Umak Investment Company Private Limited v. Business Associates (Delhi) Private Limited
2015-08-12
MANSOOR AHMAD MIR, TARLOK SINGH CHAUHAN
body2015
DigiLaw.ai
JUDGMENT Tarlok Singh Chauhan, J. 1. This appeal under Section 483 of the Companies Act, 1956 (for short ‘Act’) is directed against the order dated 3.3.2015 passed by learned Company Court whereby the provisional liquidator came to be appointed and was directed to proceed with the matter in accordance with law. 2. Looking into the nature of the order we propose to pass, it may not be necessary to discuss the facts in detail. Suffice it to note that respondent No. 1 had filed a petition for winding up of respondent No. 2 Company, which is yet pending adjudication before the learned Company Court. Alongwith the petition, the Company also filed an application under Section 450 of the Companies Act read with Rule 9 of the Company Court Rules, 1959 for appointment of official liquidator as provisional liquidator for M/s U.G. Hotels and Resorts Limited, which was registered as Company Application No. 27 of 2012. It appears that this application was lying dormant for nearly three years constraining the respondent to file another application for deciding the earlier application. This application was registered as Company Application No. 52 of 2014. 3. When these applications came up for consideration before the learned Company Court on 3.3.2015, it passed the following orders: “Co. Application No. 27 of 2012 in Co. Petition No. 9 of 2012. Heard. The official liquidator attached to this Court is appointed as provisional liquidator. He is directed to proceed with the matter in accordance with law. Learned counsel appearing on behalf of the Administrator has raised objection to the order. He has no locus standi to assail the order for appointment of official liquidator as provisional liquidator, as per law. Rather, his submission is wholly misconceived. There is difference between the duties to be discharged by the official liquidator, provisional liquidator and administrator. The application stands disposed of.” It is this order which has been assailed by the appellant on various grounds as taken in the memorandum of appeal. We have heard the learned counsel for the parties and have gone through the records of the case. 4. It is not in dispute that the appellant herein had filed detailed reply to Company Application No. 27 of 2012 and had not only raised preliminary objections regarding the very maintainability of the petition, but had also contested the petition on various other grounds.
4. It is not in dispute that the appellant herein had filed detailed reply to Company Application No. 27 of 2012 and had not only raised preliminary objections regarding the very maintainability of the petition, but had also contested the petition on various other grounds. However, as is evident from the impugned order, no reasons have preceded the conclusion whereby the official liquidator attached to this Court has been appointed as a provisional liquidator and directed to proceed in accordance with law. 5. Section 450 of The Companies Act, 1956, which provides for appointment of provisional liquidator, reads thus:- “450. Appointment and powers of provisional liquidator : (1) At any time after the presentation of a winding up petition and before the making of a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally. (2) Before appointing a provisional liquidator, the Court shall give notice to the company and give a reasonable opportunity to it to make its representations, if any, unless, for special reasons to be recorded in writing, the Court thinks fit to dispense with such notice. (3) Where a provisional liquidator is appointed by the Court, the Court may limit and restrict his powers by the order appointing him or by a subsequent order; but otherwise he shall have the same powers as a liquidator. (4) The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made.” 6. The object of appointing a provisional liquidator is to ensure that there will be a fair distribution of the assets of the company and that one creditor does not benefit at the expense of the others. An application for the appointment of a provisional liquidator is not ordinarily allowed except on a petition of the creditor who has been unable to obtain payment of his money or unless the company asks for or agrees to the appointment. 7. It is well settled that the same principle which is adopted and followed by the Civil Court for appointment of receiver is required to be applied before passing an order of appointment of a provisional liquidator.
7. It is well settled that the same principle which is adopted and followed by the Civil Court for appointment of receiver is required to be applied before passing an order of appointment of a provisional liquidator. Whereas, the applicant is required to carve out a strong prima-facie case, while the Court on the other hand, is required to satisfy itself that it would be just, equitable and proper to appoint a provisional liquidator in the interest of the company, complaining shareholders, creditors or workmen and lastly public interest etc. 8. Appointment of provisional liquidator is a very drastic measure and can be resorted to only if a clear and strong ground for winding up is present and the Court being of the view that it is necessary to do so. Existence of a good ground for making a winding up order need not necessarily be a ground for appointing a provisional liquidator. Before the Court takes this drastic step, it must be satisfied that such an order is absolutely necessary [Refer: Kailash Prasad Mishra and Others vs. Medwin Laboratory Pvt. Ltd. and Others, (1988) 63 Com. Cases 810 (MP) and Virendra Singh Bhandari and Others vs. Nandlal Bhandari and Sons Pvt. Ltd. 1979 (49) Com. Cases 532 (MP)]. 9. In view of the aforesaid discussion, the present appeal is allowed and the impugned order passed by the learned Company Court dated 3.3.2015 is set-aside and the matter is remitted back for decision afresh. All pending applications stand disposed of.