2018 (11) TMI 196 - HC - Companies Law

Winding up petition - petitioner (minor shareholder) contended that the respondent company is unable to fulfil the objects for which it was incorporated. - grievance of mismanagement or oppression - Held that - the bonafide of the petitioner is in doubt. He is a minority share holder and seems to be only interested in liquidating the company so that he liquidate his shares. - Winding up is a discretionary relief and cannot be used for a collateral purpose. In case the petitioner has a grievance of mismanagement or oppression of minority share holders he has a remedy to approach NCLT under the appropriate provisions of law. In opinion, thereof no grounds are made out for this court to pass a winding up order against the respondent company. The substratum of the company has not gone. The company is making a profit. The petition is without merit.

Summary

Issues:
- Petition filed seeking winding up of respondent company under Sections 433(c) of the Companies Act, 1956.
- Allegation that respondent company failed to commence business activities within seven years of incorporation.
- Disagreement over fulfillment of company's objectives as stated in the Memorandum of Association.
- Dispute regarding rental income being the only revenue source for the company.
- Previous dismissal of a similar Company Petition and subsequent appeal.
- Argument over the petitioner's intention to liquidate shareholdings.

Analysis:
1. The petitioner sought winding up of the respondent company under Section 433(c) of the Companies Act, 1956, citing the failure of the company to commence business activities within seven years of incorporation.

2. The petitioner, a director of the company, claimed that the company did not fulfill its stated objectives as per the Memorandum of Association, with rental income from agricultural land being its only revenue source.

3. The respondent argued that attempts were made to change the land use, but were unsuccessful due to legal hurdles faced in the process.

4. The court examined the main objects of the company as per the Memorandum of Association, highlighting the diverse business activities the company was intended to engage in.

5. The court referenced previous judgments to emphasize that winding up is a discretionary relief and should not be used for collateral purposes, especially when there is a possibility of the company being revived.

6. The court dismissed the petition, noting that the company was profitable, and the petitioner's motive appeared to be solely focused on liquidating his shareholdings rather than genuine concerns over company operations.

7. The judgment highlighted the importance of considering the company's potential for revival and the absence of grounds for passing a winding-up order in this case, ultimately leading to the dismissal of the petition.