Appeal No 126 of 1976
Appeal by Special leave from the Judgment and Order dated the 11th October 1974 of the Rajasthan High Court in DB Special Appeal No 111 of 1974 LN Sinha Sol
and Suresh Sethi for the appellant
CK Garg SS Khanduja and CL Sahu for respondent
966 The Judgment of the Court was delivered by BEG CJ
The Official Liquidator attached to the High Court of Rajasthan in charge of the liquidation of Golcha Properties Pvt Ltd hereinafter referred to as Golcha Company  has come up in appeal to this Court by special leave against a judgment and order of a Division Bench of that High Court passed on a Special Appeal from the judg ment and order of a single Judge of that Court
On peti tions presented on 4th July 1966 and 30th July 1966 by the creditors of Golcha Company the High Court had made a compulsory winding up order on 10th May 1968 and on that very date the appellant was appointed liquidator of the Golcha company
The Dharti Dhan Pvt Ltd hereinafter referred to as the Dhan Company  with its registered office at Bombay was said to be one of the debtors of the Golcha Company to the extent of Rs 1169043together with interest and commission which was said to be still due on 1st August 1969
Agreements dated 25666 and 17167 between the two companies regulated the method of repayment by annual instalments of Rs 250000 according to the appellant
As the respondent Dhan Company is said to have defaulted in the payment of two of its instalments a claim under section 4462 of the Companies Act hereinafter referred to as the Act  for the recovery of a sum of Rs 500000 was made before the Company Judge of the High Court of Rajasthan by the appellant
On 20th September 1969 the Registrar of Companies in Maharashtra had to file a winding up petition against the respondent Dhan Company in the Bombay High Court
The Company Judge in the Bombay High Court on 3rd January 1970 directed advertisement of the winding up petition
The respondent Dhan Company appealed against the decision of the Company Judge and obtained an order dated 3rd February 1970 from a Division Bench staying the operation of the order for advertisement of the winding up petition
An appeal against that order is said be still pending so that a stay of those proceedings operates
After obtaining an order of stay of the proceedings against it in the Bombay High Court the Dhan Company made an application under section 442b of the Act in the Rajasthan High Court for stay of proceedings against it section 4462 on the ground that a compulsory winding up petition was pending against it in the Bombay High Court
The object of the respondent Dhan Company appeared to be to obtain an indefi nite stay of proceedings againsts it in both High Courts
If this is a correct inference as it appears to us to be the stay application under section 442b of the Companies Act would not be a bona fide one
It looks more like an abuse of the process of the Court
It is therefore not surprising that the learned Company Judge of the Rajasthan High Court rejected the Dhan Company s application under section 442b of the Act on 9th May 1974
It is however somewhat sur prising that a Division Bench of that High Court should have allowed an appeal from the judgment of the Company Judge and ordered stay of proceedings under section 4462 of the Act against the respondent Dhan Company even though this was subjected to the 967 condition that the appellant Company produces the entire documentary evidence inclusive of account books vouchers files and other documents and papers in its possession or power relating to the claim in question as it may desire to produce or the Official Liquidator desires to summon or as the learned Company Judge may direct in his discretion and also produces a list of witnesses that the appellant company may desire to examine in its defence in respect of the claim in question along with an affidavit of what each witness is likely to depose
Thus the Division Bench had while making the stay order attempted to safeguard the interests of the Golcha Company by making an order which in the opinion of the Division Bench would prevent valuable evi dence from being lost due to either the death or the fading memory of a witness or other causes
Learned Solicitor General appearing for the appellant Official Liquidator of the Golcha Company gave up the objection taken in the special leave petition to the maintainability of an appeal to a Division Bench from the order of the Company Judge in view of the provision of section 483 of the Act which lays down 483
Appeals from any order made or decision given in the matter of the winding up of a company by the Court shall lie to the same Court to which in the same manner in which and subject to the same conditions under which appeals lie from any order
or decision of the Court in cases within its ordinary jurisdiction
The Solicitor General however submits that on merits the order of the learned Company Judge dismissing the applica tion of the Dhan Company for stay of proceedings under section 442b of the  Act deserves to be restored as no grounds for interference with the proper exercise of his discretion by the learned Company Judge existed at all
