1999 (10) TMI 626 - HC - Companies Law

Summary

Issues:
1. Whether the winding up petition filed is in contravention of section 11 of the Companies Act?
2. If so, whether the order of the learned Single Judge is liable to be interfered with?

Detailed Analysis:
Issue 1: The appellant filed a company petition seeking winding up of a partnership firm under the deed dated 1-1-1977. A dispute arose regarding profit sharing, leading to the reconstitution of the firm in 1992. The appellant claimed a higher profit share than what was allocated to him. The Single Judge dismissed the petition citing a contravention of section 11 of the Companies Act, which prohibits formation of partnerships with more than 20 persons for profit. However, the firm had less than 20 partners. The High Court found no contravention of section 11, setting aside the Single Judge's decision.

Issue 2: The company petition was filed under section 583(4) for winding up of unregistered companies. The appellant argued that the petition was maintainable under this section. Legal precedents were cited to support the maintainability of such petitions. The High Court examined previous cases and held that the appellant failed to meet the requirements of section 583(4) as the dispute was primarily about profit sharing and not about the firm's dissolution. Additionally, ongoing proceedings under the Indian Partnership Act for accounts and partition rendered the petition unsustainable. Consequently, the High Court dismissed the appeal, finding no merit in the appellant's case.

In conclusion, the High Court determined that the company petition was not in contravention of section 11 of the Companies Act but failed to meet the criteria under section 583(4) for winding up the partnership firm. The appeal was dismissed, upholding the Single Judge's decision to dismiss the petition.