Provisional liquidator appointment requires notice and recorded special reasons; mechanical appointment at admission was set aside.

A provisional liquidator in winding-up proceedings is a drastic measure and cannot be appointed mechanically at the time of admitting the petition unless the statutory stage is satisfied and the company has been given notice with a reasonable opportunity to respond. Dispensation of notice is permissible only for special reasons recorded in writing. As no notice was issued, no reasons were recorded for dispensing with notice, and no independent basis supported the appointment, the order appointing the provisional liquidator was unsustainable and was set aside. The admission of the winding-up petition itself remained undisturbed.

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Issues: Whether the order appointing a provisional liquidator could be made contemporaneously with admission of the winding-up petition, and whether such appointment was sustainable without prior notice to the company or recorded special reasons dispensing with notice.

Analysis: Section 450 of the Companies Act, 1956 permits appointment of a provisional liquidator after presentation of a winding-up petition and before the winding-up order, while Rule 106 of the Companies (Court) Rules, 1959 specifically contemplates the stage after admission of the petition. The appointment of a provisional liquidator is a drastic measure, so the statutory requirement of notice and a reasonable opportunity to represent against the proposal must ordinarily be followed. Dispensation of notice is permissible only for special reasons recorded in writing. The impugned order contained no notice, no recorded reasons for dispensing with notice, and no independent reasons supporting the appointment.

Conclusion: The appointment of the provisional liquidator was unsustainable and was set aside. The admission of the winding-up petition was left undisturbed.

Final Conclusion: The appeal succeeded only to the extent of quashing the appointment of the provisional liquidator, while the winding-up proceedings themselves remained admitted.

Ratio Decidendi: A provisional liquidator cannot be appointed mechanically at the time of admitting a winding-up petition unless the statutory stage is satisfied and the company is given notice and a reasonable opportunity to respond, or valid special reasons are recorded in writing for dispensing with notice.

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