Provisional liquidator recall denied where settlement with claimants left other statutory winding-up grounds still alive.

Settlement with depositors removed only one basis for the winding-up petition and did not by itself justify recalling the provisional liquidator. The petition also continued on other statutory grounds under the Reserve Bank of India Act, 1934, including alleged irregular conduct in the company's affairs and consequences flowing from rejection of registration and the ensuing prohibitory orders. Because the matter remained at the show-cause stage and had not been finally adjudicated, the respondent could still contest those remaining grounds on merits. At that stage, recall of the provisional liquidator was therefore not maintainable and was rejected.

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Issues: Whether the order appointing the provisional liquidator could be recalled merely because the depositors or claimants had been settled, when the winding up petition still rested on other statutory grounds.

Analysis: The settlement of claims removed only one basis for the winding up petition, namely the alleged inability to pay deposits. The petition also rested on other grounds under the Reserve Bank of India Act, 1934, including alleged irregular conduct in the affairs of the company and the statutory consequences flowing from rejection of registration and the prohibitory orders passed thereafter. Since the matter was still at the show-cause stage and the petition had not been finally adjudicated, the Court held that the respondent could contest those remaining grounds on merits. At that stage, however, the recall of the provisional liquidator could not be granted solely on the basis of settlement with claimants.

Conclusion: The application for recall of the provisional liquidator was not maintainable at that stage and was rejected.

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