We highly appreciate the brevity of this submission after the Solici tor General had very rightly and properly  conceded that he could not urge that the Division Bench had not jurisdic tion to hearthe appeal before it
No effective answer could be given to the Solicitor General s submission by the learned counsel for the respondent
We will however deal with the strenuous arguments advanced on behalf of the respondent even if it be to disclose how untenable they are
Firstly learned counsel for the respondent contends that the power to stay proceedings contained in section 442b of the Act is bound to be exercised when certain condi tions said to be found in the case before us are ful filled
This submission rests on a misapprehension of the object of section 44 2 which lays down 442
At any time after the presentation of a winding up petition and before a winding up order has been made the company or any creditor or contributory may a where any suit or proceeding against the company is pending in the Supreme Court or in any High Court apply 968 to the Court in which the suit or proceeding is pending for a stay of proceedings therein and b where any suit or proceeding is pending against the company in any other court apply to the Court having jurisdic tion to wind up the company to restrain further proceedings in the suit or proceeding and the Court to which application is so made may stay or restrain the proceedings accordingly on such terms as it thinks fit
The clear object of the section is that claims in suits in and proceeding pending elsewhere which have a bearing on the company s liabilities may be stayed only until the winding up order is made because after the winding up order has been passed section 446 begins to
operate so as to
automatically transfer with certain exceptions proceed ings against the company being wound up to
the Court exer cising the
jurisdiction to wind it up
Section 446 reads 4461 When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator no suit or other legal proceeding shall be commenced or if pending at the date of the winding up order shall be proceeded with against the company except by leave of the Court and subject to such terms as the Court may impose
2 The Court which is winding up the company shall notwithstanding anything con tained in any other law for the time being in force have jurisdiction to entertain or dispose of a any suit or proceeding by or against the company b any claim made by or against the compa ny including claims by or against any of its branches in India c any application made under section 391 by or in respect of the company d any question of priorities or any other question whatsoever whether of law or fact which may relate to or arise in course of the winding up of the company whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such applica tion has been made or is made before or after the order for the winding up of the company or before or after the commencement of the Companies Amendment Act 1960
969 3 Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may notwithstanding anything contained in any other law for the time being in force be transferred to and disposed of by that Court
4 Nothing in sub section 1 or sub section 3 shall apply to any proceeding pending in appeal before the Supreme Court or a High Court
Sections 442 and 446 of the Act have to be read together
It is only where the object of the two sections when read together is served by a stay order that the stay order could be justified
That object is to expeditiously decide and dispose of pending claims in the course of winding up proceedings
A stay is not to be granted if the object of applying for it appears to be as it does in the case before us merely to delay adjudication on a claim and thereby to defeat justice
In other words a stay order under sec tion 442cannot be made mechanically or as a matter of course on showing fulfilment of some fixed and prescribed conditions
It can only be made judiciously upon an exami nation of the totality of the facts which very from case to case
It follows that the order to be passed must be discretionary and the power to pass it must therefore be directory and not mandatory
In other words the word used before stay in section 442 of the Act really means may and not must or shall in such a context
In fact it is quite accurate to say that the word may by itself acquires the meaning  of must or shall sometimes
This word however always signifies a conferment of power
That power may having regard to the context in which it occurs and the requirements contemplated for its exercise have annexed to it an obligation which compels its exercise in a certain way on facts and circumstances from which the obligation to exercise it in that way arises
In other words it is the context which can attach the obligation to the power compel ling its exercise in a certain way
