Company Law

Jaipur Spinning and Weaving Mills Ltd. (In Liquidation)

Application seeking permanent stay of liquidation proceedings filed after 25 years - Applicant unable to prove its investment in shares

The applicant claimed to be a holder of approximately 65 percent of the issued, subscribed and paid-up share capital of the company in liquidation. An application was filed under s.466 of the Companies Act 1956 read with rules 147, 148, 159, 163 and 167 of the Companies (Court) Rules 1959 seeking, inter alia, permanent stay of the liquidation proceedings of the company in liquidation and directing the OL to furnish to the applicant the details and photostat copies of the uninvited claims, if any, received by the OL with regard to the company in liquidation. The high court noted that out of the three parcels of land of the company in liquidation, the third parcel of land had been put to auction by way of inviting tenders. However, in the application nothing had been said about this parcel of land and the tenders invited for sale of the land were sought to be stayed. The litigation, therefore, appeared to be mala fide and malicious. The requirements of rules 147, 148, 149, 159, 163, 167, 169, 275 and 276 of the Rules had been complied with. The claims of the creditors, workers and others were invited and received. The payment had been made to the workers and others without interest. No evidence was placed to show that the applicant had invested in the company in liquidation. It was also not shown that on what date the shares were purchased and invested for becoming the contributory of the company in liquidation. The applicant had categorically submitted that he did not want to revive the company and wanted to pay the creditors as per the settled list of the creditors by the OL. The applicant had also not shown its resourcefulness to make payment to the creditors in terms of the settled list of the creditors. The application filed 25 years after the company was ordered to be wound up showed that the application had been filed only to block the sale of the land of the company in liquidation. The necessity to sell the land was that the claims of the persons against the company in liquidation had to be satisfied along with the interest, which had yet not been paid. The applicant had not made out a case for stay of the winding up proceedings of the company in liquidation. The application was dismissed.