2002 (1) TMI 1213 - HC - Companies Law

Summary

Issues:
1. Company petition filed for winding up under just and equitable clause.
2. Disputes between two groups holding majority shares.
3. Company petition filed for oppression and mismanagement.
4. Scheme of arrangement proposed and pending approval.
5. Defending a recovery suit and facing criminal cases.
6. Argument based on alternative remedy under section 443(2).

Analysis:
1. The company petition was filed seeking to wind up Banaras Beads Ltd. under the just and equitable clause of the Companies Act, 1956. The petitioner alleged non-compliance with statutory requirements, failure to submit annual returns, and oppression of minority shareholders' interests. The court noted the ongoing disputes between two groups holding the majority of shares and the arbitration award subject to approval by the High Court. Additionally, a separate company petition was filed for oppression and mismanagement, with modalities for share valuation being agreed upon by the parties.

2. A scheme of arrangement proposed in line with the arbitrator's award was pending approval, with meetings of shareholders and creditors directed by the court. The company was also involved in defending a recovery suit and facing criminal cases for non-compliance with the Companies Act. The respondent argued against the maintainability of the winding-up petition under section 433(f) citing an alternative remedy provision under section 443(2) and the ongoing proceedings before the Company Law Board (CLB) addressing oppression and mismanagement.

3. The court observed that the petitioner had an alternative and efficacious remedy available through the proceedings before the CLB for complaints of oppression and mismanagement. As the petitioner was actively pursuing this remedy, the court dismissed the winding-up petition under section 433(f) on the grounds that the interests of the petitioner, who also held shares in the respondent company, would be protected by the CLB under sections 397 and 398. The court found the apprehension of not being heard to be unfounded in the circumstances presented.