Ashok Kumar Ganguly, J.
1. The appellants are contributories and shareholders of the Howrah Motor Company Ltd. (hereinafter referred to as the said Company) and the appeal is from an order dated 15th March, 2002 passed by the Company Judge in a winding up proceeding being Company Petition No. 240/98, holding that the settlement between the said company and the petitioning creditor Luxmi Tea Company, has been arrived at in the best interest of the Company and no winding up order was made in view of that settlement.
2. Material facts of the case are that by two separate cheques the petitioning creditor, the second respondent in this appeal, lent and advanced on diverse dates in January 1996, Rs. 16 lakhs and also Rs. 1 crore to the Company and the Company was to pay on this inter-corporate loan an interest at the rate of 24 per cent per annum and the loan was for a period of 6 months.
3. As the company failed to pay the loan, a winding up petition was presented by the 2nd respondent, the petitioning creditor, in the month of August 1998. On such petition, the winding up Court by an order passed on or about 2nd of September, 1998, admitted the petition and granted certain instalments as the Company could not dispute the claim. The learned Company Judge also directed that in default of such payment the petitioning creditor shall be at liberty to publish advertisement. Thereafter, on or about 24th September, 1998 a suit was filed in the Original Side of this Hon'ble Court by some of the shareholders of the said company. The suit was numbered Soumendra Nath Dey v. Howrah Motor Co. Ltd. 287 of 1998. The suit was between two groups of shareholders of the said company and the plaintiffs were alleging mismanagement of the said company against the defendants and inter alia, prayed for framing of scheme of management and an administration of the company and also prayed for injunction restraining the defendants, the other group, from dealing with or disposing of assets and properties of the said Company. The said suit was of representative character and the plaint was signed by Mr. Debraj Dey who is one of the appellants and some of the present appellants are parties to the said suit as heirs of Chandranath Dey. It may be noted that the second respondent, the petitioning creditor, was not a party to the said suit.
In the meantime as the company could not pay the instalments advertisement was published on or about 3rd January, 1999.
4. The Company Petition thereafter appeared before the Company Judge on 17th March, 1999. On that date a representation was made before the Company Judge on behalf of the company that sometime is required for the company to frame a scheme. Some of the workers appeared before the Company Judge and submitted that the company had assets to pay the dues of the creditor and they opposed winding up. The company also wanted to pay its dues to workers and to the creditors. Considering these submissions, the learned Company Judge, granted sometime to the company to bring about a scheme as to how the company proposes to liquidate its dues. It may be noted that at this stage, pursuant to advertisement only the petitioning creditor, the Auto Traders and some workers appeared. Thereafter, in the month of May 1999 the company filed a petition before the Company Court with a proposal to pay the dues of the petitioning creditor by selling its Guwahati property. On or about 22nd June, 1999 leave was given by the Company Court to deal with that property for the purpose of paying the dues of the petitioning creditor, the 2nd respondent.
5. But much prior thereto on 24th September, 1998, the interlocutory Court in the aforesaid suit, filed by some of the shareholders of the said company, granted an injunction restraining the said company from selling any of its fixed assets or immovable property without the leave of the Court. Being placed in the aforesaid situation the Company made an application before the interlocutory Court for leave to sell its Guwahati property in order to liquidate the dues of the petitioning creditor.
6. Before the suit Court a detailed hearing took place and the learned Judge by a detailed order dated 18-10-2001 granted levy to the Company to sell the Guwahati property in order to give effect to the settlement between the said Company and the petitioning creditor for liquidating the dues of the petitioning creditor. It may be noted that the present appellant appeared and opposed the said application and the order of the learned Judge granting leave. The learned Judge, while granting leave, gave opportunity to the plaintiffs to purchase the said property or to find a purchaser at a higher price. But the said proposal was not found acceptable to the plaintiffs some of whom are appellants here. The learned Judge, however, granted leave with the observation that the said order is subject to any step as may be required by law and is also subject to any order which may be passed by the Company Court in connection with winding-up application which has been admitted. It may be noted that the said order dated 18-10-2001 was not appealed against by some of the appellants who were parties to the same.
