9911796707
TMI Blog1948 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. At an extraordinary general meeting held on 1st November, 1930, one Manabendra Mohan Kundu Chowdhury, who was one of the promoters of the company, and one J.N. Roy were appointed joint managing directors of the company. In May, 1931, a site for the factory was purchased at Mohiary in the district of Howrah and in August, 1931, a factory was erected on that site. Manabendra states that he advanced a large sum of money for the purchase of the site and erection of the factory, and for starting and continuing the work of the factory. He claims to be a creditor of the company in the sum of Rs. 5,24,651. The petitioners alleged that the company had a precarious existence from 1930 to July, 1944, when the affairs of the company came to a deadlock due to the inefficiency and mismanagement of Manabendra and J.N. Roy. Indeed a winding-up petition is said to have been pending against the company at that time. Be that as it may, Manabendra is said to have approached the firm of Motilal Murarilal Co., of which the petitioner Murarilal is a partner, to take up the management of the company and since about July-August, 1944, Manabendra and J.N. Roy ceased to function as managing direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 27th September, 1946, a board meeting is said to have been held. That meeting was attended by Manabendra, M.N. Roy and Anil Ghatak. By a resolution said to have been passed at that meeting, Manabendra was authorised to supervise the work of the mills and the office and to operate on the banking account under article 196. A copy of the minutes of that meeting is annexed to Manabendra's affidavit. On 8th October, 1946, Motilal Murarilal Co., the managing agents executed a power-of-attorney in favour of Baseswarlal Kalanaria delegating to him all the powers of the managing agents in terms of article 189 and Kalanaria claims to have since been in possession of the mills and the office of the company and looking after its interests. On 26th November, 1946, another board meeting was purported to be held and several resolutions were purported to be passed at that meeting which was attended by Manabendra, M.N. Roy and Anil Ghatak. H.D. Garodia is said to have attended the meeting but to have refused to record his attendance by signing the minutes and to have left the meeting after a while. One of the resolutions passed at that meeting authorised Manabendra as the director in charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mill premises were attached by the Police on 14th March, 1947. This case was, however, subsequently dismissed and the attachment was withdrawn on 13th May, 1947. In the meantime, on 25th March, 1947, one Shiva Prosad Chakravarty, a former managing director of the company, presented before this Court a petition for winding-up of the company. On the presentation of the petition the Court fixed the hearing of that petition on 12th May, 1947, and directed a copy of the petition together with a copy of that order to be served on the company at its registered office and also directed advertisements to be published once in the Calcutta Gazette, once in the Statesman and once in the Ananda Bazar Patrika. As there was some difficulty in publishing the advertisement in the Statesman, Edgley, J., modified the direction by directing advertisement to be issued on or before 30th April, 1947, in the Amrita Bazar Patrika instead of the Statesman. The advertisements were duly published in the Calcutta Gazette, Amrita Bazar Patrika and Ananda Bazar Patrika. An affidavit affirmed by one Amulya Dhone Ghose, a clerk in the employ of Shiva Prosad's attorney, was also filed stating that on 18th Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor had been paid his dues by another creditor, Dulichand, and would not proceed further in the matter of obtaining possession or otherwise. On 20th May, 1947, the present summons was taken out for setting aside the winding-up order made on 15th May, 1947, or for staying that order altogether and for revoking the appointment of the official liquidator. The matter came up for hearing before Edgley, J., on 17th July, 1947, when the learned Judge made an order under section 173 of the Companies Act staying the winding-up order pending the decision of Suit No. 17 of 1947 filed by Murarilal and Kalanaria on 2nd January, 1947, upon certain terms and appointing Mr. Banerjee, who had been previously appointed as liquidator, as the receiver of the East India Cotton Mills. The petitioners being aggrieved by the appointment of Mr. Banerjee as receiver preferred an appeal from that order. The appeal Court, I am told, held that the application was not maintainable as neither Mr. Banerjee nor the official receiver as the official liquidator had been made a party and remanded the application to the Judge taking the company list. The petitioners have, thereafter, on 5th December, 1947, tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt to probe into the motives of Manabendra and make any observation bearing thereon which may prejudice either party therefore, confine myself to those matters which, I conceive, are vitally and strictly relevant for the purposes of this application. Of the two petitioners before me one, namely, Murarilal, claims to be a shareholder and director of the company. This claim is disputed by Manabendra who says that Murarilal after being appointed director did not acqire the qualification shares and his name does not appear in the register of members. Muararilal alleges that he acquired 100 shares from Shiva Prosad shortly after his appointment as a director and that later on at a board meeting held on 1st June, 1946, at which Manabendra was present, the transfer of 100 shares to Murarilal was approved and passed by the board as is evidenced by the minutes signed by Manabendra which have been produced before me. Notice of board meetings have been always given to him and he also attended the extraordinary general meeting of shareholders held on the 20th January. 