Law: Companies Ordinance, 1984

Section: 359

Companies Ordinance (XLVII of 1984)---Ss. 387(5) & 359---Voluntary winding up of company---Time prescribed for completion of winding up proceedings---Extension of such time---Scope---Prescribed period of one year for completing the winding up of the company can be extended by the Court, on application of the liquidator, for one month at one time and that too for the reason, that if' any proceedings for or against the company, were pending in a Court, such extension cannot exceed from six months in all---Where the application for extension of time was filed almost after one year, of the expiry of the statutory period on the grounds which fell outside the purview of S.387(5), Companies Ordinance, 1984, High Court dismissed the application --- Principles. Voluntary winding up of the applicant company, by virtue of section 359 of the Companies Ordinance, 1984, is deemed to have commenced when the special resolution to this effect was passed. The winding up proceedings were required to be completed according to section 387(5) of the Ordinance, within a period of one year from the date of the commencement of the winding up. In case of inability to complete the winding up process, the liquidator was under a legal obligation to move to the court for the extension of time under section 387(5) of the Ordinance. The applicant was entitled to the grant of extension by one month, at a time but this extension was not liable to exceed a period of six months in view of the aforementioned provisions of law. Admittedly, in the present case, no such application was moved at the expiry of the period of one year. The present application was filed after the lapse of almost 1 year and 11 months. The language of section 387(5) is very clear and does not need any scholarly interpretation. It provides that extension can be granted for one month at a time, in all for a period of six months and that too for the reason, that any proceedings for or against the company, are pending in a Court. The word, "shall" is mentioned in section 387(5), which makes the direction mandatory and disobedience entails serious consequences amounting to the invalidity of the act done in disobedience to…

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