Recall of a winding up order

Dear Editor,

I would like to highlight for your readers the recent judgment of Karnataka High Court pertaining to the recall of the winding up of a company under section 466 of the Companies Act, 1956. Dr Justice Vineet Kothari pronounced a rather unusual verdict following an application by the government of Karnataka to recall the winding up of a public company, namely, NGEF (New Government Electrical Factory) in Bengaluru, on the ground that there were surplus assets after its liabilities were settled.

In the judgment, it was observed that there is no specific provision in the Companies Act, 1956, for recalling a winding up order but at the same time, there is no prohibition either. It depends upon the facts and circumstances of each case and the revival of the company which was ordered to be wound up was not only not prohibited but deserved to be encouraged in appropriate cases, either by recall of the winding up order or even by permanently staying or freezing the order.

The purpose of enacting rules 6 and 9 of the Companies (Court) Rules, 1959, was to give vast, inherent and residuary powers to the company court, in the absence of any specific prohibition in the act itself, to pass appropriate orders and to address the situations and facts arising before it from time to time.