1935 (4) TMI 11 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the High Court of Bombay to wind up an unregistered foreign company with less than seven members.
2. Interpretation of Sections 270 and 271 of the Companies Act, 1913.
3. Expediency of winding up the company in India.
4. Form and extent of the winding-up order.

Issue-wise Detailed Analysis:

1. Jurisdiction of the High Court of Bombay:
The primary issue was whether the High Court of Bombay had the jurisdiction to make a winding-up order against an unregistered foreign company consisting of less than seven members. The respondent company, incorporated in England with limited liability, carried on business in India with its principal place of business in Bombay. It was admitted that the company consisted of five members only. The petitioning creditor, owed Rs. 60,000, alleged that the company had stopped payment and ceased to carry on business, which was undisputed. The court examined Sections 270 and 271 of the Companies Act, 1913, to determine jurisdiction.

2. Interpretation of Sections 270 and 271 of the Companies Act, 1913:
Section 270 defines "unregistered company" and excludes certain types of companies, stating that it "shall include any partnership, association or company consisting of more than seven members." Section 271 allows for the winding up of unregistered companies under the Act. The court noted that the expression "shall include" in Section 270 is not exhaustive but enumerative, meaning it extends the definition rather than limiting it. Thus, a foreign company not registered under the Act would be considered an unregistered company, regardless of the number of its members. The court concluded that the respondent company, being a foreign unregistered company, fell within the definition of an unregistered company under Sections 270 and 271.

3. Expediency of Winding Up the Company in India:
The court then considered whether it was expedient to wind up the company in India. The principles for this determination included whether the company had an office and assets within the jurisdiction and whether the winding-up order would be ancillary to the liquidation proceedings in England. The court found that the company had significant assets and operations in India, including secured creditors with claims running into several lacs of rupees, assets in various parts of the country, and pending suits. The investigation of these claims and assets could be more effectively handled in India. The court also noted that it would be inconvenient for numerous small creditors to pursue their claims in England. Therefore, the court concluded that it was expedient and in the interests of all parties to issue a winding-up order.

4. Form and Extent of the Winding-Up Order:
The court decided that the winding-up order in India should be ancillary to the liquidation proceedings in England. The Official Liquidator was appointed as the liquidator of the company, with specific directions to act only with special directions from the Judge in Chambers, except for getting in Indian assets, setting the list of creditors in India, and advertising the order. The liquidator was directed to open a separate account with the Imperial Bank of India. The petitioner and the opposing creditor were entitled to taxed costs from the assets, including instruction charges.

Conclusion:
The High Court of Bombay held that it had jurisdiction to wind up the unregistered foreign company irrespective of the number of its members under Sections 270 and 271 of the Companies Act, 1913. The court found it expedient to wind up the company in India due to the significant assets and operations within its jurisdiction. The winding-up order was made ancillary to the English liquidation proceedings, with specific directions for the Official Liquidator.