Applicability of winding-up provisions to unregistered foreign companies: court may circulate scheme and order winding up to protect local assets.

Section 153 of the Indian Companies Act, 1913 extends to unregistered/foreign companies liable to winding up and the court in which the company is liable to be wound up is determined by centre of administration/central management and control; that court may exercise a limited discretion to order circulation of a proposed scheme and convene creditor/shareholder meetings, withholding circulation only where proposals are illegal, incurable or incapable of modification; an accurate report from official/provisional liquidators must be circulated with the scheme; the court may order winding up in the interests of protecting local assets and appoint official liquidators.

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Issues: (i) Whether section 153 of the Indian Companies Act, 1913 applies to an unregistered/foreign company and whether this High Court has jurisdiction to entertain an application thereunder; (ii) Whether the Court should in the exercise of its discretion direct circulation and a meeting of creditors under section 153 in the circumstances of concurrent winding-up proceedings abroad and objections to the proposed scheme; (iii) Whether this Court should order winding up of the Travancore National & Quilon Bank, Ltd., and appoint official liquidators.

Issue (i): Applicability of section 153 to a foreign/unregistered company and jurisdiction of this High Court to entertain such application.

Analysis: The Court examined the language and legislative history of section 153, compared it with the corresponding English provisions, and considered definitions and related provisions (including sections 270, 271 and 277). The Court applied principles of domicile and central management and control to determine where a company is liable to be wound up and interpreted 'court' in section 153 to mean the court in which the company is liable to be wound up. The Court observed that an unregistered/foreign company falls within the Act's wide definition of 'company' for these purposes and that a creditor or member may apply under section 153 even after a winding-up order.

Conclusion: Section 153 of the Indian Companies Act, 1913 applies to an unregistered/foreign company and this High Court has jurisdiction to entertain an application under section 153 in the present case.

Issue (ii): Whether the Court should order circulation of the proposed scheme and convene meetings of creditors under section 153 given objections about illegality, impracticability, inadequate information and concurrent foreign winding-up proceedings.

Analysis: The Court held that the word 'may' in section 153 confers a limited discretion. The discretion is not to be exercised to withhold circulation unless the proposals are illegal, incurable or incapable of modification so that circulation would be a waste of time and expense. The Court reviewed objections (including alleged illegality, preference to shareholders, directors' re-entry to management, inadequate data, bona fides, and reliance on foreign courts) and found most defects curable at the meeting or by providing further information. The Court required an accurate report from the official/provisional liquidators and directed circulation of the scheme with that report; it concluded that initiating the scheme in this Court was permissible even where parallel foreign windings-up exist, subject to sanction by all relevant courts for global effectiveness.

Conclusion: The Court will not withhold circulation; it directed that the Official Liquidators prepare and circulate a report and the proposed scheme and convene meetings of creditors and shareholders under section 153.

Issue (iii): Whether this Court should make an order for winding up the company in British India and appoint official liquidators.

Analysis: Having found it just and equitable for protection of British Indian assets and creditors, and that passage of a winding-up order in Travancore did not preclude a winding-up order here, the Court exercised its discretion under section 271 and related provisions. The Court considered international and ancillary winding-up principles and the need to safeguard local assets, and appointed as Official Liquidators the provisional liquidators already functioning.

Conclusion: The Court ordered the Travancore National & Quilon Bank, Ltd. to be wound up by this Court and appointed the provisional liquidators as Official Liquidators.

Final Conclusion: The Court held that section 153 applies to unregistered/foreign companies and that the High Court may, in its discretion, order circulation of a proposed scheme and convene creditor/shareholder meetings unless the proposals are illegal or incapable of modification; the Court also made a winding-up order for the protection of local assets and appointed Official Liquidators, while directing preparation and circulation of the scheme and supporting report for creditor consideration.

Ratio Decidendi: Section 153 of the Indian Companies Act, 1913 extends to unregistered/foreign companies liable to be wound up, the court where the company is liable to be wound up (determined by centre of administration/central management and control) may exercise discretion to order circulation and meetings under section 153, and such discretion should be exercised to allow creditor consideration unless the proposed scheme is illegal or incapable of modification.

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