Interim permission to dispose of company assets is available under winding-up law before any winding-up order, if creditors are protected.

Section 536(2) of the Companies Act, 1956 was construed to apply after presentation of a winding-up petition and before a winding-up order, so the court retained jurisdiction to authorise disposition of company assets during that interim period. The provision was read as protecting creditors while preventing bona fide transactions from being paralysed merely because a petition was pending. The possibility that permission might later become unnecessary if the winding-up petition failed did not remove the court's power to act. Interim authorisation was therefore available where creditor interests were safeguarded.

---

---

Issues: Whether the court could grant permission under section 536(2) of the Companies Act, 1956, for disposal of the company's assets before a winding-up order was made.

Analysis: The opening words of section 536(2), read in the setting of winding-up proceedings, were construed to cover the period after presentation of the winding-up petition and before the winding-up order. The provision was held to protect creditors and to prevent bona fide transactions from being stifled merely because a petition was pending. The fact that a permission order may become unnecessary if the petition fails was held not to deprive the court of jurisdiction. On that basis, the court preferred the construction which allowed interim authorisation of a proposed disposition where the interests of creditors were safeguarded.

Conclusion: The court had jurisdiction under section 536(2) to authorise disposition of company assets even before a winding-up order was made, and the requested permission was granted.

---