Company Court jurisdiction in advanced winding-up proceedings justified refusal of ad interim stay against the impugned arrangement.

The Calcutta High Court held that a Company Court could retain jurisdiction to scrutinise post-winding-up orders and related actions where the liquidation process had advanced to a practically irreversible stage. The court treated objections based on delay as limited because the alleged acts formed part of a continuing course of conduct involving fraud, and it declined to accept the Insolvency and Bankruptcy Code objection at the interlocutory stage because no separate insolvency resolution process had been commenced. As granting stay would preserve the very arrangement under challenge and prematurely affect the appeal, ad interim stay of the impugned judgment was refused.

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Issues: Whether ad interim stay of the impugned judgment should be granted in the appeal, and whether the objections based on jurisdiction, delay, and applicability of insolvency law justified interference at the interlocutory stage.

Analysis: The challenge to jurisdiction was held to be prima facie untenable because the winding-up proceedings had already reached an advanced and effectively irreversible stage, and the Company Court retained control over the proceedings and related assets under the statutory scheme. The consent orders and subsequent directions had shifted control away from the Official Liquidator to Special Officers and a Board of Management, making the Company Court's scrutiny of those orders maintainable. The objection based on delay was treated as of limited force because the impugned acts were said to form part of a continuing course of conduct and the underlying allegations were of fraud. The plea based on the Insolvency and Bankruptcy Code was also not accepted at this stage, since no separate insolvency resolution process had been initiated and the Company Court was exercising its own powers to correct alleged abuse and mismanagement. On balance of convenience, the Court found that granting stay would effectively preserve the very state of affairs under challenge and would amount to premature interference with the impugned judgment.

Conclusion: Ad interim stay was refused.

Ratio Decidendi: A Company Court may, in an appropriate case, retain and exercise jurisdiction to examine and correct post-winding-up orders and actions affecting the liquidation estate where the proceedings have advanced to a stage that is not practically reversible, and interlocutory stay should not be granted when it would preserve the challenged arrangement and pre-empt the appeal.

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