1981 (8) TMI 190 - HC - Companies Law

Summary

Issues:
- Petition for winding-up under section 433(1)(f) of the Companies Act, 1956 on just and equitable grounds.
- Allegations of mismanagement and exclusion from company management.
- Financial position of the company and interest of shareholders in selling shares.
- Interpretation of just and equitable grounds for winding up a company.

Analysis:
The judgment pertains to a petition filed under section 433(1)(f) of the Companies Act, 1956, seeking winding-up of a company on just and equitable grounds. The petitioner, a shareholder and ex-director of the company, alleged illegal exclusion from participating in the company's management, citing her removal due to absenteeism from board meetings. The court noted that mismanagement allegations, though serious, were not a ground for the petitioner to seek winding-up as she did not represent 10% of the total subscribed capital. The petitioner's removal for absenteeism, despite being against the company's articles of association, was deemed a matter for a civil court, not warranting winding-up.

Regarding the company's financial position, it was revealed that some shareholders sought permission to sell their shares to others capable of running the company, which had ceased operations but showed potential for revival. The court emphasized that a shareholder cannot move for winding-up solely based on the company's financial difficulties or cessation of business. Even though the company had stopped operations in 1980, shareholder interest in its revival indicated a possibility of recovery, precluding grounds for winding-up based on financial losses.

The judgment referenced the House of Lords decision in Ebrahimi v. Westbourne Galleries Ltd., highlighting the test of unjust exclusion from management as a just and equitable ground for winding-up. However, the court distinguished the present case, where the director's removal was lawful under the Companies Act, not due to arbitrary exclusion by the board. The judgment concluded that the petitioner failed to establish just and equitable grounds for winding-up under section 433(1)(f) of the Companies Act, leading to the dismissal of the petition without admission.