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Issues:
1. Whether to wind up two industrial and provident societies based on the "just and equitable" ground. 2. Whether the petitions for winding up the societies were brought for legitimate reasons or for facilitating the sale of holdings at inflated prices. 3. Whether lack of confidence in the management committee's conduct justifies winding up the society. 4. Whether the issuance of new shares by the management committee was done in good faith or for improper purposes. 5. Whether the Prevention of Fraud (Investments) Act, 1958, provides grounds for winding up the society. 6. Whether the society is still serving a useful purpose and should be wound up. Analysis: The judgment involved two related petitions seeking the winding up of two industrial and provident societies based on the "just and equitable" ground under the Companies Act, 1948. The petitioners, who were shareholders, argued for winding up the societies, claiming lack of confidence in the management committee's conduct and improper issuance of new shares to maintain control. The court observed that the real motive behind the petitions seemed to be to remove obstacles to selling holdings at inflated prices, rather than for the benefit of the societies' members. The court deemed the petitions oppressive and an abuse of process, as they were not in the interests of the members but aimed at achieving extraneous objectives. The court considered the principles guiding winding up a society, emphasizing that a strong case must be made before bypassing the society's internal decision-making processes. Misconduct or mismanagement alone is not sufficient grounds for winding up. The petitioners argued lack of confidence in the management committee's conduct, citing deceptive practices and improper issuance of shares. However, the court found that the committee had acted bona fide in the society's best interests, despite some criticisms regarding share issuance evasion. The court acquitted the management committee of lack of probity and dismissed the petitioners' claims under this ground. Another ground for winding up was based on the Prevention of Fraud (Investments) Act, 1958. The petitioners argued that the registrar's power under the Act should trigger winding up. However, the court clarified that the Act did not confer jurisdiction on the court for winding up and had no relevance beyond considerations for winding up on just and equitable grounds. The court found that the society still served a useful purpose, maintaining a semi-rural area and supporting smallholders, thus rejecting the argument for winding up under the Act. In conclusion, the court dismissed the petitions, finding that it would neither be just nor equitable to wind up the societies. The court emphasized that the societies still served a purpose and deemed the petitions oppressive and an abuse of process, ultimately denying the winding-up orders.
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