UNION OF INDIA Vs. SHALIMAR WORKS LTD

JUDGEMENT

(1.) This is an application under Section 15A of the Industries (Development & Regulation) Act, 1951, as amended by the amendment Act of 1971, hereinafter referred to as the Act, filed by the Union of India against the Shalimar Works Ltd., an existing company within the meaning of the Companies Act, 1956, having its registered office at No. 4 Garden Reach Road, Calcutta, for leave to carry out an investigation as indicated in Section 15A of the Act.

(2.) The petitioner's case is that several winding-up petitions are pending before this court against the Shalimar Works Ltd., hereinafter referred to as the company, and that the petitioner feels that an investigation is necessary under Section 15A of the Act. Mr. Seth appears on behalf of the petitioner and the application is opposed by Mr. Mukherjee for the company. Mr. Mukherjee raises a question whether the present application is maintainable in the facts and circumstances of the case. It is being submitted that the company is not being wound up by or under the supervision of the High Court and, therefore, the instant application does not He.

(3.) Admittedly, certain winding-up petitions are pending before this court. There is no dispute that the said petitions have been stayed under Section 391(6) of the Companies Act. The question, therefore, is whether it can be stated that the company is being wound up. Section 15A of the Act says that when a company is being wound up, an application as indicated in that section will lie. The question, therefore, is whether in the facts and circumstances of the case the company can be stated to be in the process of being wound up. According to Mr. Seth, as soon as an application for winding up is filed, the company in question is being wound up. Mr. Mukherjee, on the other hand, submits that unless an order for winding up is passed, the process of winding up does not start. In this connection I have been referred to several sections of the Companies Act along with necessary rules prescribed under the Act. According to the Companies Act, if the court is satisfied an order may be passed for winding up and the rules prescribed under the Companies Act describe the procedure to be followed after the passing of the winding-up order. The rules also say how the liquidation proceeding or rather winding-up proceeding culminates with the final order by dissolution of the company or otherwise. Section 481 of the Companies Act also speaks about the dissolution of the company after the order passed for winding up of the company. I have been refer-red by Mr. Seth to Section 391 of the Companies Act to get support, as he says, to this contention that after the filing of the application the company should be regarded as being wound up. Sub-section (1) of Section 391 says that where a compromise or arrangement is proposed, the court may, on the application of the company or of any creditor or member of the company or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the court directs. I am afraid, this sub-section goes against the contention of Mr. Seth. There are several distinct circumstances under which the court may pass necessary orders for holding meeting as mentioned there. The distinct circumstances are : (1) an application is filed by the company or by any creditor or member of the company, or (2) an application is filed by the liquidator in the case of a company which is being wound up. If that is so, then certainly it cannot be said that as soon as an application for winding up is filed it becomes a case of a company being wound up. It clearly indicates, in my view, that the process starts after the order for winding up is made and not after the filing of an application for winding up. Therefore, one cannot say that a company is being wound up as soon as an application is filed for its winding up and before any order is passed for winding up of the company.