OFFICIAL LIQUIDATOR Vs. DHARTI DHAN PRIVATE LIMITED

JUDGEMENT

(1.) The Official Liquidator attached to the High Court of Rajasthan, in-charge of the liquidation of Golcha Properties (Pvt.) Ltd., (hereinafter referred to as Golcha Company), has come up in appeal to this Court by special leave against a judgment and order of a Division Bench of that High Court, passed on a Special Appeal From the judgment and order of a singly Judge of that Court. On petitions presented on 4th July 1966 and 30th July 1966 by the creditors of Golcha Company, the High court had made a compulsory winding up order on 10th May 1968; and, on that very date, the appellant was appointed liquidator of the Golcha Company. The Dharti Dhan (Pvt. Ltd., (hereinafter referred to as the Dhan Company), with its registered office at Bombay, was said to be one of the debtors of the Golcha Company to the extent of Rupees 11,69,043/-, together with interest and commission which was said to be still due on 1st August 1969. Agreements dated 25-6-66 and 17-1-67 between the two companies regulated the method of repayment by annual instalments of Rs. 2,50,000/- according to the appellant. As the respondent, Dhan Company, is said to have defaulted in the payment of two of its instalments, a claim under Section 446 (2) of the Companies Act (hereinafter referred to as the Act) for the recovery of a sum of Rupees 5,00,000/- was made before the Company Judge of the High Court of Rajasthan by the appellant.

(2.) On 20th September 1969. the Registrar of Companies in Maharashtra had to file a winding up petition against the respondent Dhan Company in the Bombay High Court. The Company Judge in the Bombay High Court on 3rd January, 1970, directed advertisement of the winding up petition. The respondent Dhan Company appealed against the decision of the Company Judge and obtained an order, dated 3rd February, 1970, from a Division Bench staying the operation of the order for advertisement of the winding up petition. An appeal against that order is said to be still pending so that a stay of those proceedings operates.

(3.) After obtaining an order of stay of the proceedings against it in the Bombay High Court, the Dhan Company made an application under S. 442 (b) of the Act in the Rajasthan High Court for stay of proceedings against it under Section 446 (2) on the ground that a compulsory winding up petition was pending against it in the Bombay High Court. The object of the respondent Dhan Company appeared to be to obtain an indefinite stay of proceedings against it, in both High Courts. If this is a correct inference, as it appears to us to be, the stay application under Sec. 442 (b) of the Companies Act could not be a bona fide one. It looks more like an abuse of the processes of the Court. It is, therefore, not surprising that the learned Company Judge of the Rajasthan High Court rejected the Dhan Company's application under Section 442 (b) of the Act on 9th May 1974. It is, however, somewhat surprising that a Division Bench of that High Court should have allowed an appeal from the judgment of the Company Judge and ordered stay of proceedings under Section 446 (2) of the Act against the respondent Dhan Company, even though this was subjected to the condition that "the appellant Company produces the entire documentary evidence inclusive of account-books, vouchers, files and other documents and papers in its possession or power relating to the claim in question, as it may desire to produce or the Official Liquidator desires to summon or as the learned Company Judge may direct in his discretion and also produces a list of witnesses that the appellant Company may desire to examine in its defence in respect of the claim in question along with an affidavit of what each witness is likely to depose." Thus, the Division Bench had, while making the stay order, attempted to safeguard the interests of the Golcha Company by making an order which, in the opinion of the Division Bench, would prevent valuable evidence from being lost due to either the death or the fading memory of a witness or other causes.