7. On 14th May, 2002 an application was made before the Company Court by Srabani Dey, one of the appellants herein, for substitution in place of Luxmi Tea in the winding-up proceeding and the same was dismissed and no appeal was preferred from the said order.
8. It may be noted that Srabani Dey, the appellant No. 1 herein also made an independent application for winding up of the said Company being C.P. No. 630/01 in order to prevent the said company from selling the Guwahati property to settle the claim of Luxmi Tea. But by an order dated 15th May, 2002 the said company petition was dismissed. From the said order dated 15th May, 2002 it appears that the Company Court invited affidavits from the shareholders of the said company and after considering affidavits from the shareholders, the Court ascertained the views of 88 per cent of shareholders and it was found by the Court that the majority shareholders do not support the winding up. The Court held that winding up application filed by Srabani Dey was not bona fide. It may be noted that another company petition being CP No. 470/2000 was filed by Debraj Roy one of the appellants herein for winding-up the said company but the learned Company Judge dismissed that company petition by an order dated 22nd of January, 2000. It may be noted that no appeal was preferred against the said order dated 2nd January, 2000.
9. The Court passed the order under appeal on 15th May, 2002 in company petition No. 240/98 after dismissing the winding-up petition filed by Srabani Dey. The learned Judge while passing the order noted that after the company petition was admitted and advertisement was inserted, no creditor, excepting the petitioning creditor and its sister concern, came before this Court supporting the winding up petition. And all the creditors of the company were paid their dues except the petitioning creditor, and its sister concern Indian Tea and Prov. Ltd. The learned Judge took up the company petition for final hearing and ascertained the views of the shareholders and found that 70 per cent shareholders are against the company being wound-up and only 18 per cent shareholders are in favour of the company being wound-up. The learned Judge also noted that the other company petition being CP No. 630/01 filed by Srabani Dey was dismissed.
10. Insofar as the order under appeal in the company petition CP No. 240 of 1998 was concerned the learned Judge found that the company had entered into a settlement with the petitioning creditor and the learned Judge considered the question whether the winding up petition should be disposed of in accordance with the terms of settlement which was produced before the Court. The Company Judge noted the contentions of some of the contributories that the property, which is sought to be transferred to the petitioning creditor by the company, may fetch a better price if the same is sold by auction. But the learned Judge did not accept the said contention as it found that the suit court while granting leave to the company to sell Guwahati property to liquidate the dues of the petitioning creditor gave an opportunity to the same contributories to buy that property at a higher price or to bring better offer but they failed to do so. Apart from that the learned Judge noted that the contributories themselves took the stand before the Court that the valuation of the said property which is sought to be transferred to the petitioning creditor was Rs. 1 crore 91 lakhs in 1995. In that view of the matter the learned Company Judge noted that the property which is sought to be transferred to the petitioning creditor is for repayment of a debt which works out to be more than Rs. 4 lakhs and the petitioning creditor also proposed to pay a sum of Rs. 40 lakhs in cash to the company for meeting the statutory liabilities of the company. Considering all these aspects the learned Judge came to the conclusion that the settlement, which is proposed between the petitioning creditor and the said company, is for the benefit of the company and should be accepted. As such the company petition was disposed of in accordance with the terms agreed between the company and the petitioning creditor.
11. The learned Counsel for the appellant raised a number of points assailing the order under appeal. The main contention of the learned Counsel was that the order of winding up was passed as a result collusion and conspiracy between some of the contributories of the said company and the petitioning creditor in order to deprive the said company of its valuable assets and properties. The learned Counsel for the appellant further urged that after advertisement, the winding up proceedings acquire a representative character and such a proceeding could not be disposed of on the basis of terms of settlement between the parties. The learned Counsel also urged that the petitioning creditor in its application for appointment of provisional liquidator in the winding up proceeding took the stand that the substratum of the company is gone, it has no business and it was just and equitable that the company be wound up.
12. It was further contended by the learned Counsel for the appellant that a winding up proceeding is for preservation of assets of the Company after satisfying the dues of the creditors. It was argued that in such a proceeding it cannot be ordered that a property should be sold to satisfy the dues of any particular creditor inasmuch as dues of all other creditors should be considered pari passu and the companies assets should be so distributed as to satisfy the dues of all the creditors.