1945. The other petitioner Dulichand claims to be a creditor, of the company in the sum of about Rs. 90,000. In the balance s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for hearing and notice of the filing of the affidavit is to be given to the petitioner or his attorney on the day it is filed. If this requirement is not complied with, the affidavit, unless the Judge otherwise directs, cannot be used on the hearing. If the proceedings on a petition for winding up be compared to proceedings in a suit the advertisements fulfill the purpose of service on all creditors and contributories who may desire to come in and be made a party, the notice of intention to appear on the hearing serves that of entering appearance by the defendant and the filing of the affidavit that of filing the written statement. It is by giving notice of intention to appear that a creditor or contributory becomes a party to the proceedings for winding up (see the observations of Lindley, L.J., in course of the arguments in In re Securities Insurance Company [1894] 2 Ch. 410, at p. 411. By the giving of the notice the name of the creditor or contributory comes on the record and it is' only when the name comes on the record that he becomes a party to the proceedings (see Biswambhar Biswas v. Nilambar Murari [1929] 33 CWN 997, at p. 999). In this case on the presentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an order for a winding-up is a "judgment" within clause 15 of the Letters Patent and, therefore, satisfies one of the conditions of appeal ability laid down by the section but this application cannot possibly be regarded as an appeal, for, omitting for the moment the capacity of the petitioners to maintain an appeal, which question will be discussed later on, it is quite clear that this application has not been initiated or brought before the appropriate Court in the manner prescribed for an appeal. The question, then, is: Can this application be supported as a re-hearing of the order of Edgley, J.? It is suggested, on the authority of the notes under section 202 in Sen and Sarker's Commentary on the Companies Act, that the plain meaning of the word "re-hearing" is hearing again which implies hearing by the same tribunal which had heard it before and that this rehearing is in the nature of a review and not an appeal. The language of the section, however, makes it difficult to adopt this line of argument. It will be noticed that the marginal note to the section is only "appeals from orders" and that the section makes no distinction between "re-hearing" and an appeal either as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same manner and subject to the same conditions in and subject to which appeals may be had from any order or decision of the same Court in cases within its ordinary jurisdiction, subject to this restriction, that no such re-hearing or appeal shall be heard unless notice of the same is given within three weeks after any order complained of has been made, in manner in which notices of appeal are ordinarily given, according to the practice of the Court appealed from, unless such time is extended by the Court of appeal: Provided that ." I omit the proviso which related to the Lord Warden of the Stannaries with which we are not concerned. It will be noticed that with the exception that for" the words "any Court having jurisdiction under this Act" occurring in the English section we had the word "the Court" in our section 141 and that for the reference in the English section to the practice of the Court appealed from as regards the manner of service of the notice of appeal reference was made in our section to the Code of Civil Procedure and that the proviso at the end of the English section was omitted from our section, our section 141 reproduced verbatim section 124 of the English Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Nazire Company [1879] LR 12 Ch. D 88 , Jessel, M.R., at page 98 observed as follows: "Now, part of the old jurisdiction of the Lord Chancellor was a right to re-hear his own decisions, or decisions of a preceding Lord Chancellor; and similar powers passed under the statute to the Master of the Rolls and the Vice-Chancellor, and they also had a right to re-hear their own decisions and the decisions of their respective predecessors. At first that was an unlimited right, as I said before; it was afterwards limited by general order to twenty years, and finally to five years and that existed down to the time of the passing of the Judicature Act. Now, what was that right of re-hearing? Was it original jurisdiction, or was it appellate jurisdiction? There can, as it seems to me, be but one answer to that question it was appellate jurisdiction. No doubt it sometimes was an appeal from a Judge to himself, but it was much more, frequently an appeal from a Judge to his successor. One of the very first cases heard before Lord Lyndhurst was a re-hearing of a case before Lord Eldon, whose decision he reversed. In fact, the hope of every appellant was founded on the change of the Judge. