Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
Don't have an account? Register Here
<h1>Appointment of Provisional Liquidator Set Aside for Procedural Irregularities</h1> <h3>Avon Lifesciences Limited Versus Ashika Credit Capital Ltd.</h3> Avon Lifesciences Limited Versus Ashika Credit Capital Ltd. - TMI Issues:1. Appointment of Provisional Liquidator without proper procedure.2. Lack of notice and reasons for appointing Provisional Liquidator.3. Interpretation of Section 450 of the Companies Act, 1956.Issue 1: Appointment of Provisional Liquidator without proper procedureThe appeal was filed against an order appointing the Official Liquidator as the Provisional Liquidator of the appellant-Company for not being able to pay the debt. The appellant did not contest the admission of the Company Petition but challenged the appointment of the Provisional Liquidator. The learned Senior Counsel argued that the appointment was premature as it should have been made after the admission of the Company Petition. The court agreed that the order admitting the Company Petition and appointing the Provisional Liquidator cannot be passed simultaneously. The statutory provisions require the appointment of a Provisional Liquidator after the admission of the petition for winding up of the Company.Issue 2: Lack of notice and reasons for appointing Provisional LiquidatorThe court noted that the Company Judge did not provide any notice or reasons for appointing the Provisional Liquidator. Section 450(2) of the Companies Act mandates that the Court must give the company a notice and a reasonable opportunity to make representations against the appointment of the Provisional Liquidator. The purpose of this provision is to allow the Company to present its case before such a drastic appointment is made. The court emphasized that notice can only be dispensed with for special reasons, which were not provided in this case.Issue 3: Interpretation of Section 450 of the Companies Act, 1956The court referred to Section 450 of the Companies Act, 1956, and Rule 106 of the Companies (Court) Rules, 1959, which outline the procedure for appointing a Provisional Liquidator. The court highlighted that Rule 106 specifies that the appointment should occur after the admission of the petition for winding up of a Company. The court also cited judgments from other High Courts emphasizing the careful consideration required before appointing a Provisional Liquidator and the necessity of providing notice and reasons for such appointments. In light of the procedural irregularities and lack of reasons, the court set aside the order appointing the Provisional Liquidator while confirming the admission of the Company Petition.In conclusion, the High Court of Andhra Pradesh set aside the appointment of the Provisional Liquidator due to procedural irregularities and lack of notice and reasons. The court clarified the proper procedure outlined in the Companies Act and emphasized the importance of following due process before making such significant appointments. The appeal was partly allowed, with the respondent retaining the option to pursue the Application for the appointment of a Provisional Liquidator separately.