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Issues:
Petition for winding up based on company's financial condition, Competency of State Government's sanction, Time limitation for presenting winding-up petition after obtaining sanction, Relevance of subsequent balance-sheets, Company's financial position and prospects, Dismissal of winding-up petition, Registrar's duty to monitor company's financial position, Costs allocation. Analysis: The judgment pertains to a petition for winding up a company filed by the Registrar of Companies under section 166(aa) of the Indian Companies Act with State Government's sanction. The petition was based on the company's financial condition as of 30th November, 1949, showing insolvency due to accumulated losses. The State Government's sanction was obtained in 1950 but the petition was presented in 1952 after subsequent balance-sheets were published. A preliminary objection was raised regarding the competency of the sanction, contending that it did not consider the updated financial position of the company at the time of petition presentation, including the balance-sheets for 1950 and 1951. The court held that the sanction must align with the facts on which the petition is based, and since subsequent balance-sheets were not before the sanctioning authority, the sanction was deemed invalid. Furthermore, the court examined the company's history, noting its purpose of exporting groundnuts and the challenges faced during the war, leading to incurred expenses without significant activities. However, after obtaining an export license in 1951, the company made a substantial profit, indicating a positive turnaround. The balance-sheet for 1951 showed limited outstanding liabilities mainly towards interest and expenses, which creditors were willing to write off, leaving only the income-tax liability unresolved. The court considered the company's immediate future prospects, including the likelihood of receiving export quotas for 1952, which could lead to profitable operations. Consequently, the court dismissed the winding-up petition, emphasizing the company's potential for profitability and the need for further assessment before considering winding up. Moreover, the judgment highlighted the Registrar's duty to monitor the company's financial position and intervene if necessary in the future. Regarding costs, the court decided that each party should bear its own costs, considering the unique circumstances of the case involving a statutory authority as the petitioner and the lack of prior offers to write off outstanding amounts by the respondents, which could have influenced the decision on costs allocation.
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