Stay of proceedings under Companies Act refused where the application was found to be a delay tactic.

A stay of proceedings under sections 442 and 446 of the Companies Act, 1956 is warranted only when it advances the statutory objective of expeditious disposal in winding-up related matters. Where a stay application appears designed merely to delay adjudication or obstruct the suit, it is not bona fide and should be refused. On the stated facts, the request was made only after the suit had reached the evidence stage and no such plea had been taken in the written statement, which showed absence of bona fides. The request to halt proceedings was therefore rejected, and the suit was allowed to continue.

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Issues: Whether the application for stay of proceedings under section 442 of the Companies Act, 1956 was bona fide and warranted in the circumstances.

Analysis: The stay power under sections 442 and 446 of the Companies Act, 1956 is to be read together and is meant to serve the object of expeditious disposal of claims in winding-up related proceedings. A stay is not justified where the application appears to be filed merely to delay adjudication or to obstruct the progress of the suit. On the facts, the request for stay was made only after the suit had progressed to the stage of evidence, with no plea having been raised in the written statement, which indicated that the application was not made bona fide.

Conclusion: The application for stay was not bona fide and was liable to be rejected.

Final Conclusion: The suit was allowed to proceed, and the request to halt the proceedings was refused.

Ratio Decidendi: A stay under section 442 of the Companies Act, 1956 can be granted only when it furthers the statutory object of expeditious adjudication in winding-up related matters, and it must be refused if its real purpose is merely to delay or defeat justice.

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