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Issues Involved:
1. Competence of the petitioners to file a winding-up petition. 2. Company's inability to pay its debts under Section 433(e). 3. Just and equitable grounds for winding up under Section 433(f), including lack of probity and failure of substratum. Detailed Analysis: 1. Competence of the Petitioners to File a Winding-up Petition: The company raised a preliminary objection regarding the maintainability of the petition, arguing that it would not be proper to admit a petition by a contributory unless it was pleaded that the company had sufficient assets for disbursement to creditors and members. The court referenced In re Othery Construction Ltd. and V.V. Krishna Iyer Sons v. New Era Manufacturing Co. Ltd., concluding that there is no legal bar for a contributory to bring a petition for winding up. The court held that the preliminary objection about the competence of the petitioners to file a petition under Section 433 of the Companies Act was to be rejected. 2. Company's Inability to Pay Its Debts under Section 433(e): The company had taken enormous loans for its various businesses, which were not repaid despite demands. The financial corporation had filed a suit for the recovery of the loan, and the Dewas units were sold by public auction in execution of the decree. The petitioners had a deposit of more than Rs. 4 lakhs with the company, which was not repaid on demand. The company contended that there was a bona fide dispute regarding this demand, but the court found no such bona fide dispute existed. The balance-sheets indicated that the company's assets were dwindling, and its liabilities had outstripped its total assets. The court concluded that the company was commercially insolvent and unable to pay its debts, justifying a winding-up order under Section 433(e). 3. Just and Equitable Grounds for Winding up under Section 433(f): The petitioners relied on two grounds: lack of probity in the majority shareholders and directors, and failure of substratum. a. Lack of Probity: The petitioners alleged various transfers of immovable properties and businesses of the company to the majority members' relatives without proper commercial considerations. The company owned Nandanwan and Rampurawala buildings, which were transferred to the majority members, liquidating the company's fixed assets without any benefit. The hotel business and the yarn shop were also transferred to the relatives of the majority members. The company sold its shares in Mills Ltd. to G.R. Oil Mills Pvt. Ltd., a company controlled by the majority group, through hawala entries, depleting the company's assets without relieving its liabilities. The court found these transfers were not made in good faith and justified the petitioners' lack of confidence in the majority group. b. Failure of Substratum: The company's businesses had stopped or were running at a loss, and the selling agency business also expired in 1975. The company's balance-sheets from 1970-71 onwards presented a dismal picture where liabilities far exceeded assets. The court rejected the company's argument that it could embark on other trades and businesses, finding no reasonable hope for its revival. The court held that the substratum of the company had failed, and it was just and equitable to wind up the company. Conclusion: The court held that: 1. The company is unable to pay its debts. 2. It is just and equitable that the company should be wound up. The court ordered the respondent-company to be wound up, with the official liquidator taking custody of all the company's property and effects. The petitioners were directed to advertise the winding-up order in specified newspapers, and the official liquidator was instructed to take necessary steps in accordance with the Companies Act, 1956. The costs of the petition were to be borne by the company.
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