13. The learned Counsel for the appellant also urged that there is no independent valuation and no reserved price was fixed in respect of the Guwahati property, no public auction was held. The learned Counsel placed reliance on various sections of the Companies Act and the Company Court Rules and also relied on a number of decisions. The Court proposes to consider them one after the other.
14. The learned Counsel for the said Company and also the learned Counsel for the petitioning creditor, the second respondent, supported the order under appeal. Both the learned Counsels submitted that the order of the Company Judge was passed in the best interest of the Company so that it is not wound up and survives. It was urged that the price at which the Guwahati property was to be sold to the petitioning creditor is the best bargain and the appellant, even though was given an opportunity could not bring a better offer. On the other hand, it was pointed out that the appellants have always tried their best to see that the company cannot satisfy the debts of the petitioning creditor and made various attempts so that the settlement between the petitioning creditor and the said company cannot be worked out. According to the Counsel three such attempts were unsuccessfully made. Two applications for winding up of the company, one by Srabani Dey and one by Debraj Dey, both appellants herein, were dismissed. An application by some shareholders including Srabani Dey seeking to be substituted in place of Luxmi Tea was also dismissed. The learned Counsel for the Company also submitted that in the suit filed by some of the appellants the stand taken is that the company is to be revived and should not be wound up and that suit is pending. Now when by the order under appeal, the Company Judge by holding that the settlement is in the best interest of the company tried to save its from being wound up, the appellants cannot have any genuine grievance.
These are the rival contentions on facts.
15. The learned Counsel for the appellant referred to various sections of the Companies Act (hereinafter referred to as the said Act). The learned Counsel first referred to Section 433. That section indicates the circumstances in which the company may be wound up by Court. The learned Counsel then very much relied on Section 441 in order to show when the winding up proceedings by Court commences. He relied on both Sections 441(1) and 441(2) in order to contend that, except in the case of a voluntary winding up, winding up of a company by Court shall be deemed to commence at the time of presentation of the petition for winding up.
16. Section 442 to which also reference was made empowers the Court to stay on restrain proceeding against the company. That section has two parts. The first part enables the company, any creditor or contributory to apply, at any time after the presentation of winding up petition and before the winding up order has been made, either to the Supreme Court or High Court where any suit or any proceeding against the company is pending, for a stay of the proceeding. Sub-section (b) similarly empowers the company, its creditors or contributories to apply before the winding up Court for stay of any suit or proceeding, if any, is pending in any other Court. The Court to which such a prayer for stay is made, may stay the same on such terms as the Court may think fit.
17. Section 443 enumerates the various orders the winding up Court may pass on hearing the winding up petition. The learned Counsel also referred to Sections 529A, 536, 537 and 557 of the said Act. The provisions of those sections are set out herein below:
"529A. Overriding preferential payments.--(1) Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company-
(a) workmen's dues; and
(b) debts due to secured creditors to the extent such debts rank under Clause (c) of the proviso to Sub-section (1) of Section 529 pari passu with such dues, shall be paid in priority to all other debts.
(2) The debts payable under Clause (a) and Clause (b) of Sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions. ** ** **
536. Avoidance of transfers, etc., after commencement of winding up.--(1) In the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator, and any alternation in the status of the members of the company, made after the commencement of the winding up, shall be void.
(2) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or altercation in the status of its members; made after the commencement of the winding up, shall unless the Court otherwise orders, be void.
537. Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of Court.--(1) Where any company is being wound-up by or subject to the supervision of the Court-
(a) any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement;
Shall be void.
(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government. ** ** **
557. Meeting to ascertain wishes of creditors or
contributories.--(1) In all matters relating to the winding up of a company, the Court may-
(a) have regard to the wishes of creditors or contributories of the company, as proved to it by any sufficient evidence;
(b) if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the Court directs; and
(c) appoint a person to act as chairman of any such meeting and to report the result thereof to the Court.
(2) When ascertaining the wishes of creditors, regard shall be had to the value of each creditor's debt.
