Law: Companies Act (VII of 1913)

Section: 162

(a) Companies Act (VII of 1913), S. 162 (iv)---Winding up of companies-Private company originally formed as a two-man com pany conceived in friendship----Serious disputes, however, arising subsequently and dead lock created far want of mutual trust and reliance essential for its smooth run ning ---Application for winding up, in circumstances, held, prima facie tenable under S. 162(iv) and analogy of partnership law, applicable. Re: Yenidje Tobacco Co. Ltd. 1916 Ch. D 426; Re: Davis and Collett Ltd. 1935 A E R 315 and Ladli Parshad Jaiswal v. The Karnal Distillery Co. Ltd. P L D 1965 S C 221 rel. Re: Cuthbert Cooper & Sons Ltd. (1937) 2 Ch. D 466; Re: Davis Investments (East Ham), Ltd. (1961) 3 A E R 926 and Charles Fort Investments Ltd. v. Amanda (1963) 2 A E R 940 ref. (b) Companies Act (VII of 1913), S. 175 (2) read with Civil Procedure Code (V of 1908), O. XL, r. 1---Provisional Liquidator- Receiver---Appointment of---Discretion of Court---To be exercised judicially with necessary care and circumspection according to circum stances of case---Jurisdiction of Court in appointment of provisional liquidator-----Not ousted altogether in every case of opposition---Court, in a fit case, can also appoint a receiver under provisions of O. XL, r. 1, Civil Procedure Code, to protect interest of company and its business. Section 175 (2) of the Companies Act lays down that the Court may make an order for the appointment of Provisional Liquidator at any time after the presentation of a petition and before the making of an order for winding-up. The powers thus vested in the Court in this behalf are unqualified and general. But the discretion conferred on the Court must always be exer cised judicially and not in an arbitrary, capricious and wanton manner. The appointment of a Provisional Liquidator is a serious matter and the power has got to be exercised with the necessary care and circumspection in the light of the circumstances prevailing in each case. It is made with a view to protect the assets of the Company to safeguard them from jeopardy and for a fair and equitable distribution among its contributories after the Company has been wound-up. In appointing the…