In what way does the Companies Act, 1956 regulate the appointment

In what way does the Companies Act, 1956 regulate the appointment of a Committee of Inspection, its composition, quorum at its meetings, and filing a vacancy, if caused after the appointment of the committee, for a company undergoing winding-up?

. RM Limited went for a public issue of Equity Shares (Rs. 10 crores) of Rs 10 each. The shares were subscribed to an extent of 95% of the total issue. The shares of the company were accepted for listing by Mumbai Stock Exchange but subsequently the permission was cancelled on certain grounds. On an appeal to the Central Government by the company, the decision of the Stock Exchange was held to be valid. As a result, the application money had become refundable to the allottees. The company, therefore, had no prospect of doing any business and there was a complete deadlock among the Directors. Looking at the circumstances, certain creditors filed a petition in the Court for winding-up of the company on the ground that the company had become commercially insolvent. The shareholders of the company object to the petition of the creditors. Decide, giving reasons:

( i) Whether the objection of the shareholders will sustain and the petition of

creditors for winding up of the company can be dismissed by the Court?

(ii) State the provisions of the Companies Act, 1956, in this regard.

[May, 1994]