AI Structured Summary
Not yet generated for this judgment
Judgment
A preliminary objection has been taken by learned counsel for the respondents, namely, that the winding-up petition is not maintainable under the provisions of section 583 of the Companies Act, 1956 (in short "the Act"), on the ground that the respondents society is not an association within the meaning of section 582(b) of the Act.
Section 582 of the Act comes under Part X of the Act which provides for winding-up of unregistered companies. The relevant provisions of section 582 read as under :
"582. For the purposes of this Part, the expression ''unregistered company'' -
(a) shall not include -....
(b) save as aforesaid, shall include any partnership, association or company consisting of the more than seven members at the time when the petition for winding-up the partnership, association or company, as the case may be, is presented before, the court. "
The case of the petitioners is that it is an association registered under the Societies Registration Act and consists of more than 20 members. Thus, it has claimed the reliefs under the provisions of Part X of the Act, which deals with the winding-up of unregistered companies.
Learned counsel for the petitioners maintained that this society is not a charitable society but it was incorporated with the object of carrying on trade, business and manufacturing activities through the saw mills acquired by it. It is also registered as a medium and small-scale industry with the Department of Industries. The fact that the petitioner''s society is registered under the Societies Registration Act is not disputed, but learned counsel for the respondents contended that u/s 11 of the Act, no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying on any business that has as its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law.
But section 11 comes under Part II of the Act, which deals with incorporation of companies and matters incidental thereto. The matters incidental thereto are that every company should have a memorandum of association and an articles of association. This Chapter also provides for certain other matters, namely, alteration of the memorandum of association or articles of association, the effect of failure to register such alteration, provisions with respect to names of companies, for change of registered office of companies, general provisions with respect to memorandum and articles, membership of companies, for reduction of number of members below legal minimum, provision for contracts and deeds, investments, seal, etc. Therefore, the provisions of section 11 must be understood in the context of Chapter II which deals with incorporation of companies and matters incidental thereto. Consequently, the prohibitions contained therein cannot be imported into Chapter X of the Act, which is a special chapter for the purpose of winding-up of unregistered companies. That is the reason the opening words of section 582 make it clear that "for the purpose of Part X", the expression "unregistered company" shall include any partnership, association or company consisting of more than seven members at the time when the petition for winding-up was presented before the court. Therefore, the word "association" has to be understood in its general senses and not with reference to the provisions contained in section 11 of the Act, prohibiting partnerships or associations consisting of more than 20 members from carrying on any business in matters more particularly mentioned in section 11(2) of the Act. Thus construed, there could be no bar to maintain this petition for the winding-up against an association like the respondents-association duly registered under the Societies Registration Act, as an unregistered company. Accordingly, the preliminary objection is overruled.
Petition is admitted.
In view of the fact that the liability to the petitioner-society is not dispirited by the respondents, petitioners will take out advertisement of the petition in one issue of Deccan Herald on or before August 21, 1986 fixing the date of hearing on September 11, 1986.