whether the petitioner had made out a case for staying the winding up proceedings under Section 466 of the Companies Act, 1956? 2. Whether the petitioner had made out a case for setting aside the sale of the company's assets?
Ratio Decidendi: 1. The court held that the petitioner had not made out a case for staying the winding up proceedings under Section 466 of the Companies Act, 1956, as he had not satisfied the conditions precedent for such a stay. The court observed that the petitioner had not filed the statement of affairs as required under the Companies Act, 1956, and that he had not made any attempt to set aside the winding up order within the prescribed time limit. The court also found that the petitioner had not provided any concrete evidence to support his claim that the company could be revived. 2. The court held that the petitioner had not made out a case for setting aside the sale of the company's assets as he had not demonstrated any prejudice or injustice caused to him as a result of the sale. The court found that the sale was conducted in accordance with the law and that the petitioner had not provided any evidence to suggest otherwise.
Final Decision: The court dismissed the petitioner's application for a stay of the winding up proceedings and for setting aside the sale of the company's assets.
( 1 ) THIS application had been filed by one Nilkanta Kolay on 20th January, 1992 under Section 466 of the Companies Act, 1956 before the Hon'ble Appeal Court and was remanded to this Court, inter alia, with the following directions :"in the event, the Company Court allows the application for stay of the winding up proceeding and / or setting aside the order of the winding up order, the sale will automatically stand set aside, if however, the Company Court dismissed the application for setting aside the winding up order, the sale shall stand confirmed. There will be no sale and disbursement without the leave of the Company Court. "
( 2 ) SOME of the facts relating to the instant application are as follows : On 20th March, 1986 one Lalit Kumar Sinha filed a winding up petition being Company Petition No. 120 of 1986 against the company claiming a sum of Rs. 68,000/- from the Company.
( 3 ) IT appears from the submissions made and it is a matter of record that another winding up petition was filed against the company by another creditor Krishna Kumar Sinha being C. P. No. 121 of 1986 for non payment of Rs. 68 thousand. On 20-3-1986. Notice in respect of C. P. No. 120 of 1986 was admittedly served on the company. On 23-4-1987 the applications being C. P. No. 120 of 1986 and C. P. 121 of 1986 were admitted by the Court and directions were given for advertisements. On 5-7-1988 winding up order was passed in C. P. No. 120 of 1986 against the company and official liquidator was appointed in respect of the assets of the company. On 25-4-1990 the Official Liquidator took possession of the assets of the company upon notice and in presence of the representatives of the directors of the company. In September, 1980 the Official Liquidator filed a petition of complaint, inter alia, against the ex-directors of the said company in liquidation including Nil Kanta Kolay for taking cognizance and for punishment of the offence committed by them by not filing the statement of affairs as envisaged under Section 454 of the Companies Act, 1956. On 10-9-1990 the summons were directed to be issued under Section 454 of the Companies Act, 1956 against the accused persons including Nil Kanta Kolay. On 14-11-1990 summons were served on Nil Kanta Kolay through officer in charge, Memary P. S. On 16-11-1990 Nil Kanta Kolay engaged Mr. Subhas Medda learned Advocate to represent him in the said complaint case marked as C. A. No. 220 of 1990 connected with C. P. No. 120 of 1986. On 22-11-1990 order was passed by Justice Prabir Kumar Majumdar (as His Lordship then was) in C. A. No. 220 of 1990 when Mr. Subhas Medda appeared for Nil Kanta Kolay and took direction for affidavit.
( 4 ) THE petitioner has stated in paragraph 3 of the petition that there are 3 contributories i. e. Nil Kanta Kolay to the extent 50%, Karuna Nand Kolay to the extent of 25% and Subhrananda Banerjee to the extent of 25%.
( 5 ) TWO applications were made for winding up of the company on 28-3-1986 i. e. C. P. No. 120 of 1986 and C. P. No. 121 of 1986. The company did not take any steps to defend the said proceedings and ultimately on 5-7-1988 after advertisement the company was directed to be wound up in C. P. No. 120 of 1986. The Official Liquidator took possession on 25-4-1990 and summons were served in proceedings under Section 454 of the Companies Act, 1956 and the petitioner Nil Kanta Kolay appeared pursuant to such summons on 16-11-1990. 3
( 6 ) IN spite of all these proceedings no application was made for setting aside the order of winding up under Order 9, Rule 12 though several allegations have been made in the petition that the petitioner could not appear or defend the said proceedings due to certain alleged defaults as against his own advocate. The petitioner was admittedly served with the notice of the winding up application in C. P. No. 120 of 1986. If at all the petitioner had any defence to the same and was prevented by any sufficient cause from defending
