1969 (5) TMI 36 - HC - Companies Law

Issues Involved:
1. Competency of Surinder Nath to file the petition on behalf of Concord Finance Private Ltd.
2. Whether the petition is mala fide.
3. Whether the respondent company is unable to pay its debts.
4. Relief.

Issue-wise Detailed Analysis:

1. Competency of Surinder Nath to File the Petition:
The first issue was whether Surinder Nath was competent to file the winding-up petition on behalf of Concord Finance Private Ltd. The authority to file the petition depended on four resolutions: two by the board of directors and two by the general body of shareholders. The petitioner relied on resolutions dated July 31, 1964, and August 7, 1964, which were initially challenged due to quorum issues but later confirmed in a valid meeting. Additionally, resolutions from the general body dated June 27, 1962, and June 29, 1963, were scrutinized. Despite irregularities and objections regarding the quorum and venue of the meetings, the court found that the acts of the directors were valid under Section 290 of the Companies Act, which protects acts done by de facto directors. The court concluded that the resolutions authorizing Surinder Nath were valid, and he was competent to file the petition.

2. Whether the Petition is Mala Fide:
The second issue was whether the petition was filed with mala fide intentions. The respondent argued that the petition was mala fide, evidenced by Surinder Nath being a surety to the loan claimed by the petitioner company. However, the court was not persuaded by this argument, noting that Surinder Nath being a co-debtor would increase his jeopardy if the company was wound up, thus not supporting the claim of mala fides. The court found no substantial evidence to prove that the petition was filed with ill intentions.

3. Whether the Respondent Company is Unable to Pay its Debts:
The third issue was the financial status of the respondent company. The latest balance sheet from March 31, 1962, showed a poor financial state with significant losses and minimal profits. The respondent company failed to produce any recent balance sheets or evidence of financial improvement. Testimonies indicated that the company was in a miserable condition with minimal staff and no significant agreements since 1963. The court concluded that the respondent company was commercially insolvent, unable to pay its debts, and in a bad financial state, justifying the winding-up petition.

4. Relief:
Based on the findings, the court allowed the petition and ordered the respondent company to be wound up. The official liquidator was appointed as the liquidator of the company, and the necessary procedural steps were directed to be followed, including the advertisement of the winding-up order in specified newspapers. The parties were ordered to bear their own costs.

Conclusion:
The court concluded that Surinder Nath was competent to file the petition, the petition was not mala fide, and the respondent company was commercially insolvent. Consequently, the court ordered the winding-up of the respondent company and appointed the official liquidator to oversee the process.

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