Continuance of State companies under reorganisation law defeated winding up petitions where no law, agreement, or direction intervened.

Bihar Government companies covered by the Bihar Reorganisation Act, 2000 were treated as continuing to function in the areas in which they had operated immediately before the appointed day, by virtue of their inclusion in the Ninth Schedule and the operation of sections 46(4) and 65. The court held that the scheme of the Inter-State Corporations Act, 1957 did not require prior amendment of the Schedule for the reorganisation law to operate, because section 5 was only enabling. In the absence of an enacted law, inter-State agreement, or Central Government direction, the companies could not be treated as liable to winding up on the grounds urged, and the winding up petitions were dismissed.

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Issues: Whether the Government companies covered by the Bihar Reorganisation Act, 2000 could be treated as inter-State corporations and, until a law, agreement, or Central direction intervened, be continued in operation so as to render the winding up petitions untenable.

Analysis: The companies were State Government companies under section 617 of the Companies Act, 1956, but by virtue of their inclusion in the Ninth Schedule to the Bihar Reorganisation Act, 2000 and the operation of section 46(4) and section 65, they were held to continue functioning in the areas in which they operated immediately before the appointed day. The Court further held that the scheme of sections 2, 3 and 5 of the Inter-State Corporations Act, 1957 did not require prior amendment of the Schedule for the Bihar Reorganisation Act, 2000 to take effect, since section 5 was only an enabling provision. In the absence of any enacted law, inter-State agreement, or Central Government direction, the companies were not liable to be wound up on the basis urged by the petitioners.

Conclusion: The winding up petitions were not maintainable on the grounds urged and were dismissed.

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