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of <h1>Decree execution halted due to impossibility of performance after winding up order. Revision petition allowed.</h1> The High Court held that the execution of the decree was not maintainable due to the impossibility of performance arising from the winding up order ... Winding up – Avoidance of transfer, etc., after commencement of Issues:1. Maintainability of execution of the decree based on agreements after winding up order of a company.Analysis:The case involved the execution of a decree by Haryana State Industrial Development Corporation Limited against Transport Corporation of India Limited. The decree was based on a compromise agreement between the parties, where Transport Corporation of India Limited was to take over the shares of Haryana State Industrial Development Corporation Limited in Haryana Detergents Limited. However, before the obligations under the agreement could be fulfilled, Haryana Detergents Limited was ordered to be wound up. Transport Corporation of India Limited objected to the execution of the decree, citing the impossibility of fulfilling the obligations due to the winding up order. The executing court dismissed the objections, stating that the winding up order did not affect the execution of the decree as it was against Transport Corporation of India Limited. The High Court, however, held that the executing court erred in this decision.The High Court referred to Section 536 of the Companies Act, 1956, which states that in the case of winding up of a company, any transfer of shares or alteration in the status of its members made after the commencement of winding up shall be void. The court emphasized that if Haryana State Industrial Development Corporation Limited could not fulfill its obligations under the agreement due to the winding up order, Transport Corporation of India Limited could not be compelled to make payments as per the agreement in execution of the decree. The court cited the Supreme Court ruling in Jai Narain v. Kedar Nath, AIR 1956 SC 359, which allows the executing court to consider whether the defendant can fulfill their part of the decree when obligations are reciprocal and interlinked.The High Court concluded that the execution of the decree was not maintainable due to the impossibility of performance arising from the winding up order against Haryana Detergents Limited. The court set aside the order of the executing court, allowing the revision petition by Transport Corporation of India Limited. The decision was made with no order as to costs.
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