Case Law Companies Act Sudarsan Chits Ltd Vs O Sukumaran Pillai And Ors

Case Law Companies Act

Sudarsan Chits Ltd Vs

O Sukumaran Pillai And Ors

 

DATE OF JUDGMENT-16/08/1984

BENCH: DESAI, D.A.

BENCH: DESAI, D.A. ERADI, V. BALAKRISHNA (J) KHALID, V. (J)

CITATION: 1984 AIR 1579 1985 SCR  (1) 511 1984 SCC  (4) 657 1984 SCALE  (2)289

ACT: The Companies Act, 1956  (1 of  1956), Section 446 (2) (b)-Scope of. Words and phrases-Meaning of “Court which is winding up the company” -Section 446 (2)-Companies Act, 1956.

HEADNOTE: The  appellant, a limited  company  governed  by  the Companies Act, 1956 (for short, the Act) challenged before a Division Bench  of the  High Court  the order of the Company Judge,  winding  up  the  appellant-company  and  appointing Official  Liquidator, on  three  petitions  moved  by  the creditors under  s. 439  of the  Act on  the ground that the appellant-company was unable to pay its debts. The appellate Bench of  the High  Court  disposed  of  the  appeals  after approving the  scheme of compromise and arrangement under s. 391 of  the Act  and directed  that (i) the winding up order passed by  the Company  Judge shall  be held  in abeyance on certain undertakings  being filed  by the  appellant company within the prescribed time before the High Court to abide by the conditions  imposed in  the judgment;  (ii) the Official Liquidator will  be considered  as appointed  to function as the provisional  Liquidator on  the first  payment of Rs. 25 lacs being made within four weeks of the judgment; and (iii) in case  of any  default the  winding up  order  will  stand confirmed.  Since   then  the   scheme  of   compromise  and arrangement  was  being  implemented  meticulously.  In  the course of implementation of the scheme the appellant company moved an application before the Appellate Bench praying that the  provisional Liquidator  be  directed  to  file  claim petitions under  s. 446  (2) of  the Act  for realising  the claims  of  the  company  which  would  further  assist and facilitate the implementation of  the scheme  of compromise and arrangement as supervised by the Court. Respondent No. 1 opposed this application. The High Court while rejecting the application, held  that as  the  winding  up  proceeding  in respect of  the appellant-company  is no  more  pending  and there is  no court  which could  be said  to  be  the court winding up  the company, the claim petition on behalf of the company which  is not being wound up could not be instituted as contemplated  by s. 446 (2). Hence this appeal by special leave. Allowing the appeal, 512 ^ HELD :  (1) It  would be  advantageous  to  notice  the historical evolution of the provision as well as its present setting before  considering the  true scope and ambit of the jurisdiction conferred  on the court winding up a company by sec. 446(2)  (b) of  the Act.

Section  171  of  the  Indian Companies Act  1913, which  did not  contain  any  provision similar or  identical to  that of sec. 446(2), is re-enacted with little modification as Sec. 446(1) of the Companies Act 1956 Since  there was  no specific provision in the repealed Companies Act  1913 conferring  jurisdiction  on  the  court winding up  the company  analogous to  the one  conferred by sec. 446(2), 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. To save the company which is  ordered to  be  wound  up  from  this  prolix  and expensive litigation  and to keep all incidental proceedings in winding  up before  the court  which is  winding  up  the company, its  jurisdiction was  enlarged by  sec. 446(2)  to entertain petition  amongst others for recovering the claims of the  company. This  was the  object  behind  enacting  s. 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. [516H, 517A, B, 518A, B] 2. Section 446(1) provides that when a winding up order has been  made or the official Liquidator has been appointed as provisional Liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order,  shall be  proceeded with,  against  the  company, except by  leave of  the Court  and subject to such terms as the Court  may impose.  It envisages two situations in which the  court   will  have   jurisdiction  to  make  the  order thereunder contemplated.  These two  situations are: where a winding up  order  has  been  made  or  where  the  official Liquidator has been appointed as provisional Liquidator.