(3) When ascertaining the wishes of contributories, regard shall be had to the number of votes which may be cast by each contributory."
The learned Counsel wanted to submit that in the instant case by the order under appeal, the Company Court while approving the proposal of the Company to sell the Guwahati property to the petitioning creditor acted in breach of the provisions contained in those sections.
18. The learned Counsel also relied on various Company Court Rules namely Rules 95, 96, 99, 100, 101, 102 and 103 and urged that leave has to be obtained under Rule 100 to withdraw the winding up petition after the same has been advertised. The learned Counsel submitted that the provision clearly points out that the winding up proceeding clearly acquires a representative character once it is advertised. After it is advertised, as has been done in this case, the impugned transaction, the sale of the immovable property of the company to the petitioning creditor is a kind of a private transaction and this is not permissible. The learned Counsel further urged that the petitioning creditor is an unsecured creditor. Its claim cannot have primacy over the claims of the secured creditors namely the workers of the company. It has been further urged that the impugned transaction is void in view of the provisions of the said Act as pointed out above and the Company Judge by permitting such a sale acted illegally and the same should be corrected by the Appeal Court.
The learned Counsel also referred to various Judgments in support of the aforesaid contentions.
19. The Court will consider the relevance of the points decided in those Judgments to the facts of this case. While doing so, the Court will point out why most of those decisions do not apply to the fact situation in the present case and this Court will also indicate why this appeal has to be dismissed. The learned Counsel for the appellant first relied on the Division Bench judgment of Bombay High Court in the case of Hari Nagar Sugar Mills Ltd. v. M.W. Pradhan 1967 Bom. L.R. 294. The learned Counsel relied on that judgment in order to contend that in a winding up petition, which has become representative in character, the Court cannot pass an order in terms of settlement between the parties. But the question which fell for consideration in Hari Nagar was whether a receiver appointed in a Partition Suit could file a winding up petition in his own name in respect of a debt due from a Company to the members of a joint family and whether the filing of a winding-up petition fell within the ambit of the Receiver's power. The Court thought, after considering rival contentions, that it was not called upon to decide whether winding-up petition was a normal one or a proper mode of realizing debt or not. The Court observed that the object of the suit was to realize a particular debt and a winding up petition is meant for securing equitable distribution of debtor's property among the creditors. Such equitable distribution must be preceded by getting all the debtor's property and only after realization of the property, a distribution could be made. Therefore, winding up proceeding should be construed as a proceeding for realization of property and therefore, it was within the power of a Receiver to file such a proceeding.
Unfortunately the aforesaid ratio has nothing to do with the contentions advanced by the appellant in this case.
20. The next decision relied on was in the case of Tulsidas Jasraj Parekh v. Industrial Bank of Western India AIR 1931 Bom. 2. This case dealt with section 227(2) of the Companies Act, 1913. The learned Counsel submitted that the same in pari materia with Section 536(2) of the present Act. There is no doubt about that.
21. But the proposition on which reliance was placed was that a petitioning creditor cannot utilize his petition for securing some pecuniary benefit for himself between the date of the petition and the actual winding-up order.
22. In Tulsidas, the winding-up order was made on 3rd March, 1925, and the winding-up proceeding commenced on 12th June, 1924 with the presentation of the petition. (Page 3, left hand column of the report).
23. But in the case in hand, no winding up order was ever made. Therefore, the principle that a petitioning creditor should not be allowed to utilize the petition in order to obtain some benefit between the date of the petition and the actual winding-up order has no application to the present case when admittedly no winding-up order has been made.
24. Reliance was next placed on a judgment of the Division Bench of Allahabad High Court in the case of Ram Lal v. Official Liquidator, Benaras Bank Ltd. AIR 1942 All. 141. In Ramlal transactions took place between the date of application for winding up and before the passing of the winding up order, which was actually made on 1st March, 1940, (Page 142 right-hand column second paragraph of the report). When a company is being wound up, no creditor should obtain an advantage over any other creditor. This is an accepted principle. But when there is no winding-up order, as in the instant case, the question of one creditor obtaining advantage over other creditor does not arise. Apart from that here no other creditor except the petitioning creditor and its sister concern has come up. The dues of the workers have also been take care of. So question of one creditor seeking an advantage over the other creditor does not arise at all since the winding-up order has not been made at any point of time. The order, under appeal, has been made to prevent a winding up.
