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Issues: (i) Whether the attachment of the respondent-company's properties and the appointment of receivers under the Punjab Co-operative Societies Act, 1961 were void in view of the pendency and commencement of winding up proceedings under the Companies Act, 1956. (ii) Whether the winding up petition should be admitted and an official liquidator appointed as provisional liquidator during its pendency.
Issue (i): Whether the attachment of the respondent-company's properties and the appointment of receivers under the Punjab Co-operative Societies Act, 1961 were void in view of the pendency and commencement of winding up proceedings under the Companies Act, 1956.
Analysis: The winding up of a company by the court is deemed to commence on presentation of the petition. Once winding up has commenced, any attachment, distress or execution against the company's estate or effects without leave of the court is void. The orders of attachment and receivership were passed after commencement of winding up proceedings and without leave of the court. The State enactment could not override the central law governing winding up of companies, and the conflict had to yield to the Companies Act in view of the constitutional allocation of legislative power.
Conclusion: The attachment order and the order appointing receivers were void and were quashed.
Issue (ii): Whether the winding up petition should be admitted and an official liquidator appointed as provisional liquidator during its pendency.
Analysis: No effective written statement had been filed on behalf of the respondent-company, the liabilities asserted in the petition were not effectively denied, and the company appeared unable to discharge its debts. The management situation was disordered, the board was not effectively functioning, and the company's assets required protection from dissipation. In these circumstances, admission of the petition and appointment of an independent provisional liquidator were considered necessary to safeguard the company, its creditors and workmen.
Conclusion: The winding up petition was admitted and the official liquidator was appointed as provisional liquidator.
Final Conclusion: The judgment protected the winding up jurisdiction of the company court, nullified the competing attachment and receivership, and placed the company's assets under provisional liquidation while the winding up petition remained pending.
Ratio Decidendi: Once winding up proceedings commence, any post-commencement attachment or receivership of the company's assets without leave of the company court is void, and a conflicting State-law recovery mechanism must yield to the Companies Act.
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