The first of  the two  situations envisages an order for winding up of  the company having been made and which is subsisting. The second  situation is  where without  making a winding up order, the Court has appointed official liquidator to be the provisional  Liquidator  as  contemplated  by  Sec.  450(1). [518D, 519E, F] Sub-Sec. (2)  of Sec.  446 confers  jurisdiction on the Court which  is winding  up the  company  to  entertain  and dispose of  proceedings set  out in  clauses (a) to (d). The expression ‘court  which is  winding up  the  company’  will comprehend the  Court before  which a winding up petition is pending or  which has  made an  order for  winding up of the company and  further winding  up proceedings  are  continued under its  directions. Undoubtedly,  looking to the language of Sec.  446(1) and  (2) and  its setting  in Part VII which deals with  winding up  proceedings would  clearly show that the jurisdiction  of the  Court to  entertain and dispose of proceedings set out 513 in sub-cls. (a) to (d) of sub-sec. (2) can be invoked in the court which is  winding up the company. [520B-C] (3) Where       a winding  up petition  is  pending  meaning thereby  that   an  official   Liquidator  is  appointed  as provisional Liquidator  which is  a stage  in the process of winding up,  the  court  before  which  such  proceeding  is pending can  be styled  as a court winding up of the company and ipso  facto it  would have jurisdiction to entertain the proceeding enumerated  in clauses (a) to (d) of sub-sec. (2) of  sec.

446.  If   the  winding  up  petition  fails  the proceedings pending  in the court may have to be transferred to the  court which can entertain the proceeding. But if the petition praying  for winding  up  the company  ends  in  a winding up  order the  proceedings intimated  under sub-sec. (2) will  have to  be proceeded  with till  they are finally disposed of because winding up order will relate back to the date of the presentation of the winding up petition. In this view of  the matter  no anomalous  situation can ever arise. Therefore, the  apprehension of  the High Court that if such jurisdiction is  conferred on  the court at a stage anterior to the  winding up  order being  made but  subsequent to the appointment of official Liquidator as provisional Liquidator an anomalous  situation would  arise is  not  well  founded. [513B, C] (4) 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. Now,  it the  winding up order is  subsisting the  court which made that order or the court which  kept it  in abeyance  will have jurisdiction to give necessary  directions to  the provisional Liquidator to take recourse to s. 446(2). [522B-C] (5) In  the instant  case. The winding up order made by the learned  Company Judge  in  respect  of  the  appellant- company has  neither  been  quashed  set,  aside, cancelled revoked nor  recalled. 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.  The  High  Court  was  in  error  in rejecting the  application, since  its approach  in giving a restricted meaning to the expression ‘court which is winding up the  company’ under sub sec. (2) by restricting it to the first situation  under section  446(1) overlooks the objects and purpose sought to be achieved by introducing sub-section (2) in section 446. [521G, H, 522A, F] Official Liquidator v. Kadir and Ors. (1977) Kerala Law Times 30  and Faridabad  Cold Storage and Allied Industry v. Official Liquidator,  Amonia Supplies Corporation P. Ltd. 48 Company Cases; over-ruled. 514

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2528 of 184. From the Judgment and Order dated the 18th August, 1983 of the  Karnataka High  Court in  CMP. No.  14913 of 1983 in MFA. No. 518-20 of 1981. S. N. Kacker and Shiv Pujan Singh for the Appellant. K. M. K. Nair for the Respondent. Gobind Bharathan and E. M. S. Anam for Intervener. The Judgment of the Court was delivered by DESAI, J. Sudarsan Chits (India) Ltd.-appellant herein, (‘Company’ for  short) is  governed by  the  Companies  Act, 1956. Three  petitions being  Company Petitions  Nos.  9/81, 8/81 and  49/81 were  moved by  the creditors of the Company under Sec.  439 of  the Companies Act praying for winding up of the  Company on  the ground that it was unable to pay its debts. The  learned Company Judge passed an order winding-up the Company  and appointed  official Liquidator  to  be  the Liquidator of  the Company. This order was challenged in MFA Nos. 578,  579 and  520 of  1981 which  came up  for hearing before a  Division Bench  of  the  Kerala  High  Court.  The judgment of the Division Bench is reported in Sudarsan Chits (India) Ltd.  v. G.  Sukumaran Pillai.(1)  The appeals  were disposed of  after approving  the scheme  of compromise  and arrangement under  Sec. 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 515 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 Division  Bench  is  being implemented and  we were informed that an amount of Rs. 2.40 crores   has    already   been    disbursed  amongst  the claimants/creditors of  the company.  We were  also informed that the  scheme of  compromise  and  arrangement  is  being meticulously implemented  under the supervision of the court as directed by the Appellate Bench. In the  course of       implementation  of  the  scheme,  it became necessary  to recover certain debts and claims due in favour  of   the  Company.  For  this  purpose  Civil  Misc. Application No. 14913 of 1983 was moved before the Appellate Bench  praying   for  a   direction  that   the  provisional Liquidator be  directed to  file claim  petitions under Sec. 446 (2)  of the  Companies Act  in  the  Company  Court  for realising the  claims of  the Company,  which would  further assist and  facilitate the  implementation of  the scheme of compromise and  arrangement as  supervised by the court.