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinary jurisdiction." I omit sub-sections (2), (3) and (4) of that section which deal with orders or judgments pronounced in Scotland. This section has now been replaced by section 224 of the present English Companies Act, 1929. Section 224 (1) is in the terms following: "Subject to the provisions of this section and to rules of Court an appeal from any order or decision made or given in the winding-up of a company by the Court in Scotland under this Act shall lie in the same manner and subject to the same conditions as an appeal from any order or decision of the Court incases within its ordinary jurisdiction. It is not necessary for my present purpose to refer to the other subsections of this section. The present English section does not provide for appeal from an order made by the High Court in England but that makes no difference, for such appeal is permitted under the rules of the Supreme Court read with rule 224 of the Company rules. The important thing to note, however, is that the expression "re-hearing" is not to be found in the English Act of 1908 or 1929. As pointed out by Jessel, M.R., after the Judicature Act, 1873, there could be no rehearing, in the sense of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf the expression "re-hearing" as used therein clearly means proceedings in the nature of an appeal. If this application, in so far as it prays for the setting aside of Edgley, J.'s order, is to be regarded as a "re-hearing" within the meaning of the section, I as the successor Judge, taking the company list, which was taken by Edgley, J., have no jurisdiction to entertain it, for, according to the section, such re-hearing is to be had in the same manner and subject to the same conditions in which an appeal is to be had from an order made by Edgley, J., in a case within his ordinary jurisdiction and such a re-hearing will have to be initiated on a memorandum of appeal and taken to the Division Bench appointed to hear appeals from the Original Side. Even if this application could be treated as a re-hearing in the nature of an appeal within section 202 and if I, as the successor company Court, could entertain it, there still remains the question whether the petitioners or either of them are or is essential to maintain it. The right of appeal is the creature of-statute. Nobody has any inherent or natural right of appeal. Even a party to the proceedings in which the impugned order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors was held pursuant to the directions of the Court to consider the scheme. The appellants attended the meeting by proxy but did not vote and did not attend at the hearing to oppose the sanction of the scheme. The scheme was sanctioned by the Court. The appellants appealed from the order sanctioning the scheme. The objection that the appellants, not being parties to the proceedings, could not appeal without leave of the Court was upheld by the Court of Appeal. In Rustomji v. Official Liquidator of the Peoples and Amritsar Banks Ltd [1919] 49 IC 381 , the Court sanctioned a scheme. The appellant did not comply with rule 58 of the rules framed by the Chief Court and had not entered his name in the book kept for the purpose and had not in fact attended the proceedings resulting in the order sanctioning the scheme. It was held that the appellant not having qualified himself to attend the proceedings and not having been a party to the proceedings before the trial Judge had no locus standi to appeal. In the case, Natore Kamala Bank Ltd. [1937] ILR [1937] 1 Cal. 368 , the company proposed a scheme and a meeting of creditors was held under the directions of the Court. The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding up of the company and appointed a liquidator. By reason of default in making the deposit in full the registration of the company was cancelled. A committee of inspection was appointed under section 209( c ) of the Companies Act. That committee submitted a scheme of reconstruction. The Court gave directions for convening a meeting of creditors and policy-holders. The Superintendent of Insurance applied for winding-up. After certain proceedings which need not be detailed the liquidator applied for sanction of the scheme. Notice of this application was served on the Superintendent of Insurance. The Superintendent of Insurance opposed the scheme. The Court, however, sanctioned the scheme. Later on the Court ordered the Reserve Bank to make over to the liquidator the securities held by it as deposit in the name of the company. The Governor-General in Council who was not a party before the lower Court and the Superintendent of Insurance on whom notice was given and who appeared in the lower Court filed the appeal. Two preliminary points were raised, namely, that the order was not appealable and that the appellants had no right to maintain the appeal. It was held that the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company