Bona fide winding-up costs may be shifted to the petitioning creditor when liquidation is pursued without good faith.

Winding-up proceedings pursued without bona fides may attract costs against the petitioning creditor where no specific Companies Act provision governs the situation. The Lahore High Court treated the petition as not bona fide because the creditor had already realised the company's available assets in execution and pressed liquidation to exert pressure on the directors, while no useful purpose remained in continuing the liquidation. Applying the discretionary costs jurisdiction under Section 35, read with Section 141, CPC, the Court directed the petitioning creditor to bear the official liquidator's out-of-pocket expenses and remuneration.

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Issues: Whether the petitioning creditor, having moved and pressed the winding up proceedings not in good faith, could be directed to bear the official liquidator's out-of-pocket expenses and remuneration in the liquidation.

Analysis: The petition for winding up was found to have been made not bona fide, as the petitioning creditor had already realised the company's available assets in execution and had pressed liquidation to exert pressure on the directors. The company had no assets, no useful purpose remained in continuing the liquidation, and the official liquidator had been appointed and kept in proceedings at the instance of the petitioning creditor. In the absence of a specific provision in the Companies Act dealing with such a situation, the matter was held to be governed by Section 35 of the Code of Civil Procedure, read with Section 141 of the Code of Civil Procedure, 1908, under which costs lie in the discretion of the Court and may be directed to be paid by the party responsible for the proceedings.

Conclusion: The petitioning creditor was directed to pay the official liquidator's out-of-pocket expenses in the liquidation proceedings together with Rs. 150 as remuneration.

Final Conclusion: The decision fastened the financial burden of the liquidation on the petitioning creditor because the winding up application and subsequent proceedings were pursued without bona fides.

Ratio Decidendi: Where liquidation proceedings are initiated and pursued without bona fides, and no specific company-law provision governs the costs, the Court may invoke its discretionary power as to costs under the Code of Civil Procedure to direct the responsible party to bear the liquidation expenses and the liquidator's remuneration.

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