Winding-up order set aside after later finding that the company had ceased to be a sick industrial company.

A winding-up order founded on BIFR's earlier opinion could not stand after a later BIFR finding showed that the company's net worth had exceeded its accumulated losses and it had ceased to be a sick industrial company. With the factual basis for the winding-up order gone, the Company Court exercised its procedural and inherent powers to prevent further complications and grant relief in changed circumstances. The earlier order was therefore quashed and set aside, and the company application succeeded on the basis of the subsequent discharge from the sick company regime.

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Issues: Whether the order directing winding up, passed on the basis of the BIFR opinion, deserved to be quashed and set aside in view of the later BIFR finding that the company had ceased to be a sick industrial company.

Analysis: The later BIFR order recorded that the company's net worth had exceeded its accumulated losses and that it no longer remained a sick industrial company within the meaning of the Act. In view of this supervening factual development, the foundation of the earlier winding-up order ceased to survive. The Company Court also noted that its inherent powers and the applicable company procedure permitted it to pass appropriate orders to prevent further complications and to do justice in changed circumstances.

Conclusion: The earlier winding-up order was liable to be quashed and set aside.

Final Conclusion: The company application succeeded and the impugned winding-up order was annulled on account of the subsequent discharge of the company from the purview of the sick company regime.

Ratio Decidendi: Where the factual basis of a winding-up order disappears because the company is later found to have ceased to be a sick industrial company, the Court may recall or set aside the earlier order in exercise of its powers under company law procedure and inherent jurisdiction.

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