25. Reliance was next placed on the Division Bench judgment of Gujarat High Court in the case of Navjivan Mills Ltd., In re  59 Comp. Cas. 201. In this case, the Court decided in favour of the power of the court regarding validating transaction pending a petition for winding up and before the winding up order is actually made. The question in dispute was whether such a power for validating an impugned transaction under Section 536(2) could be exercised before winding up order. The Court held that there was no inherent restriction against such exercise under Section 536(2) and the company court can always exercise the power of validating an impugned transaction in the winding up order.
26. This case is of no assistance to the appellant. This case does not, as obviously it could not, decide that the Company Court has no power to order a disposition of property in terms of settlement between the parties even if the court is of the view that such a settlement is lawful and is for the benefit of the Company and is for the purpose of avoiding winding up and thus saving the Company from going into liquidation. The order, under appeal, has been passed keeping those considerations in mind.
27. Reliance was next placed on the judgment of the Supreme Court in the case of Chittor District Co-operative Marketing Society v. Vegetables Ltd. 1987 Suppl. SCC 167.
28. In this case also there was a winding up order (See paragraph 3 at page 168 of the report) and the appeal against the winding up order was dismissed. But it was shown from the facts that (i) the payments were made between the presentation of the winding up petition and the date of winding up order and (ii) payments made, after the winding up order, and during the interregnum when that order was stayed by the appeal court and the dismissal of the appeal, were not bona fide. The Court held that there was no 'commercial compulsion' to make those payments. Therefore, the High Court's order refusing to validate such payments which are not bona fide transactions were not interfered by the Supreme Court. Here there is no winding up order at all. Both the Civil Court and the Company Judge held that the sale of the company's immovable property to the petitioning creditor was in the best interest of the Company. If that sale is not allowed to take place the winding up of the Company cannot be saved. So there is a commercial compulsion to see that the sale takes place to save the company from being wound up. So the ratio in Chittor is factually distinguishable.
The next case relied on was the decision in the case of Pankaj Mehra v. State of Maharashtra .
29. This decision lays down that the filing of a winding up petition cannot be a valid excuse by the Company to dishonour its cheques on the ground that payment of cheque would amount to disposition of property of the Company and would be "void" under Section 536(2) of the said Act. The Court also considered the provisions of Section 138 of Negotiable Instruments Act.
30. In this case there is no winding up order and that makes all the difference. Apart from that the principles laid down in paragraph 20 directly contradict the contentions of the appellant. The relevant portions of paragraph 20 are set out hereinbelow:
"20. It is difficult to lay down that all dispositions of property made by a company during the interregnum between the presentation of a petition for winding up and the passing of the order for winding up would be null and void. If such a view is taken the business of the company would be paralysed for the company may have to deal with very many day-to-day transactions, make payments of salary to the staff and other employees and meet urgent contingencies. An interpretation which could lead to such a catastrophic situation should be averted...." (p. 766)
31. Reliance was then placed on the judgment of the Supreme Court in the case of Pulavarthi Venkata Subba Rao v. Valluri Jagannadha Rao in order to contend that a decree passed on
compromise is not a decision by Court. A compromise decree is merely an acceptance by Court of something to which the parties had agreed. Since no decision of the Court was implicit in a compromise decree, such a decree cannot operate as res judicata, either statutory or constructive.
32. There can be no dispute about this principle, but the facts of this case do not show that the order under appeal was by way of compromise between the parties. The reasons why this Court cannot treat the order under appeal as one passed by compromise are many. First of all the Company was granted leave by the Company Court by its order dated 22-6-1998 to deal with its Guwahati property for the purpose of paying the dues of the petitioning creditor. The terms and conditions of sale of that property to the petitioning creditor for paying its dues were considered in detail by Justice Aloke Chakrabarti in His Lordship's order dated 18-10-2001 and the learned Judge found "it is the best bargain available" (page 132 of the Paper Book). The learned Judge also recorded "On the last date of hearing, i e., 15th October, 2001 while the matter was being heard, it was adjourned to enable the learned Counsel for the plaintiffs to find out that whether their clients are agreeable either to themselves purchase or to get a buyer of the said property at a higher price. Today when the matter was taken up, such proposal was found not acceptable by the plaintiffs".
