1947 (4) TMI 22 - HC - Companies Law

Summary

Issues Involved:
1. Whether the present petition for compulsory winding-up is barred due to a previous dismissal.
2. Whether the petitioners have the right to maintain the petition for winding-up despite not paying a further call made by the company.
3. Whether a case has been made for the appointment of a provisional Liquidator.

Issue-Wise Detailed Analysis:

1. Bar Due to Previous Dismissal:
The first preliminary objection raised by the respondent's counsel was that the present petition is barred because a previous application by some of the petitioners was dismissed by Munir, J., on 27th November 1946. The court found this objection to be without force. The previous petition was dismissed as premature because the petitioners did not amend it as required. There was no similar defect in the current petition, and thus, the objection was overruled.

2. Right to Maintain the Petition:
The second objection was that the petitioners had not paid a further call of 25% on shares made by the company, which allegedly disqualified them from maintaining the petition. The petitioners argued that the call was made mala fide, and the meeting in which the resolution for the call was passed was not properly held. The court referred to Section 166 of the Companies Act, which enumerates the conditions under which a contributory can present a petition for winding up. The court concluded that the failure to pay a further call does not by itself debar a contributory from maintaining a petition for winding up. The objection was overruled as the validity and legality of the call required careful examination.

3. Appointment of Provisional Liquidator:
The petitioners sought the appointment of a provisional Liquidator on four grounds:
1. Default in Filing Statutory Report and Holding Statutory Meeting:
- The company conceded that it had not filed the statutory report or held the statutory meeting within the time allowed by law. However, it argued that criminal proceedings initiated by the petitioners had resulted in the police taking away the company's records, which prevented compliance.

2. Failure to Start Business:
- The company had not started the business for which it was constituted within a year of its incorporation. The respondent argued that significant steps had been taken to advance the business, including setting up a workshop and buying machinery.

3. Substratum of the Company:
- The petitioners argued that the refusal of a government license to run an aircraft meant the substratum of the company had gone. The respondent contended that the company had multiple objects, some of which could still be achieved.

4. Improper Maintenance of Books and Misappropriation:
- The petitioners alleged that the company did not maintain proper books of account and that there were instances of misappropriation. The court found that these allegations required further investigation but did not justify the appointment of a provisional Liquidator at this stage.

The court refused to appoint a provisional Liquidator but issued several orders to safeguard the interests of the petitioners and other shareholders:
1. Audit of Account-Books:
- The company's account-books were to be audited by Messrs. S.P. Chopra & Co., with a report to be submitted within a fortnight.

2. Stay of Pending Suits:
- Proceedings in two pending suits were stayed during the pendency of the present petition.

3. General Meeting:
- A general meeting of all shareholders was ordered to be held to ascertain their wishes on the question of winding-up.

4. Restriction on Withdrawal of Funds:
- Mr. P.J. Kumar was restricted from withdrawing any amount from the company's bank accounts without court permission.

Further proceedings were scheduled for 15th May 1947. The remuneration for the auditors and the chairman of the shareholders' meeting was to be fixed later, and notices for the meeting were to be given by registered post and published in specified newspapers.