Case: Official Liquidator Vs. Dharti Dhan (P) Ltd

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 exercise it for the benefit of those who have that right, when required on their behalf. Where there is such a duty, it is not inaccurate to say that the words conferring the power are equivalent to saying that the donee must exercise it. It by no means follows 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. " 7. The principle laid down above has been followed consistently 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 examined 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 exereised 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 v. Dave Bhagwatprasad Prabhuprasad [1963] 3 SCR 312 (SC), State of Uttar Pradesh v. Jogendra Singh [1964] 2 SCR 197 (SC), Sardar Govindrao v. State of M.P [1965] 1 SCR 678(SC), A.C. Aggarwal, Sub-Divisional Magistrate, Delhi v. Mst. Ram Kali [1968] 1 SCR 205(SC), Bashira v. State of U.P. [1969] 1 SCR 32 (SC) and Prakash Chand Agarwal v. Hindustan Steel Ltd. [1972] 2 SCR 405 (SC).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 rights created must be enforced. 8. 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 decisions 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. 9. Secondly, an attempt was made to urge that as the power to grant or not to grant or to grant a stay upon certain conditions, 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 discretion 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 override the discretion of the learned company judge to refuse stay. We think that a questions of general 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 442(b) 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. 10.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The clear object of the section is that claims in suits and proceedings pending elsewhere which have a bearing on the companys 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 upSections 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 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 judiciously 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. In other words, the word " may " 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 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 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 compelling its exercise in a certain way. The context, both legal and factual, may impart to the power that obligatorinessThe principle laid down above has been followed consistently 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 examined 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 exereised 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 v. Dave Bhagwatprasad Prabhuprasad [1963] 3 SCR 312 (SC), State of Uttar Pradesh v. Jogendra Singh [1964] 2 SCR 197 (SC), Sardar Govindrao v. State of M.P [1965] 1 SCR 678(SC), A.C. Aggarwal, Sub-Divisional Magistrate, Delhi v. Mst. Ram Kali [1968] 1 SCR 205(SC), Bashira v. State of U.P. [1969] 1 SCR 32 (SC) and Prakash Chand Agarwal v. Hindustan Steel Ltd. [1972] 2 SCR 405 (SC).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 rights created must be enforcedIn 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 decisions on claims made. In such a case, there could be no doubt that the application should be rejected outright as the learned company judge didSecondly, an attempt was made to urge that as the power to grant or not to grant or to grant a stay upon certain conditions, 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 discretion 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 override the discretion of the learned company judge to refuse stay. We think that a questions of general 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 442(b) 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.