TaxTMI 
TaxTMI 
1984 (8) TMI 242
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....erala High Court. The judgment of the Division Bench is reported in Sudarsan Chits (India ) Ltd. v. G. Sukumaran Pillai, ILR [1983] 1 Ker. 700. The appeals were disposed of, after approving the scheme of compromise and arrangement under section 391 of the Companies Act, directing that the winding-up order shall be held in abeyance on certain undertakings to be filed by the company before the court within the prescribed time to abide by the conditions imposed in the judgment and if there be any default in the matter of performing of the conditions so imposed, and/or undertaking is not filed as directed therein, the winding-up order made by the learned judge will stand confirmed. A further direction in this behalf given by the court is material and may be extracted : "On the first payment of Rs. 25,00,000 being made within four weeks from this date, the winding-up order will be held in abeyance and thereupon the official liquidator will be considered as appointed to function as the provisional liquidator subject to such restrictions on his powers and privileges as we may indicate here." Since then the scheme of compromise and arrangement as set out in the judgment of the Divisi....
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....ermitted. Upon its true construction, what is the scope and ambit of the jurisdiction conferred on the court winding up a company by section 446(2Xb) is the only question of law that arises in this appeal and may be answered in the facts and circumstances of the case. Section 446(2) reads as under : "446(2). The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of- (a)any suit or proceeding by or against the company ; (b)any claim made by or against the company (including claims by or against any of its branches in India); (c)any application made under section 391 by or in respect of the company ; (d)any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company ; whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Ac....
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....oceedings in winding up before the court which is winding up the company, its jurisdiction was enlarged to entertain a petition, amongst others, for recovering the claims of the company. In the absence of a provision like section 446(2) under the repealed Indian Companies Act, 1913, the official liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. These suits, as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of proceedings but in holding up the progress of the winding-up proceedings. To save the company which is ordered to be wound up from this prolix and expensive litigation and to accelerate the disposal of winding-up proceedings, Parliament devised a cheap and summary remedy by conferring jurisdiction on the court winding-up the company to entertain petitions in respect of claims for and against the company. This was the object behind enacting section 446(2) and, therefore, it must receive such construction at the hands of the court as would advance the object and at any rate not thwart it. The fasciculus of sections included in Part ....
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....ame manner in which and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction. In exercise of this appellate jurisdiction, the Appellate Bench entertained the appeals and directed that the winding-up order shall be held in abeyance till the scheme is implemented and if any default was committed, the winding-up order made by the learned company judge would be revived. The Appellate Bench declined to direct the provisional liquidator to file claim petition at the instance of the company under section 446(2)(b) on the sole ground that such a petition at the instance of the liquidator would be maintainable in the course of winding up of proceedings which means that the winding-up proceedings are pending. Undoubtedly, section 446(1) manifests the legislative intention that the procedure thereunder prescribed could be availed of when the winding-up order has been made or where the official liquidator is appointed as the provisional liquidator. Section 446(1) envisages two situations in which the court will have jurisdiction to make the order thereunder contemplated. These two situations are where a win....
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....ch is not being wound up could not be instituted as contemplated by section 446(2). In reaching this conclusion, the Appellate Bench gave a restricted meaning to the expression "court which is winding up the company" in sub-section (2) by restricting it to the first situation in section 446(1), namely, when an order of winding up has been made. The Appellate Bench appeared to be of the view that where the official liquidator has been appointed as the provisional liquidator which implies that no winding-up order has been made, jurisdiction under section 446(2) cannot be invoked. The court felt that an anomalous situation would arise if claim petitions are moved under section 446(2)(b) at a stage when no winding-up order has been made because if ultimately the winding-up order is not made, the proceedings initiated under section 446(2)(b) by the provisional liquidator would be wholly without jurisdiction. The approach of the High Court, with respect, overlooks the object and purpose sought to be achieved by introducing sub-section (2) in section 446 by Amending Act 65 of 1960. As noted earlier, winding-up proceedings dragged on for decades with no end in sight and with no benefit ....
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....e Bench directed that pending the implementation of the scheme as sanctioned by the High Court, the winding up order will be kept in abeyance itself without anything more shows that the order was neither cancelled nor recalled nor revoked nor set aside. It continued to exist but was inoperative. Any default on the part of the company in carrying out its obligation under the scheme by itself without anything more would revive the winding up order. Therefore, the winding up order was effectively subsisting but inoperative for the time being, having all the potentiality of being rejuvenated or being brought back to life. Now, if the winding up order was merely held in abeyance, i.e ., if it was not operative for the time being, but had not ceased to exist, the winding up proceedings are in fact pending and the court which made the winding up order would be the court which is winding up the company. It is now well-settled that a winding up order once made can be revoked or recalled, but till it is revoked or recalled, it continues to subsist. That is the situation in this case. If the winding up order is subsisting, the court which made that order or the court which kept it in abeya....