One G. Sukumaran  Pillai was  impleaded as  the first respondent and the  provisional Liquidator  was impleaded as the second respondent. It appears to have been contended before the court that as there  was no  winding up  proceeding pending  before the Company Judge  or the  Appellate Bench and as the Company is being  managed   under  the   scheme   of   compromise   and arrangement, the  Company Court will have no jurisdiction to entertain the  claim petition  under Sec.  446  (2)  of  the Companies  Act.   This  contention  found  favour  with  the Appellate Bench  and the  Civil Misc. Petition was rejected. Relying upon  the decision  in Official  Liquidator v. Kadir aud Ors.(1)  and Faridabad  Cold Storage and Allied Industry v. Official  Liquidator,  Ammonia  Supplies  Corporation  P. Ltd.(2) the  court concluded  that the right to avail of the remedy by  filing a  claim petition  conferred by Cl. (b) of Section 446  (2) can  be availed of only in a court which is winding up the company. Hence this appeal by special leave. After the       special leave  was  granted,  a  notice  was served upon  the provisional  Liquidator informing  him that the appeal will be 516 listed for  final hearing  on August 1, 1984. Even after the intimation the  provisional Liquidator  did  not  choose  to appear at the hearing. C. M.  P. No.  6062 of  1984 was moved on behalf of All India Subscribers Association of Chits through its Secretary Mr.  S.   K.  Jain   seeking  intervention  in  the  matter. Intervention was permitted. Upon its true construction, what is the scope and ambit of the  jurisdiction conferred  on the  court winding  up  a company by Sec. 446 (2) (b) is the only question of law that arises in  this appeal  and may be answered in the facts and circumstances of the case. Sec. 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 lay 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 had 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) Act, 1960.” Before we  advert to  the question  of construction  of Sec. 446  (2) (b),  it would  be advantageous  to notice the historical evolution of the provision as well as its present setting. Sec.  171 of  the Indian  Companies Act,  1913, the predecessor of Sec. 446 (1) did 517 not contain  any provision  similar or  identical to that of Sec. 446  (2).  Sec. 171 only provided for stay of suits and proceedings  pending  at  the commencement  of  winding  up proceeding, and embargo against the commencement of any suit or other legal proceedings against the company except by the leave of  the court. This provision with little modification is re-enacted  in  Sec.  446  (1).  There  was  no  specific provision conferring  jurisdiction on  the court  winding up the company analogous to the one, conferred by Sec. 446 (2). Sub-sec.

(2)  was introduced  to enlarge the jurisdiction of the court  winding up  the company  so as  to facilitate the disposal of winding up proceedings. The provision so enacted probably did  not meet  with the requirement with the result that the  Committee appointed  for  examining  comprehensive amendment to  the Companies  Act in  its report  recommended that ‘a  suit’ by  or against a company in winding up should notwithstanding any  provision in  law for the time being be instituted in  the court in which the winding up proceedings are pending.(1)  ‘To give  effect to  these recommendations, sub-sec. (2) was suitably amended to bring it to its present from by  Companies  (Amendment)  Act,  1960.  The  Committee noticed that  on a  winding up  order  being  made  and  the Official Liquidator  being appointed  a  Liquidator  of  the company, he has to take into his custody company property as required by  Sec. 456.  Sec. 457  confers power  on  him  to institute or  defend any  suit, prosecution,  or other legal proceeding, civil  or criminal, in the name and on behalf of the company.  Power  is  conferred  upon  him  to  sell  the properties both  movable and removable of the company and to realise the  assets of  the company  and this was to be done for the  purpose of  distributing the  assets of the company amongst the  claimants. Now  at a  stage when  a winding  up order is made the company may as well have subsisting claims and to realise these claims the Liquidator will have to file suits.