The context both legal and factual may impart to the power that obligatoriness
Thus the question to be determined in such cases always iswhether the power conferred by the use of the word may has annexed to it an obligation that on the fulfilment of certain legally prescribed conditions to be shown by evi dence a particular kind of order must be made
If the statute leaves no room for discretion the power has to be exercised in the manner indicated by the other legal provi sions which provide the legal context
Even then the facts must establish that the legal conditions are fulfilled A power is exercised even when the Court rejects an applica tion to exercise it in the particular way in which the applicant desires it to be exercised
Where the power is wide enough to cover both an acceptance and a refusal of an application for its exercise depending upon facts it is directory or discretionary
It is not the conferment of a power which the word may indicates that annexes any obligation to its exercise but the legal and factual context of it
This as we 970 understand it was the principal laid down in the case cited before us Frederic
Guilder Julius vs The Right Rev The Lord Bishop of Oxford The Rev Thomas Thellusson Carter
1 Dr Julius in the case mentioned above had made an application to the Bishop of Oxford against the Rector of a parish asking the Bishop to issue a commission under the Church Discipline Act to enquire against certain unautho rised deviations from the ritual in a Church by the
Rector
The relevant statute merely conferred a power by laying down that it shall be lawful to issue a commission
The Courts of Queens Bench and of Appeal in England had differed on the question whether a mandamus from the Court could go to the Bishop commanding him to
issue a commission for the purpose of making the enquiry
The House of Lords held that the power to issue the commission was not coupled with a duty to exercise it in every case although there may be cases where duties towards members of the public to exercise a power may also be coupled with a duty to exercise it in a particular way on fulfilment of certain specified conditions
The statute considered there had not specified those condi tions
Hence it was a bare power to issue or not to issue the commission
Lord Blackburn said at p 241  I do not think the words it shall be lawful  are in themselves ambiguous at all
They are apt words to express that a power is given and as prima facie the donee of a power may either exercise it or leave it unused it is not inaccurate to say that prima facie they are equivalent to saying that the donee may do it but if the object for which the power is conferred is for the purpose of enforcing a right there may be a duty cast on the donee of the power to exer cise it for the benefit of those who have that right when required on their behalf
Where there is such a duty it is not inaccu rate to say that the words conferring the power are equivalent to saying that the donee must exercise it
It by no means fol lows that because there is a duty cast on the donee of a power to exercise it that mandamus lies to enforce it that depends on the nature of the duty and the position of the donee
The principle laid down above has been followed consist ently by this Court whenever it has been contended that the word may carries with it the obligation to exercise a power in a particular manner or direction
In such a case it is always the purpose of the power which has to be exam ined in order to determine the scope of the discretion conferred upon the donee of the power
If the conditions in which the power is to be exercised in particular cases are also specified by a statute then on the fulfilment of those conditions the power conferred becomes annexed with a duty to exercise it in that manner
This is the principle we deduce from the cases of this Court cited before us Bhaiya Punjalal Bhagwandin vs 1 5 AC 214
971 Dave Bhagwatprasad Prabhuprasad1 State of Uttar Pradesh vs Jogendra Singh2 Sardar Govindrao  Ors
vs State of MP3 Shri A CAggarwal
Sub Divisional Magistrate Delhi  Anr vs Smt
Ram Kali etc
4 Bashira vs State of UP5 and Prakash Chand Agarwal  Ors vs Ms Hindustan Steel Ltd6 In the statutory provision under consideration now before us the power to stay a proceeding is not annexed with the obligation to necessarily stay on proof of certain conditions although there are conditions prescribed for the making of the application for stay and the period during which the power to stay can be exercised
The question whether it should on the facts of a particular case be exercised or not will have to be examined and then decided by the Court to which the application is made
If the applicant can make out on facts that the objects of the power conferred by sections 442 and 446 of the Act can only be carried out by a stay order it could perhaps be urged that an obligation to do so has become annexed to it by proof of those facts