in the manner and subject to the same conditions in and subject to which an appeal could be had from any order made by the same Court in cases within its ordinary jurisdiction subject to the restriction as to the service of notice within a specified time and in the manner in which notices of appeal were ordinarily given according to the practice of that Court. By the reference to the "manner" the section expressly attracted the practice of the Court which in company matters was the Chancery Court. As pointed out in Securities Insurance Co.'s case's ( supra ), the Chancery Practice was that a stranger who was adversely affected by an order could appeal only with leave of the Court. That practice by section 124 of the English Act of 1862 received statutory recognition in respect of re-hearings and appeals from an order made in the winding-up and gave a statutory right of re-hearing and appeal from such order to such a stranger subject to his obtaining the leave of the Court, But in our section re-hearings of and appeals from an order made in winding-up can be had in the same manner and subject to the same conditions as an appeal may be had from an order made in a case withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil suits by the Code of Civil Procedure Act (VIII of 1859). Power was reserved to the Indian Legislature to make rules relating to Civil Procedure These Letters Patent were replaced by the Letters Patent of 1865, which are still in force. Under clause 19, the law or equity to be administered by the High Court in exercise of its Ordinary Original Civil Jurisdiction remains the same as under clause 18 of the Letters Patent of 1862. Clause 37 of the Letters Patent of 1865 is headed "Civil Procedure" and empowers the High court to make rules and orders for the purpose of regulating all proceedings in civil cases which may be brought before the High Court, provided that in making the rules and orders the High Court shall be guided by the provisions of the Civil Procedure Code, 1859, and any modification thereof by competent legislative authority for India. Our Civil Procedure is now regulated by the Code of 1908 and various rules framed by the High Court. I am not aware of any general provision anywhere, and none has been brought to my notice, which generally authorises the High Court to give leave to a person who was not a party to the proceedings to appeal from an order made on those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stranger. There is nothing in the Code or the rules giving any such right to a stranger or giving the High Court any general power to give leave to a stranger to appeal. The right of appeal is a creature of Statute and in the absence of any express statutory provision it does not appear to me to be logically correct to hold, as was held by Lort-Williams, J., that such a right exists in a stranger in respect of an order made in the winding-up of a company. After, however, registering my respectful dissent from the views of that learned Judge, I find myself faced with a more formidable difficulty, namely, the decision of the appeal Court in Light of Asia Insurance Co.'s case [1942] 46 CWN 441; 13 Comp. Cas. (Ins.); 123 . With the observations of Nassim Ali, J., in that case regarding the locus standi as appellant of the Superintendent of Insurance who was served with notice and appeared at the hearing and thus became a party thereto I respectfully and entirely agree. I shall not disguise the fact that I find it difficult to express my concurrence with his Lordship's observations regarding the right of appeal of the Governor-General in Council who was not a party to the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solvency jurisdiction." There is no such provision in the Companies Act. Section 90 of the Presidency Towns Insolvency Act provides that in proceedings under the Act the Court shall have the like powers and follow the like procedure as it has and follows in the exercise of its Ordinary Original civil Jurisdiction. There is similar provision in section 5 (1) of the Provincial Insolvency Act. There is no corresponding provision in the Companies Act expressly attracting the rules of procedure laid down in the Code of Civil Procedure or the rules. The only way to attract the rules of procedure is to fall back upon section 141 of the Civil Procedure Code. Even if, by this process, the provisions of the Code are attracted it has to be seen whether those provisions can support this application as a review. Review is regulated by Order 47 of that Code. Although rule 1, sub-rule (1), of that Order opens with the words "any person considering himself aggrieved" the provisions of that sub-rule as also those of sub-rule (2) make it clear that it is a "party" who alone can apply for a review and a stranger to the proceedings cannot comein. In the next place review can be allowed only on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings. Palmer, I., at page 132 cites the case of Lyric Syndicate Lid. [1849] 1 De. G Sm.744 , to which I have referred earlier, apparently with approval. Learned counsel for the petitioners relies strongly on the case of Ex parte Barnett [1900] 17 TLR 161 , as showing that an ex parte winding-up order could be set aside on the application of contributories who had not appeared at the hearing. The observations of Knight