1976 (1) TMI 136 - HC - Companies Law

Delhi High Court dismisses jurisdiction challenge in Companies Act liquidation case

Jaipal Singh Versus Tanwar Finance (P.) Ltd.

Jaipal Singh Versus Tanwar Finance (P.) Ltd. - [1978] 48 COMP. CAS. 149 (DELHI) Issues:- Jurisdiction under section 446 of the Companies Act, 1956 for challenging a resolution of liquidation passed by a company.- Interpretation of section 446(2) of the Companies Act, 1956 regarding the court's jurisdiction during winding-up proceedings.- Determining the maintainability of the petition seeking to set aside liquidation under section 446 of the Companies Act, 1956.Analysis:The judgment delivered by Justice Dalip K. Kapur of the High Court of Delhi pertains to a petition filed under section 446 of the Companies Act, 1956 by a contributory of a company challenging a resolution of liquidation passed by the company. The petitioner sought to set aside the liquidation, alleging that the declaration of insolvency was ineffective as it was made after the meeting. The court initially considered the maintainability of the petition under section 446 before delving into the merits of the case. Justice Kapur observed that the application was not admitted initially and noted that it was erroneously filed along with another petition. The court then analyzed the provisions of section 446 of the Companies Act, 1956, which deal with the court's jurisdiction during winding-up proceedings.The court emphasized that the jurisdiction under section 446(2) arises concurrently with other courts in matters related to suits or proceedings by or against the company during winding-up. It was highlighted that for the court to exercise jurisdiction under section 446(2), there must be a winding-up proceeding in place, either through a winding-up order or under the supervision of the court. In this case, the petitioner sought to challenge the validity of the winding-up by questioning the existence of a proper winding-up process. The court noted that since a supervision order had been passed earlier, the court had been overseeing the winding-up proceedings. However, if there was no valid winding-up, the court would lack jurisdiction under section 446(2) to entertain the petition.Justice Kapur concluded that the application could not be heard under section 446(2) of the Act due to the absence of a valid winding-up process. The court also considered the possibility of the petitioner seeking alternative legal avenues to dispute the validity of the winding-up. While dismissing the petition, the court granted liberty to the petitioner to explore other legal remedies available under the Companies Act, 1956, or other laws to enforce the rights claimed in the application. The judgment highlighted that the dismissal did not attract any costs and did not extend the limitation period for the petitioner to pursue other legal actions.