To  avoid this eventuality and to keep all incidental proceedings in  winding up before the court which is winding up the  company, its  jurisdiction was enlarged to entertain petition amongst  others for  recovering the  claims of  the company. In  the absence  of a  provision like  Sec. 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  would hold up the progress of the winding up proceedings. To 518 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, the 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 Sec.  446 (2)  and therefor, 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 VII of the Companies Act  bears the heading ‘Winding up’. Sec. 443 sets out the  circumstances in which a company may be wound up by the court.  Sec. 444  provides that where the court makes an order for  the winding  up of  a company,  the  Court  shall forthwith  cause  intimation  thereof  to  be  sent  to  the official Liquidator  and the Registrar. Sec. 446(1) provides that when  a winding  up order has been made or the official Liquidator has  been appointed as provisional liquidator, no suit or  other legal  proceeding shall  be commenced,  or if pending at  the date  of the  winding  up  order,  shall  be proceeded with,  against the company, except by leave of the Court and  subject to  such terms  as the  court may impose. Then comes  sub-sec.

(2)  of  Sec. 446.  It  specifies  the contours of  the jurisdiction  of the court which is winding up the company. It confers special jurisdiction on the Court which is  winding up  the company  to do things that are set out in  the  various  sub-clauses  notwithstanding  anything contained in any other law for the time being in force. Sec. 446 (2)  thus conferred  special jurisdiction  on the  court winding up  the company  which otherwise  it  may  not  have enjoyed. The court in the Companies Act is defined in Sec. 2 (11) to  mean with  respect to  any  matter  relating  to  a company (other then any offence against this Act), the Court having jurisdiction  under the  Act  with  respect  to  that matter relating  to that company, as provided in Section 10. Section 10 provides that the court having jurisdiction under the Act  shall be  the High  Court  having  jurisdiction  in relation to  the place at which the registered office of the company concerned  is situate, except to the extent to which jurisdiction has  been conferred  on any  District Court  or District Courts  subordinate to that High Court in pursuance of sub-sec.  (2).

The winding up  petition has  thus to  be presented in the High Court before the Judge who is assigned the work under the Companies Act. Therefore, the Court which is winding  up the  Company will  be the  court to  whom the petition for 519 winding up  was presented  and which  passed the  order  for winding up  the Company. In this case, the order was made by the learned Company Judge in the Kerala High Court directing winding up the company. An appeal lies against the order for winding up  the Company  under section 483 to the same court to which  and in the same 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 is 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  Sec. 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,  Sec.

446  (1)   manifests  the   legislative intention that  the procedure thereunder prescribed could be availed off when the winding up order has been made or where the official  Liquidator is  appointed  as  the  provisional Liquidator. Sec.  446 (1)  invisages two situations in which the  court   will  have   jurisdiction  to  make  the  order thereunder contemplated.  These two  situations are: where a winding up  order  has  been  made  or  where  the  official Liquidator has been appointed as provisional Liquidator. The first of  the two  situations envisages an order for winding up of  the Company having been made and which is subsisting. The second  situation is  where without  making a winding up order, the court has appointed official Liquidator to be the provisional Liquidator.  Sec. 450  (1) of  the Companies Act confers power  on the  Company  Court  to  appoint  official Liquidator to  be provisional  Liquidator at  any time after the presentation  of the  winding  up  petition  and  before making of  the winding  up order.  The Court  before which a winding up  petition  is  presented  has  power  to  appoint official Liquidator as provisional Liquidator of the Company even before  making the  winding  up  order.  If  ultimately winding up  order is  made, the  official Liquidator acts as such. And let it be remembered that where a winding up order is made,  it relates  back to  the date  when  petition  for winding up  is presented.  Referring  to  Sec.