Bruce, V. C., clearly indicate that there was no satisfactory compliance with the provisions as to service required under section 10 of the Winding-up Act of 1848. That case may, therefore, be supported, if at all, on the peculiar facts of that case showing suppression of service and of material facts amounting to fraud practised on the Court and on the Chancery practice of re-hearing by a Judge of his own decision or that of his predecessor. If, however, the analogy of Order 9, rule 13, is applied it is only the party against whom the order is made ex pane who may apply to have it set aside and he may do so on proof of certain things. As I have explained neither of the petitioners was a party to the proceedings before Edgley, J. The advertisements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Cotton Mills Ltd." on his copy of the daily cause list for four days running. There is no affidavit from Mr. P.K. Bose. I am not suggesting that the knowledge about the pendency of the winding-up petition of Mr. P.K Bose who is attorney of the petitioners in the suit can in law be imputed to the petitioners in the winding-up matter but it certainly has a bearing on the probability of actual knowledge of the petitioners and their constituted attorney of that fact. Murarilal was in jail but he filed his suit while he was there. According to the petitioners on the death of Motilal Garodia there was no dissolution of the firm of Managing Agents and the heirs of Garodia became partners. There was also N.N. Movani, another partner. There was Kalanaria, the constituted attorney. It is somewhat improbable that persons carrying on business as Managing Agents of a cotton Mill do not read the daily newspapers in which company notices are usually published and that none of them had any knowledge of the advertisements published in the Amrita Bazar Patrika or Ananda Bazar Patrika or the Calcutta Gazette. Further, the alleged non-service of the petition on the company, as to which more will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that case the Official Liquidator wrote a letter to the District Judge intimating that he had received an offer for a certain property of the company and recommending its acceptance. After a personal interview with the Official Liquidator the District Judge passed an order permitting the Official Liquidator to sell the property at the price offered upon some condition as to deposit of money by the intending purchaser. There was no application or any Court proceeding on which this order was made. It was made as a purely administrative order. Then the former manager of the company presented a petition stating that the price offered was grossly low and brought an offer for a very much higher sum. The District Judge then directed notice to be given to all parties including the former intending purchaser and after hearing all of them passed an order on the application annulling the previous sale and directing sale to the second intending purchaser. The first purchaser appealed. As I had said the first order for sale was an administrative order. The second order was on a petition on notice to all persons interested and one of such persons appealed. I fail to see how this case helps th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have these petitioners apart from the fact that they do not read particular newspapers in which the advertisements of the date of hearing of the petition were issued? Here I am pressed with what has been euphemistically called the background of facts which in plain words may be called matters of prejudice. It is said that finding that the company had attained considerable success Manabendra began to attempt to get back control and with that end in view called bogus meetings of directors and shareholders and purported to pass illegal resolutions and he wrongfully took recourse to police proceedings. As I have said those matters will be gone into in the suit filed by the petitioner Murarilal and Kalanaria and I do not consider it right to express any opinion on the charges and counter-charges made by them. It is then said that being baffled in those attempts Manabendra procured Shiva Prosad to make the winding-up application, that it was not a bona fide application but had been engineered by Manabendra and that by suppressing the service of the petition on the company Manabendra has procured the winding-up order. This leads me to look into the circumstances in which the petition c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hiva Prosad? This is all improbable. To proceed, Shiva Prosad presented his petition to the Court on the 25th March, 1947, when the Court fixed the hearing for the 12th May, 1947, and gave directions for advertisements and for service on the company. As there was some difficulty in getting in the advertisement in the Statesman, Edgley, J., modified the directions by substituting Amrita Bazar Patrika for the Statesman. Advertisements were duly published in the Calcutta Gazette, Amrita Bazar Patrika and Ananda Bazar Patrika as stated in the affidavit of compliance affirmed by Amulyadhone Ghose, a clerk in the employ of Shiva Prosad's attorneys. That affidavit also proves service of the petition on the company on the 18th April, 1947, at its registered office where the copy petition and the order were left with one Ram said to be an employee of the