D.K.KAPUR, J. - (1.) This petition under Sections 518 and 466 of the Companies Act, 1956, raises an interesting question as to 'the power of the Court to bring a voluntary winding up to an end. The facts of the case are that there is a company, M/s. Dimples Private Limited which has a paid-up capital of Rs. 34,200 ;it was incorpora- ted on 8th February, 1957, but its business came to an end in 1962-63. On 15th April, 1967, the share-holders held an extraordinary general meeting and adopted a special resolution sending the company into a members voluntary winding up. The applicant, Shri S. P. Sood became the Voluntary Liquidator of the company. The Voluntary Liquidator realised all the amounts due to the company with the result that Rs. 34,032.28 are now with him as per statement of accounts made up to 14th April, 1976, annexure 'C' attached to the petition. There are only two share-holders of the company-Mrs. Leela Puri who has one share and Movies Private Limited which has 341 shares. The share-holders held a meeting on 9th August, 1976. resolving that the voluntary winding up should be stayed and the Court should be moved. A copy of that special resolution is annexure 'D'. Acting on this resolution, the Voluntary Liquidator has prayed that the voluntary winding up may be stayed permanently.
(2.) Notices of this petition have been given to the Registrar of Companies and the Central Government and also published in the Hindustan Times and Chitra Weekly. An affidavit has been filed on behalf of the Registrar of Companies stating that there was no opposition to the petition on merits, but pointing out that the special resolution had not been filed. Now a receipt has been filed which shows that the special resolution seeking to get the winding up terminated has also been filed.
(3.) The main controversy in the case turns on whether the Court has power to stay a voluntary winding up. The power of the Court in relation to a winding up order passed by itself is contained in Section 466 of the Companies Act, 1956, which gives power to the Court on an application either of the Official Liquidator or a creditor or a contributory to pass an order staying the proceedings either altogether or for a limited time. If the present winding up was the result of a winding up order passed by the Court, there would be no doubt that the Court would have jurisdiction. For the purposes of submitting that the Court has a similar power in relation to a voluntary winding up, the petitioner relies on Section 518 of the Act. Sub-section (1) of that Section reads :- "518 (1). The Liquidator or any contributory or creditor may. apply to the Court- (a) to determine any question arising in the winding up of a company ; or (b) to exercise, as respects the enforcing of calls, the staying of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court." The wide language in which this provision is framed, seems to suggest that the powers of the Court in relation to winding up proceedings, which are exercisable while a company is being wound up by the Court, can also be exercised in the course of voluntary winding up. The submission, of the petitioner is emphasised by the terms of Sub-section (5) of this Section, which reads :- "A copy of an order staying the proceedings in the winding up made by virtue of this section, shall forth-will be forwarded by the company, "or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the company." Thus, the question for consideration is whether the power to stay the winding up exercisable under Section 466 in relation to companies being wound up by the Court can also be exercised when a company is in voluntary winding up. I find that the position taken up by the petitioner is consistent with a large number of reported case. In Punjab Co-operative Bank, Ltd. AIR 1919, Lahore 305 (1), it was held under the old Act that the Court could stay a voluntary winding up. In the matter of East India Cotton Mills Ltd. AIR 1949, Calcutta 69 (2), S.R. Dass J. (as he then was) examined the principles on which a stay of winding up could be ordered and found that it was analogous to the jurisdiction exercised while rescinding a receiving order or annulling an adjudication in bankruptcy. There are some English cases also in which a voluntary winding up was stayed. Examples of those are : In re : South Barrule Slate quarry Co. (1869) 8, Equity Cases 688 (3), re : Titian Steamship Co. (1888) W.N. 17 (4), and many other cases. It has been held in such cases that mere consent of the parties is not enough but the Court should consider all the circumstances. A leading judgment on the principle on which the Court should act while ordering stay is in re : Telescriptor Syndicate, Limited, (1903) 2, Ch. Div. 174 (5). In that case, the Court detailed various points for and against ordering a stay of the winding up and decided that there was no ground for staying the winding up on the facts as they were. The Court, however, observed that at a later date, the Official Receiver could report whether all the liabilities and creditors and contributories had been settled and the debts had been paid and whether the members were prepared to reduce their share capital by surrendering and cancelling their bonus shares, then the Court would 'as at present advised be prepared a stay the proceedings in the winding up'. Thus, there is no doubt that the Court does possess the power to stay a winding up even when it is a case of voluntary winding up. There must, however, be facts justifying the stay. The words used in Section 466 are : "on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed." Thus, I have got to find from the facts whether this is a case where the winding up ought to be stayed or whether it is a case where the company should be finally wound up.;