33. Some of the plaintiffs before Justice Aloke Chakrabarti are also appellants before us. The Company Judge while dismissing by an order dated 15-5-2002 a separate winding up petition filed by Srabani Dey (C.P. 630 of 2001) one of the appellants before us, recorded that 70 per cent of the shareholders of the Company do not want the company to be wound up and the majority shareholders offered to buy the shares of there minority shareholders, represented by Srabani Dey but that offer was not found acceptable to that group. That is why the learned Company Judge dismissed that winding up petition as not bona fide.
34. The same learned Company Judge while passing the order under appeal also ascertained the views of the shareholders and came to a finding that 70 per cent shareholders are opposed to the company being wound up and only 18 per cent are in favour of the winding up of the company. The Court was informed that all the creditors of the company had been paid up and except the petitioning creditor and its sister concern there is no other creditor. The dues of the workers have been taken care of. The Court also recorded that there is no other unsecured creditor of the Company. These findings in the order under appeal have not been questioned before us.
35. After considering all these aspects and recording these findings, the Court considered whether the winding-up petition should be disposed of in terms of the settlement between the petitioning creditor and the company. The Court also considered the objections of some of the contributories about the price at which the company was selling its properties and the company rejected that objection by recording reasons.
36. Considering all these facts the Company Court took the view that the settlement is for the benefit of the Company and should be accepted. Therefore, the order is based on the reasoned finding of the Court and is not based on a compromise between the parties. So the decision in Pulavarthi Venkata Subba Rao's case (supra) is of no assistance to the appellants.
37. The next decision cited on the same point was rendered in the case of Ruby Sales & Services (P.) Ltd v. State of Maharashtra . It was held in Ruby Sales & Services (P.) Ltd.'s
case (supra) that a compromise decree does not stand on a better footing than the agreement, which proceeded it. A consent decree is a creature of the agreement and liable to be set aside. The correctness of this proposition is not questioned but it is difficult to see how it is applicable to the present case. The Court after considering all aspects of the matter have allowed the Company to settle the claim of the petitioning creditor by offering the Guwahati property in full and final settlement. This case is of no help to the appellant.
38. The decision in John Herbert & Co. (P.) Ltd. v. Pranay Kumar Duttay  70 CWN 516 has been overruled in Jagannath Gupta & Co. (P.) Ltd v. Mulchand Gupta 39 Comp. Cas. 262 (Cal.) in view of the decision of the Supreme Court in Shankarlal Agarwala v. Shankarlal Poddar .
39. The decision in S. Narayanan v. Century Flour Mills Ltd.3 Comp. LJ 209 relied on by the appellant held that no compromise or agreement could be, in a representative action, entered into without the leave of the Court. Here such leave was obtained on several occasions. All the terms and conditions were placed and the leave was obtained from Court. It cannot be said that the Court merely recorded a compromise. The Court considered the terms and thereafter, made an order to permit the disposition of property in the manner agreed upon in the Terms of Settlement as the Court felt it was in the best interest of the Company.
40. The next case cited by the appellant was decision in the case of Ganesh Sarkar v. Ainal Haque Ansari 85 CWN 403. The Judgment was rendered in a suit, which was filed challenging an election. In the suit leave under Order 1, Rule 8 was given and the Court held unless all the parties are notified, compromise between the parties cannot be given effect to.
41. But in this case after the Company petition was advertised, the Court considered the contentions of each and every party, who appeared pursuant to the advertisement. The Court also considered the independent application for winding up made by Srabani Dey and others and dismissed the same holding that to be not a bona fide application. The court ascertained the views of more than 70 per cent of the contributories before passing the order under appeal. Therefore, the principles laid down in Ganesh Sarkar's case (supra) have not been violated.