company. If Ram was a servant of the company as alleged it was proper service on the company under rule 56 of our Company rules as well as Order 29, rule 2, of the Code. Manabendra as a creditor on the 9th May, 1947, under rule 58 gave notice to Shiva Prosad's attorneys of his intention to appear and support the application. The matter appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petition was not served on the managing agents there is not a word in the petition that the company had no servant of the name of Ram which name was specifically mentioned in the affidavit of service affirmed by Amulya Dhone Ghose. Shiva Prosad and Amulya Dhone Ghose have filed two affidavit-in-opposition to the present application. Amulya reiterates that he went to the registered office and found Ram who was a servant of the company and left the copies with him. It is only in the affidavit in reply that the petitioners for the first time say that the company had no servant of that name. Learned counsel for the petitioners tells me that the pay book of the company will show and Murarilal is prepared to go into the box and swear that the company had no servant called Ram and pressed me to set down the application for trial on evidence if necessary. The petitioners have taken no steps to get the company's pay book to be produced before me. On the other hand learned counsel for Manabendra has caused to be produced an affidavit by one Sri Ram Singh, an employee of the company, affirmed on the 21st January, 1947, and prepared in the office of the petitioner's attorneys and filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the petitioners cannot make the alleged non-service of summons on the company a ground for now attacking the order when the public advertisements meant generally for creditors and contributories were duly published. I have not known of a case where, at the instance of a defendant, who has been properly served but did not appear, an ex parte decree has been set aside on the ground that the summons had not been duly served on another defendant. Order 9, rule 13, does not permit such a course. Again, if the non-service of the petition on the company went to the root of the jurisdiction of the Court to make the order that was a defence to the application on its merits which should have been urged at the hearing of the petition. I do not think it can be advanced at this stage. Mr. Hazra appearing for the company contends that the company is a party to this application, that it is virtually the company's application and that the company is entitled to have the ex parte order set aside on the ground of non-service of the petition. If on a winding-up order being made the company may appeal from it independently of the liquidator as shown by the cases of In re, Diamond Fuel Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and cannot be read as conferring on them power to institute proceedings in Court and certainly not to institute proceedings not connected with or not arising out of any actual and particular commercial transaction of the company. In this view of the matter, the company is not properly before me at all. Finally on the evidence before me I am not as I have said, prepared to hold that there was any suppression of service of the petition on the company. For reasons stated above this application, in so far as it asks for setting aside the order of winding-up, must be refused. In this application the petitioners also pray for the stay of the winding-up proceedings under section 173 of the Companies Act. This section comes into play after an order for winding-up has been made. It presupposes a good and valid winding-up order. In an application under this section, there can be no question of attacking the order. Any creditor or contributory may make an application under this section. Therefore, each of the petitioners is fully qualified to maintain this application in so far as it is one under this section. The company, however, independently of the liquidator, does not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iders not only whether what is proposed is for the benefit of the creditors, but also whether the stay will be conducive or detrimental to commercial morality and to the interests of the public at large. In particular, the Court will have regard to the following facts: That directors have not complied with their statutory duties as to giving information to the official receiver or furnishing a statement of the affairs; that there has been an undisclosed agreement between the promoter and the vendor to the company as to the participation by the former in fully paid up shares forming the consideration for the purchase of property by the company on its formation; that the promoter has made gifts of fully paid up shares to the directors, that there are other matters connected with the promotion, formation, or failure of the company or the conduct of its business or affairs, which appear to the Court to require investigation. The same principles are apparently applicable whether the company has or has not invited the public to subscribe for its shares except, possibly, in the case of a private company, where all the shareholders have full knowledge of what has been done."This summary of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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