446  (1)  it becomes clear  that the court will have jurisdiction to make the order therein contemplated, where a winding up order has been made or prior to the making up of the winding up order, official 520 Liquidator has  been appointed  as provisional Liquidator as contemplated by Sec. 450 (1). Sub-sec. (2)  of Sec.  446 confers       jurisdiction on the court which  is winding  up the  company  to  entertain  and dispose of  proceedings set  out in  clauses (a) to (d). The expression ‘court  which is  winding up  the  company’  will comprehend the  court before  which a winding up petition is pending or  which has  made an  order for  winding up of the company and  further winding  up proceedings  are  continued under its  directions. Undoubtedly,  looking to the language of Sec.  446 (1)  and (2)  and its setting in Part VII which deals with  winding up  proceedings would  clearly show that the jurisdiction  of the  court to  entertain and dispose of proceedings set  out in  sub-cls. (a) to (d) of sub-sec. (2) can be invoked in the court which is winding up the company. Reverting to  the facts  of this  case,  the  Appellate Bench held  that as  the winding up proceeding in respect of the appellant  company is  no more  pending, and there is no court which  could be  said to  be the  court winding up the company and  therefore, the  claim petition on behalf of the company which  is not being wound up could not be instituted as contemplated by Sec 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- sec. (2) by restricting it to the first situation in Sec 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 Sec. 446 (2) cannot be invoked. The Court felt  that an anomalous situation would arise if claim petitions are  moved under  Sec. 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 Sec.  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-sec. (2)  in Sec.  446 by  Amending Act  65 of  1960. As noted earlier, winding up proceedings dragged on far decades with no  end in  sight and  with no benefit to the creditors and contributories of the Company. To accelerate the process of winding up so as to bring 521 them to  an end, this sub-section was amended in its present form in 1960 conferring jurisdiction on the court winding up the  company   to  entertain  amongst  others  any  suit  or proceeding by or against the company or any claim made by or against the  company. If therefore, a winding up petition is pending meaning  thereby  that  an  official  Liquidator  is appointed as  provisional Liquidator which is a stage in the process  of   winding  up,   the  court  before  which  such proceeding is pending can be styled as a court winding up of the company  and ipso  facto it  would have  jurisdiction to entertain the proceeding enumerated in clauses (a) to (d) of sub-sec. (2) of Sec.

446. The apprehension of the High Court that if  such jurisdiction  is conferred on the  court at a stage anterior  to the  winding  up  order  being  made  but subsequent to  the appointment  of  official  Liquidator  as provisional Liquidator  an anomalous  situation would arisen has left  us unimpressed.  If the  winding up petition fails the proceedings  pending in  the  court  may  have    to  be transferred to the court which can entertain the proceeding. But if  the petition praying for winding up the company ends in a  winding up  order the proceedings initiated under sub- sec. (2)  will have  to be  proceeded  with  till  they  are finally disposed  of because  winding up  order will  relate back to  the date  of the  presentation of  the  winding  up petition. In  this view of the matter no anomalous situation can ever arise. However, the  narrow question  which is  required to be considered  in  this  appeal  is:  whether  the  winding  up proceedings were  pending or  had come  to an  end when  the Appellate Bench  froze the winding up order by keeping it in abeyance ?  Let it be made at once clear that the winding up order made  by the  learned Company  Judge in respect of the appellant Company  has  neither  been  quashed,  set  aside, cancelled  revoked  nor  recalled.  On  the  contrary  after directing that  the  winding  up  order  shall  be  held  in abeyance,  the   Appellate  Bench   directed  that  official Liquidator shall  continue to  act as provisional Liquidator as provided  by Sec.  450 and  that itself is a stage in the winding up  proceedings. When  winding up  order is  kept in abeyance it  is in  a state of suspended animation. The fact that  the   Appellate  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 sub- 522 sisting 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. it was not operative for the time being, but it 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  abeyance  will  have jurisdiction to give necessary directions to the provisional Liquidator to take recourse to Sec. 446(2). In passing it was  stated that  the Company sought the direction from  the Appellate  Bench and  not from the Court which was  winding up  the Company  i.e.

the court of the Learned Company  Judge which made the winding up order. That of course is true  but even taking a very technical view of the matter, the appellant was perfectly justified in moving the petition  before the  Division Bench  because it was the Division Bench  which was supervising the implementation of the scheme  of compromise  and arrangement  and it  was  the Division Bench  in the appeal before it against the order of winding up  that had  kept the winding up order in abeyance. The  direction  was rightly therefore,  sought  from  the Appellate Bench. Having thus examined the matter from all angles, we are of the  view that  the High  Court was in error in rejecting the application  made on behalf of the appellant-Company for directing  the   provisional  Liquidator  to  prefer  claims petitions on  the materials  and expenses to be furnished by the  Company.   The  amounts  realised  by  the  provisional liquidator on filing claim petitions shall be handed over to the Company and the appellant-Company is under an obligation to use, spend, and appropriate them in the implementation of the scheme under the supervision of the court. This appeal accordingly succeeds and is allowed and the order of  the High  Court under  appeals is  set aside.  The application for the directions to the provisional Liquidator made by  the appellant  Company is granted and directions in terms of  the prayer  are hereby  made. The  appellant shall bear its own costs. M.L.A.

Appeal allowed. 523

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