P L D 1994 Lahore 125 (PLP)

Respondent‑Company passed a special resolution for its voluntary winding up on 29‑3‑1990. Section 359 of the Companies Ordinance provides that "A voluntary winding up shall be deemed to commence at the time of the passing of the resolution for voluntary winding up". Under section 387(5), winding up proceedings are required to be completed within a period of one year, from the date of commencement of winding up. It appears that the winding up proceedings were not completed within the prescribed period of one year. Petitioner, the Liquidator of the respondent‑Company, therefore, moved an application (C.0.27‑91) seeking extension of time. The application was allowed and the time was extended for one month for completing the liquidation with a direction to A.D.C.(G) to dispose of the cases pending before him within one month. The pending cases were, however, not decided by the A.D.C.(G) within one month. Petitioner then moved another apply on (C.0.40‑91) seeking further extension which application was allowed vide order dated 14‑7‑1992 and the time for completing the liquidation proceedings was extended for six months from the date of the order passed. Petitioner has again filed the instant application seeking further extension stating that after he had completed a substantial portion of liquidation work, some persons filed frivolous suits in the Civil Court regarding the Company's properties with the result that due to the pendency of the suits, "the liquidation proceedings again became standstill and the voluntary liquidation could not be completed and finalized".

2. I have heard the learned counsel for the petitioner as also Syed Hamid Ali Shah, Advocate who was asked to assist the Court on the question as to whether in cases of voluntary winding up, Court is empowered to extend the' time for liquidation beyond six months.

3. As noted hereinabove, the voluntary winding up of the respondent Company commenced with the passing of special resolution on 29‑3‑1990. Under section 387(5), the winding up proceedings are required to be completed within a period of one year from the commencement of the winding up but this period can be extended under the proviso to subsection (5) of section 387 which reads as follows:‑ Provided that the Court may, on the application of the liquidator, grant extension by one month at any time but such extension shall not exceed a period of six months in all and shall be allowed only for the reason that any proceedings for or against the company are pending in a Court and the Court shall also have the power to require expeditious disposal of such proceedings as it could under section 317 if the company was being wound up by the Court". It is manifest from the plain language of the proviso that in appropriate cases, Court can grant extension for one month at a time but the total period of extension is not to exceed six months. Both the learned counsel have agreed with this interpretation of the proviso afore-quoted. Syed Hamid Ali Shah, Advocate has, however, referred to sections 368, 369, 371, 381 and 382 of the Companies Ordinance and argued that these provisions envisage extension of time for more than six months. I have examined the provisions relied upon by the learned counsel. They do not seem to support his contention. Section 368 in terms provides that if the liquidator is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the declaration under section 362, or that period has expired without the debts having been paid in full, he shall forthwith summon a meeting of the creditors and shall lay before the meeting the statement of the assets and liabilities of the Company and is such an eventuality, the creditors may appoint a different liquidator. This provision is hardly relevant to the point at issue and in any case, no such opinion as is referred to is section 368 has been expressed by the present liquidator and, therefore, this provision cannot be invoked. Section 369 lays down that in the event of winding up continuing for more than one year, the liquidator shall summon a general meeting of the Company at the end of the first year from the commencement of the winding I up and, if the proceedings are not concluded during the first year and extension is granted under section 387, within thirty days of such extender: period. This provision is also of no help to the learned counsel as it only lays down in case proceedings for winding up are not concluded during the first year and time is extended under section 387, the liquidator shall summon the meeting of the Company within thirty days of the extended period. It does non , extend the period of its. own but only refers to the extension granted under section

387. Section 371 also does not advance the argument of the learned counsel as it only says that where section 368 has effect (which provision, as held above, is not attracted to the instant case) sections 381 and 382 shall apply to the winding up, to the exclusion of sections 369 and 370 as if the winding up were creditors' voluntary winding up and not members' voluntary winding up. Assuming without holding that section 381 applies, it does not carry the case of the petitioner any further as it is couched in almost the same language as section

369. It (section 381) provides that in the event of winding up continuing for more than one year, the liquidator shall summon a general meeting of the Company and a meeting of the creditors at the end of the first year from the commencement of the winding up and if the proceedings are not concluded during the first year and extension is granted under section 387, within 30 days of such extended period. Section 382 only provides for the final meeting and dissolution of the Company on its affairs being fully wound up and it does not talk of any extension. It is thus manifest that none of the provisions relied upon by the learned counsel even indirectly contemplates the extension of time for completing the voluntary winding up beyond six months clearly envisaged in the proviso to subsection (5) of section

387. In the aforesaid view of the matter, I hold that the period prescribed for completing the voluntary winding up of a Company can be extended for one month at one time but such extensions cannot exceed six months in all. Petitioner having already been allowed more than six months' dine, his request for further extension is not sustainable. This application is accordingly dismissed. AA./M‑1279/ Application dismissed