1. Winding Up – Circumstance in which a company may wound up – Companies Act, 1956 – S. 433

The Court held that a bona fide dispute had been raised by the company in respect of the claim made by the petitioner company that the dues of the petitioner company had not been paid by the company. The claim of the opposite party company with regard to the price of the goods such as dual desks and benches supplied by it, against the petitioner company, could be recovered by the opposite party company under the common law forum. It was also open to the petitioner company to approach the common law forum, if it had any dues against the party company. The Court held that there was no merit in the company petition, and same was dismissed.

Orissa Small Inds. Corpn Ltd vs. Orissa Pump and Engg. Co. Ltd. [(2009) 96 SCL 347 (Orissa).

2. Winding up commencement – Once winding up order is passed, it relates back to date of commencement of proceedings – Sale of property without sanction of the court Companies Act, 1956 – Ss. 441, 529

The company in liquidation had taken a plot on lease from MIDC which was mortgaged to SICOM in consideration of amount lent. The company defaulted in payment of amount of said term loan and SICOM in exercise of powers reserved/vested in it under the said mortgage and under the provisions of section 29 of the State Financial Corporation Act, 1951 took over possession of the mortgaged premises. CLPL purchased the land from SICOM and said land was transferred to ‘L’ which had been nominated by CLPL and the possession was handed over and sale deed was executed by SICOM in favour of ‘L’. The entire shareholding of ‘L’ was purchased by the applicant company and in view of order of the High Court L was merged with the applicant prior to execution of the sale deed. The applicant filed instant application seeking an order against the Official Liquidator restraining him from interfering with possession of property and also prayed for the declaration that the company had no right, title and interest in the property and that it was not the asset of the company. The Official Liquidator contended that initially the recommendation for winding up of the company was presented by the BIFR in 1990 before the Bombay High Court and was registered. The petition was transferred by the Bombay High Court to the Gujarat High Court where winding up petition was admitted. Therefore, the date of commencement of winding up proceedings might be treated as the date of presentation of petition before the Bombay High Court i.e. in 1990 and that as per provision contained in section 531A, the transfer of property of the company in liquidation should be treated as void against the liquidator and transaction during the pendency of the winding up petition without any sanction of the court as invalid.

Indoco Remedies Ltd vs. Official Liquidator of Kay Packaging (P) Ltd. [(2009) 96 SCL 384 (Guj.)

3. Company Law Board – Powers under Code of Civil Procedure – Preliminary Issue – Companies Act, 1956 & Company Law Board Regulations, 1991 – S. 10E & Regulation 44

The Company Law Board is a creature of a statute and the proceedings are governed by the regulations made by the Company Law Board under section 10E(6). Perusal of section 10E(4) would show that all the powers under the code of civil procedure, 1908 are not vested in the Company Law Board. Therefore, the CLB has no power to decide preliminary issues nor can exercise powers under the code other than those conferred on it under section 10E(4C) and therefore, appeal was to be allowed.

B. Subba Reddy vs. S.S. Organics Ltd. [(2009) 96 SCL 466 (AP)

4. Payment of fees – Death of director – Conversion of individual membership card to corporate entity – Regulation 10 read with para 1(4) of Schedule III of the SEBI (Stock Brokers and Sub- Brokers) Regulations, 1992

The appellant company was elected as a corporate member of the stock exchange. The process of formation of the corporate entity by conversion of the individual membership card, as required in terms of paragraph 1(4) of Schedule III, was complete when H was alive. The fact that he expired before the corporate entity was granted registration by the board was not of any consequence as far as the grant of fee continuity benefit was concerned since neither paragraph I(4) of Schedule III nor the Board circular lays down any condition regarding registration. All the conditions prescribed in paragraph I(4) of Schedule III had already been fulfilled except that H could not continue for 3 years as a whole time director because death intervened. But the Board’s circular allows fee continuity benefit in case of the death of erstwhile individual/partnership members within 3 years of conversion subject to the fulfilment of the conditions mentioned therein. No deficiency in that regard had been pointed out by the Board. In that view of the matter, the appellant was clearly entitled to the benefit of fee continuity in terms of the board’s circular.

Hasmukh Lalbhai Share Brokers (P) Ltd. vs. Securities and Exchange Board of India (2009) 96 SCL 243 (Sat. Mum.)

5. Appeal – Condonation of delay – Company Law Board – Words ‘not exceeding 60 days’ used in the proviso to section 10F expressly bar application of section 5 of the Limitation Act, 1963 – Section 10F – Companies Act, 1956

The Court held that in the proviso to section 10F are ‘not exceeding 60 days’, thereby clearly prescribing the time limit of only 60 days, in addition to the initial period of 60 days allowed under section 10F to enable to party to file an appeal. The proviso clearly shows that the power vested in the Court to condone delay on sufficient cause being shown is directory and subject to the discretion vested in the Court. However, the maximum period to the extent of which such delay is capable of being condoned is mandatorily prescribed and not open to exercise of any discretion. Therefore the words ‘not exceeding 60 days’ would amount to an express exclusion within the meaning of section 29(2) of the Limitation Act, 1963 and would therefore bar the application of section 5 of the Limitation Act, 1963 to section 10F. Hence, the Court cannot condone delay in filing appeal beyond period exceeding 60 days.

Smt. Hetal Alpesh Muchhala vs. Adityesh Educational Institute (2009) 96 SCL 450 (Bom.)