42. The next case referred to by the appellant was in the case of Allahabad Bank v. Bengal Paper Mills Co. Ltd. .
43. In that case it was a sale of a Company, which was in liquidation. In a sale of a Company in liquidation, the Company Court Rules must be complied with. No reserve price for the sale in that case was fixed. The Company was already in liquidation. It was not ascertained what was the total amount of claim, secured or unsecured. Nor was it ascertained whether the assets were adequate or inadequate. On all these grounds, the sale was held to be improper.
44. This case has no manner of application to the present case. Here, the sale was not of a Company property in liquidation. The Court applied its mind regarding the value of the property and the best price that the property could fetch. An offer was made to the appellants to get a purchaser, who would pay a better price but the appellants failed to do so.
So the principles in Bengal Paper Mill have no manner of application.
45. Similarly the decision rendered in Usha Atlas & Hydraulic Equipments Ltd. v. Official Liquidator 1 CLT 450 was in respect of sale of assets of a company in liquidation.
46. In that case valuer's report was called for by the Court and it was held it was a duty of the Court to ensure that the best possible price is fetched, and to see that the price at which the Company was sold was adequate and reasonable. It was held that the learned Judge did not give any consideration to this aspect of the matter. On that ground, the order confirming the sale was set aside.
47. In the instant case, the sale was not of the assets of a Company in liquidation. The Court was satisfied that there was no buyer who would offer to pay more for the Guwahati property than the offer made by the petitioning creditor which was being accepted and the Company was saved from liquidation. The decision in Usha Atlas & Hydraulic Equipments Ltd. 's case (supra) has no application in the instant case.
Thus, the decision cited by the appellants do not support the contentions urged on their behalf.
48. Apart from that from a proper reading of Section 441 and specially Section 441(2) of the Companies Act, it is clear that the deeming provision under Section 441 shall come into play only when there is a winding up order. In other words if there is a winding up order in such a situation the winding up must be deemed to have commenced from the date of presentation of the petition for winding up. But if no order for winding up is made and the winding up petition is dismissed or if it is disposed of otherwise, as in the instant case, than the date of presentation of winding up petition has no relevance. In this connection the departmental circular dated 31st March, 1971 has clarified this position. Though the departmental circular is not binding on a Court but on the principle of contemporanea exposito such circulars can be looked into to ascertain the intention of the law. Reference in this connection may be made to the Judgment of Supreme Court in the case of Desh Bandhu Gupta & Co. v. Delhi Stock Exchange Association Ltd. . Relying on Maxwell's Interpretation of Statute, 12th Edition, and Crawford's Statutory Construction, 1940 Edition, Justice Tulzapurkar delivering the Judgment explained the principle of contemporanea exposito. In doing so the learned Judge quoted with an approval the observation of Justice Ashutosh Mookherjee in the case of Mathura Mohan Saha v. Ram Kumar Saha ILR 43 Cal. 790. The relevant observations of Justice Mookherjee which were set out in Desh Bandhu Gupta & Co. 's case (supra) are extracted below:
"It is a well settled principle of interpretation that Courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it, although such interpretation has not by any means a controlling effect upon the Courts and may be disregarded for cogent and persuasive reasons."
49. In the instant case the departmental circular, in my judgments, has correctly interpreted the purport of Sub-section (2) of Section 441 of the said Act. The said departmental circular is set out below:--
"In the case of a winding up by the Court, the winding up dates from the date of presentation of the petition for winding up. This means if and when order is made for winding up, it relates back to the date of the presentation of the petition. If no order for winding up is made and the winding up petition is dismissed, the date of presentation of the winding up petition has no relevance. As such until winding up order is made, the company will have to comply with the requirement of the Companies Act as are required of a company not wound up.
In Sub-section (2) of Section 441 of the Companies Act, the words are "shall be deemed to commence" instead of 'shall commence' indicate that although the winding up of a company does not in fact commence at the time of the presentation of the petition, it nevertheless shall be taken to commence from that stage if and when the winding up order is made (see noted above).
