Winding-up proceedings can be stayed when shareholders resolve disputes and provide adequate financial guarantees to settle potential liabilities, allowing for a company's revival.

ORDER :

1. This application is filed by the directors of the respondent-company under Sections 466 and 559 of the Companies Act, 1956, read with Rule 9 of the Companies (Court) Rules, 1959, seeking a declaration of the winding-up proceedings of the respondent- company, pursuant to the order dated 17.07.2015 passed in Company Petition No.104 of 2006 and as upheld by the order dated 12.04.2019 in Original Side Appeal No.50 of 2015, as permanently stayed.

2. Brief facts leading to the filing of the present application are that all the three applicants were shareholders and directors of the respondent-company. On account of loss of substratum, applicant No.3 filed C.P. No.67 of 2006, in which the company was arrayed as the respondent and represented by applicant No.2 herein, while applicant No.1 was also arrayed as a respondent in his personal capacity. Another C.P.No.104 of 2006 was filed by the family members of applicant No.3 against the company, represented by the other two shareholders. This Court, vide common order dated 17.07.2015, allowed both company petitions and directed winding up of the respondent-company. Aggrieved thereby, the respondent- company preferred O.S.A.No.48 of 2015 against the order dated 17.07.2015 passed in C.P.No.67 of 2006 and O.S.A.No.50 of 2015 against the order dated 17.07.2015 passed in C.P.No.104 of 2006. O.S.A.No.48 of 2015 was allowed by order dated 12.04.2019, setting aside the order passed in C.P.No.67 of 2006 whereas, O.S.A.No.50 of 2015 was dismissed, thereby upholding the winding-up order passed in C.P.No.104 of 2006. Thus, the company was directed to be wound up on the ground of loss of substratum. An Official Liquidator was appointed pursuant to the winding-up order in C.P.No.104 of 2006 and the Official Liquidator has taken steps to put the property of the respondent- company to sale by way of auction. However, the said auction could not be conducted, as there was only one bidder. It is stated that, in the meantime, the applicants resolved their inter se disputes and have come to an agreement to revive and run the respondent- company. Therefore, the present company application has been filed seeking to stay the winding-up proceeding of the respondent-company permanently.

3. It is submitted that as per the balance sheet dated 31.03.2006, the total liabilities of the company under liquidation were Rs.1.66 crores, out of which Rs.1.34 crores pertained to shareholder loans and contributions from their family members and only Rs. 31 lakhs pertained to unsecured third-party liabilities. It is submitted that the liabilities of the respondent-company with respect to the shareholders, and the liabilities of the respective parties have since been relinquished.

4. It is further submitted that applicants have already deposited a sum of Rs. 50 lakhs with the Official Liquidator pursuant to the directions of this Court in O.S.A.No.5 of 2014, filed challenging the dismissal of the interlocutory application seeking stay of the proposed e-auction on 19.12.2024 and that the said amount of Rs.50 lakhs is sufficient to meet the outstanding third-party liability of Rs. 31 lakhs, leaving a surplus of Rs.19 lakhs, which is presently in possession of the Official Liquidator.

5. The applicants have also furnished undertakings and filed individual affidavits stating that they shall be liable for any claims made against the company for the aforesaid period, if such claims are raised in the future. Out of the balance amount of Rs. 19 lakhs, the Official Liquidator has stated that a sum of Rs. 3 lakhs has been appropriated towards his costs and establishment fund and the remaining amount is liable to be