Case Note & Summary
The Bombay High Court dealt with an application under Section 466 of the Companies Act, 1956, filed by S. K. Sarpotdar, a shareholder and contributory of Surlux Diagnostic Limited (in liquidation), seeking recall of the winding up order dated 10th February, 1999 and dismissal of the company petition. The company was incorporated under the Companies Act, 1956 and its shares were listed on the Bombay Stock Exchange. The winding up petition was originally filed by Omprakash Mehra, proprietor of M/s. Omprakash Durgadas, claiming a debt of Rs.15 lakhs. The applicant contended that the company was profitable and provided essential diagnostic services, but faced a temporary lean phase and had genuine disputes with the creditor. The applicant offered to bring necessary finance to pay all creditors and revive the company. The Official Liquidator had taken possession of the diagnostic centre on 3rd August, 1999, but later released the property as it belonged to a sister concern. The court noted that the applicant had paid the principal debt of Rs.15 lakhs to the legal heir of the deceased creditor and was willing to pay all other dues, including interest and costs. The Official Liquidator reported that the company had no other assets or liabilities except the debt to the petitioning creditor. The court found that the winding up order was passed in 1999 and the company had not functioned since, but revival was possible if all creditors were paid. The court held that the interests of creditors and shareholders would be served by recalling the winding up order and dismissing the petition, subject to payment of all dues. The court directed the applicant to pay Rs.15 lakhs with interest at 12% per annum from the date of the petition till payment, and also to pay costs of Rs.50,000 to the Official Liquidator. Upon payment, the winding up order was recalled and the company petition was dismissed.
Headnote
A) Company Law - Winding Up - Recall of Winding Up Order - Section 466 Companies Act, 1956 - Application by shareholder to recall winding up order and dismiss petition - Court considered that the company was profitable and provided diagnostic services, and the applicant offered to pay all creditors to revive the company - Held that winding up order is recalled and company petition is dismissed, subject to payment of all dues to creditors and costs (Paras 1-11).
Issue of Consideration
Whether the winding up order dated 10th February, 1999 should be recalled and the company petition dismissed under Section 466 of the Companies Act, 1956, to allow revival of the company in liquidation.
Final Decision
The court allowed the application under Section 466 of the Companies Act, 1956, recalling the winding up order dated 10th February, 1999 and dismissing Company Petition No.275 of 1995, subject to payment of Rs.15 lakhs with interest at 12% per annum from the date of the petition till payment, and costs of Rs.50,000 to the Official Liquidator.
Law Points
- Section 466 Companies Act
- 1956
- recall of winding up order
- revival of company
- payment of creditors
- shareholder application
Case Details
2012 LawText (BOM) (10) 93
Company Application No.218 of 2012 in Company Petition No.275 of 1995
Mr. M. M. Vashi i/b. M/s. M. P. Vashi & Associates, for the Applicant; Dr. T. Pandian, Official Liquidator present; Mr. K. S. Reddy, Dy. Official Liquidator present; Mr. Radharaman O. Mehra, legal heir of Petitioner (Creditor) present; Mr. S. K. Sarpotdar, Applicant present; Mr. Lal Goel, Promoter Director present
Official Liquidator of M/s. Surlex Diagnostic Ltd.
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Nature of Litigation
Application under Section 466 of the Companies Act, 1956 for recall of winding up order and dismissal of company petition.
Remedy Sought
The applicant, a shareholder, sought recall of the winding up order dated 10th February, 1999 and dismissal of the company petition to revive the company.
Filing Reason
The applicant believed the company was profitable and could be revived if all creditors were paid; the debt was disputed and the principal amount had already been paid to the legal heir of the creditor.
Previous Decisions
Winding up order dated 10th February, 1999; order dated 28th February, 2000 in Company Application No.498 of 1999; order dated 16th March, 2000 directing inventory of assets.
Issues
Whether the winding up order should be recalled under Section 466 of the Companies Act, 1956.
Whether the company petition should be dismissed to allow revival of the company.
Submissions/Arguments
The applicant submitted that the company was profitable and provided diagnostic services; the debt was disputed and the principal amount had been paid to the legal heir of the deceased creditor.
The Official Liquidator reported that the company had no other assets or liabilities except the debt to the petitioning creditor.
The legal heir of the creditor confirmed receipt of the principal amount and had no objection to the recall of the winding up order.
Ratio Decidendi
Under Section 466 of the Companies Act, 1956, a winding up order can be recalled if the company can be revived and all creditors are paid, especially when the debt is disputed and the principal amount has been paid to the creditor's legal heir.
Judgment Excerpts
The Petitioner/ Applicant in this Application under Section 466 of the Companies Act, 1956 is recalling winding up order dated 10th February, 1999 passed by this Court and also prays for dismissal of the Company Petition.
The Applicant is the shareholders contributories and members of a public limited company viz. Surlux diagnostic Limited in liquidation.
The company in liquidation was not only a profitable company, but the same was also discharging important function of providing diagnostic services to people at large.
Now the Applicant has come forward with necessary finance to pay all creditors and revive of the company in liquidation in the interest of the creditors and the shareholders like Applicant, but also public at large.
The winding up order is recalled and the Company Petition is dismissed.
Procedural History
The winding up petition was filed by Omprakash Mehra on 10th February, 1999, and the company was ordered to be wound up. The Official Liquidator took possession of the diagnostic centre on 3rd August, 1999, but later released the property. On 28th February, 2000, the court passed orders in Company Application No.498 of 1999, and on 16th March, 2000, directed inventory of assets. The present application under Section 466 was filed in 2012.
Acts & Sections
- Companies Act, 1956: Section 466