Winding up is a process which begins after the court passed the order for winding up. Till such order is passes, there cannot be any winding up in fact. (U.O. No. 21182/61/Adv(F), dated 31-3-1971 on Department's File No. 5/1 /69-CL-III.)"
50. Unfortunately the learned Counsel for the appellant missed this aspect of the matter and advanced the argument on the basis as if there is a winding up order in this case. The learned Counsel for the Company has relied on a Judgment in the case of A.C. Goel v. First National Bank Ltd. . In paragraph 4 of the said Judgment the learned Judge explained the provision of Section 441 of the said Act. Explaining the purpose of Section 441, the learned Judge held that the Legislature uses the words "shall be deemed to commence" instead of "shall commence". This choice according to the learned Judge is meaningful and communicates the intention of the Legislature. The deeming provision according to the learned Judge has been introduced in the section only to relate back the winding up to the date of presentation of the petition in a case where actual winding up has taken a place. This Court is in respectful agreement with the aforesaid interpretation given by Justice Tek Chand in A.C. Goel's case (supra).
51. Now coming to the question of valuation of the Guwahati property, this Court finds that the said property has been valued by the appellants in the plaint filed by them at Rs. 4 crores, The plaint was filed in 1998 and was signed by Debraj Dey one of the appellants before us. It is nobody's case that the appellant will undervalue the property and there is no reason why they should do so. Therefore, when the learned Company Judge passed the order under appeal accepting the proposal of the company to sell the property at Guwahati in order to pay the claim of the petitioning creditor, which stood at about Rs. 4.60 crores, this Court does not think that the said order was passed without proper application of mind or without proper exercise of discretion by the learned Judge of the Company Court. The learned Judge also recorded in the order under appeal that apart from satisfying the claim of the petitioning creditor, which stood at about Rs. 4.60 crores, Rs. 40 lakhs will be earmarked by the Directors of the said Company for meeting the statutory liability of the company and for no other purpose.
52. Therefore, taking an overall view of the entire matter this Court finds that the said order passed by the learned Company Court was in the best interest of the Company. This Court finds that if the order of the learned Judge is set aside and the settlement mentioned in the order is not allowed to be worked out then in all probability the company will have to be wound up- The argument made by the learned Counsel for the appellant that the Company Court can only allow or dismiss a winding up petition and cannot pass any other order is incorrect. On a proper construction of the various provisions namely Sections 440, 443, 446 and 447 of the said Act it is clear that the Company Court has a very wide discretion in connection with winding up proceeding. In other words a company court dealing with winding up proceeding will not normally pass a final order of winding up until the Court is satisfied that the same would be in the best interest of the creditors or the contributories or both. Similarly, wide discretion has been conferred on a winding up Court under Section 442 to stay a winding up proceeding at any point of time before a winding up order is made.
53. Widest discretion has been conferred on the Company Court under Section 443 of the Company Court. Under Section 443(2) of the Act even the Court can refuse to pass a winding up order if it is of the view that some other remedies are available and the attempt to wind up the Company is unreasonable. Therefore, an order of winding up does not necessarily follow as soon as the winding up petition is presented. Such an order is purely discretionary and can be passed only on just and equitable grounds. Even after passing a winding up order, the Company Court can stay the winding up proceeding all together or for a limited period on such terms and conditions as the Court may think fit. In fact such wide discretionary powers have been conferred on the winding up Court so that the Court can make an effort to try and preserve the Company and the primary intention of the Court should be to avoid an order of winding up.
54. Similarly the argument of the learned Counsel for the appellant by placing reliance on Section 529A of the Companies Act is misconceived. The provisions of Section 529A of the Companies Act do not normally come into play until a final order of winding up is made. It is only when a final order of winding up is made the creditors and contributories have a right over the assets of the company but not before that. It may be noted here that the appellants are neither creditors nor workers of the Company. No secured creditor has come forward to claim any priority.
55. Therefore, the contentions raised by the learned Counsel for the appellant are without any substance and are not upheld. For the reasons aforesaid, this Court is of the view that the appeal has no merit and as such is dismissed. All interim orders are vacated.
There will be however, no order as to costs.