That would be the position not because the word may itself must be equated with shall but because judicial power has necessarily to be exercised justly properly and reasonably to enforce the principle that fights created must be enforced
In the case before us the only right which could be said to have been created is the right to get speedier adjudication from the Court where the winding up proceeding is taking place
That is the object of the provisions
On facts disclosed in this case we find that the application seems to have been made with the object of delaying deci sions on claims made
In such a case there could be no doubt that the application should be rejected outright as the learned Company Judge did
Secondly an attempt was made to urge that the power to grant or not to grant or to grant a stay upon certain condi tions assuming the power to be discretionary is to be exercised by the Courts in which that discretion is vested this Court should not interfere with the exercise of discre tion by the Division Bench to which an appeal from the order of the Company Judge lay
The effective answer to this contention is that where the learned Company Judge had himself exercised his discretion on a correct appreciation of the object of the provisions of sections 442 and 446 of the Act even though he did not state the object or refer to all the facts the Appellate Court should not have interfered by granting a conditional stay without giving sufficient reasons to over ride the discretion of the learned Company Judge to refuse stay
We think that a question of general 1 19631 3 SCR 312
2  3  4 1968 1 SCR 205
5 6 14 206SCI77 972 principle arises in this case which has to be clarified so that an interference by this Court under Article 136 of the Constitution in order to vindicate a correct principle and to meet the ends of justice is called for
Thirdly learned counsel for the respondent submitted that the order under appeal before us is not final so that we need not interfere under article 136 of the Constitution for this reason
It is true that this Court does not as a rule interfere with interlocutory orders
It is not necessary for us to embark on this occasion on a discussion of the meaning of a final order
That is certainly a question fraught with difficulties
It is sufficient for us to observe that our powers of interference under article 136 of the Constitution are not confined to those in respect of final orders although finality of an order is a test which this Court generally applies in considering whether it should interfere under article 136 of the Constitution with it
We think that we have indicated sufficiently why despite the fact that an order staying proceedings under section 442b of the Act may not strictly speaking be final yet a question of general principle of wide application as to the circumstances in which an apparently discretionary power may become annexed with a duty to exercise it in a particular way having arisen here we consider this to be a fit case for interference under Article 136 of the Constitution
Consequently we allow this appeal and set aside the judgment and order of the Division Bench and restore that of the learned Company Judge
The parties will bear their own costs
SR Appeal allowed


Summary:
The Company Judge in the Bombay High Court directed on 3 1 1970 advertisement of the winding up petition fried by the Registrar of Companies in Maharashtra against the respondent company one of the debtors of the Golcha company to the extent of Rs 1169043 
The respondent company appealed against the decision of the Company Judge and obtained an order dated 3rd February 1970 from a Divi sion Bench staying the operation of the order of advertise ment of the winding up petition
As the respondent company defaulted in the payment of two of its instalments as agreed to between the Golcha company and the respondent company by agreements dated 25th June 1966 and 17th January 1967 the Official Liquidator of the Golcha company made a claim under section 4462 of the Companies Act for the recovery of a sum of Rs 5 lac before the Company Judge of the High Court of Rajasthan
The respondent company after obtaining an order of stay of the proceedings against it in the Bombay High Court made another application under section 442b of the Companies Act in the Rajasthan High Court for staying of proceeding against it under s 446 2 made by the appellant on the ground that a compulsory winding up petition was pending against it in the Bombay High Court
The Company Judge rejected the application under section 442b of the Act on 9 5 1974
But the Division Bench of the Rajasthan High Court allowed the appeal against the stay order and ordered a conditional stay of proceedings section 446 2 of the Act against the respondent company
On appeal by special leave the Court HELD 1 The clear object of section 442 is that claims in suits and proceedings pending elsewhere which have a bearing on the company s liabilities may be stayed only until the winding up order is made because after the winding up order has been passed section 446 begins to operate so as to automatically transfer with certain exceptions proceedings against the company being wound up to the court exercising the jurisdiction to wind it up
