1996 (7) TMI 460

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....ent and against which the respondent decree-holder had obtained a decree. The learned advocate submits that the business had collapsed and that an application for winding up of the concerns has been entertained by the High Court and a liquidator has been appointed. He has submitted that having regard to the provisions of section 587 of the Companies Act, 1956, once such a development takes place, it is not competent for any court to either commence or continue with any legal proceedings in relation to recoveries either against the concern or persons who have contributed to it. He, therefore, submits that this revision is entitled to succeed in so far as by virtue of the provisions of section 587 of the Companies Act, it will have to be held....

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.... of the Companies Act, 1956. All that the section prescribes is that the liquidator be afforded a free hand so that all claims can be consolidated before that authority. The section, however, takes cognizance of the fact that there may be situations in which it is undesirable or inadvisable for the company court to prohibit the proceedings from going on. A typical example would be a situation wherein the person in charge of the affairs of the companies are demonstrated to have indulged in massive frauds or acts of misappropriation or other criminal offences and in any situation such as this, the company court would not only refuse to stop any such proceedings but to my mind would be fully justified in directing that they should either be co....