968 B C 2 Sections 442 and 446 of the Act have to be read together
It is only where the object of the two sections when read together is served by a stay order that the stay order could be justified
That object is to expeditiously decide and dispose of pending claims in the winding up proceedings
A stay is not to be granted if the object of applying for it appears to be merely to delay adjudication on a claim and thereby to defeat justice
In other words a stay order under section 442 cannot be made mechanically or as a matter of course on showing fulfilment of some fixed and prescribed conditions
It can only be made judi ciously upon an examination of the totality of the facts which vary from case to case It follows that the order to be passed must be discretionary and the power to pass it must therefore be directory and not mandatory
969 B D 3 The word may used before stay section 442 of the Compa nies Act really means may and not must or shall in such a context
In fact it is not quite accurate to say that the word may by itself acquires the meaning of must or shall sometimes
This word however always signifies a conferment of that power
That power may having regard to the context in which it occurs and the requirements contem plated for its exercise have annexed to it 965 an obligation which compels its exercise in a certain way on facts and circumstances from which the obligation to exer cise it in that way arises
In other words it is the context which can attach the obligation to the power compel ling its exercise in a certain way
The context both legal and factual may impart to the power that obligatoriness
969 D F 4 Thus the question to be determined in such cases always is whether the power conferred by the use of the word may has annexed to it an obligation that on the fulfil ment of certain legally prescribed conditions to be shown by evidence a particular kind of order must be made
In such a case it is always the purpose of the power which has to be examined in order to determine the scope of the discre tion conferred upon the donee of the power
If the condi tions in which the power is to be exercised in particular cases are also specified by a statute then on the fulfil ment of those conditions the power conferred becomes an nexed with a duty to exercise it in that manner
969 F 970 G H Frederic Guilder Julius vs The Right Rev
The Lord Bishop of Oxford The Rev Thomas Thelusson Carder 5 AC 214 quoted with approval
Bhaiya Punjalal Bhagwandin vs Dave Bhagwat prasad Prab huprasad  State of Uttar Pradesh vs Jogen dra Singh   Sardar Govindrao  Ors
vs State of MP   Shri A C Aggarwal Sub Division al Magistrate Delhi  Anr
vs Smt
Ram Kali etc
1968 1 SCR 205 Bashira vs State of UP and Pra kash Chand Agarwal  Ors
vs Ms Hindustan Steel Ltd  applied
5 In section 442 of the Companies Act the power to stay a proceeding is not annexed with the obligation to necessarily stay on proof of certain conditions although there are conditions prescribed for the making of the application for stay and the period during which the power to stay can be exercised
The question whether it should on the facts of a particular case be exercised or not will have to be examined and then decided by the court to which the applica tion is made
If the applicant can make out on facts that the objects of the power conferred by sections 442 and 446 of the Act can only be carried out by a stay order it could per haps be urged that an obligation to do so becomes annexed to it by proof of those facts
That would be the position in case the word may itself must be equated with shall but because judicial power has necessarily to be exercised justly properly and reasonably to enforce the principle that rights created must be enforced
971 B D 6 In such cases the only right which could be said to have been created is the right to get speedier adjudication from the court where the winding up proceeding is taking place
That is the object of the provisions
On facts disclosed if it be found that the application has been made with the object of delaying decisions on claims made the application should be rejected outright
971 D E 7 In the instant case the object of the respondent company appears to be to obtain an indefinite stay of pro ceedings against it in both High Courts
This being a correct inference the stay application under section 442b of the Companies Act could not be a bona fide one but an abuse of the processes of the court
966 F G 8 It is true that the Supreme Court does not as a rule interfere with interlocutory orders
The powers of interference under article 136 of the Constitution by the Supreme Court are not confined to those in respect of final orders although finality of an order is a test which the Supreme Court generally applies in considering whether it should interfere under article 136 of the Constitution with it
972 B D