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TMI Blog1959 (1) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... fficial liquidator. The bank was established in the time of the erstwhile State of Tripura, who held 50 per cent. of the shares, and also had fixed deposits and current accounts, the amounts of which totalled at the time of filling this application at Rs. 1,32,118.06 nP. On the merger of the State with the Dominion of India in 1949, these shares and amounts of fixed and current deposits, which were the properties of the State passed to the Government of India, according to the terms of the merger agreement. On December 2, 1957, a demand in writing under the signature of the Chief Commissioner under instructions of the Government of India, was sent by registered post to the bank to pay the sum due for the fixed and current deposits, within three weeks, but the bank neglected to pay the same. It was further alleged that the financial position of the bank is extremely unsatisfactory and has been steadily deteriorating, and the bank had not done any new business for a very long time, and was incurring an expense of about Rs. 2,000 per mensem over the salary of the staff without any gain, and was also not in a position to pay the amount of deposits due to the public. Only one cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is again a substantial compliance with the Rules. Reliance was placed, in support of this contention of the opposing contributory, on the case reported in In the matter of Indian Companies Act, 1913 [1949] 19 Comp. Cas. 1 , but that case itself goes to show that though it is desirable that the rules and forms prescribed by the court should be followed, the court can in a proper case condone such mere irregularities. In the present case this objection came after the petition had been admitted. Looking to this and the fact that the office also did not raise any objection, I certainly think that this is a case, where the irregularities of such a nature ought to be condoned ( see also Davco Products Ltd. v. Rameshwarlal Sadhani AIR 1954 Cal. 195). The objection that it was necessary to comply with the provisions of sub-section (3) of section 38 of the Act of 1949, was rightly not pressed in the course of arguments, because it is obvious that that provision is an alternative one, and not in addition to the provisions of section 434 of the Act of 1956. That meaning is implicit in the words "without prejudice to the provisions contained in section 434 of the Companies Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act, 1913 [1949] 19 Comp. Cas. 1 and Bukhtiarpur Bihar Light Railway Company Limited v. Union of India [1954] 24 Comp. Cas. 507) . There is no doubt, on the basis of the material on record, that the Government has been controlling and supervising the bank in various matters, and it appears that certain remissions were allowed, payments not made, or transactions not entered into at their instance. But it is not necessary to consider that or whether this interference contributed to any extent towards the deterioration of the condition of the bank because this or the motive behind the application is entirely irrelevant and cannot be taken into consideration for the purpose of deciding the question, whether a case for winding up has been made out or not. What is relevant is whether there are sufficient materials to satisfy the court that the company is commercially insolvent and its substratum is gone (see Bachharaj Factories Ltd. v. Hirjee Mills Ltd. [1955] 25 Comp. Cas. 227 ) Section 434( c ) lays down that in determining whether a company is unable to pay its debts the court shall take into account the contingent and prospective liabilities of the company. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reasonable prospect of the bank recovering if allowed to go on, though it is nearly certain that expenses on account of staff etc ., will continue and thus pile up the losses. These expenses will be considerable when it is taken into account that the authorised capital is only 50 lakhs. It was urged on behalf of the opposing contributory, that this position could be got over by calling up the remaining amount due on the shares, and that will be a considerable amount. That amount should therefore be also taken into consideration when judging the question of the commercial insolvency of the bank, and reliance was placed for it on the case reported in New State of India Insurance Co. Ltd. v. Superintendent of Insurance, New Delhi AIR 1943 Lah. 109 . There can be no doubt that there is no absolute bar from taking the amount of such unpaid capital into consideration in judging the financial position of a company, but as observed in the case cited, while it is not possible to regard the entire unpaid capital as available to the creditors at its face value, it is equally wrong to leave it out of consideration altogether regardless of the position and solvency of the shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner is not only a creditor, but also the largest shareholder, and it is the concern of the shareholders to see that the company's substratum is not lost, and business is carried on at a profit. The circumstances in the present case clearly indicate that there can be no reasonable hope of the bank tiding over the difficulties in which it finds itself and carrying on the business at a profit, rather everything indicates that nothing but loss will be the result if it is not wound up. In these circumstances it will be only just and equitable to wind up the bank (see Vanaspati Industries Ltd. v. Firm Prabhu Dayal Hari Ram [1950] 20 Comp. Cas. 311, Davco Products Ltd. v. Rameshwarlal Sadhani AIR 1954 Cal. 195 , In re Cine Industries and Recording Co. Ltd. [1942] 12 Comp. Cas. 215 ) For the above reasons, I find that the bank has ceased to be "commercially solvent" and there being no reasonable hope of its being able to carry on the business at a profit in the near future, it is also just and equitable that it should be wound up. At a late stage, that is, on the date the arguments commenced, the learned counsel for the opposing contributory filed an application for being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r them. The contention advanced is, therefore, unsustainable, even if the shares are left out of consideration, because the local administration is certainly one of the creditors of the bank on account of the ownership of these deposits in the current accounts. Again, as was contended by the learned counsel for the petitioner, it is not open to the opposing contributory to raise this contention at this late stage, when it was not put in the pleadings, because it is a question which will involve an investigation of the necessary facts, before a decision can be given as to the ownership of these amounts. It is true that by the merger agreement the administration of Tripura was placed under the Dominion Government, and the very preamble and the second paragraph of article I which run thus: "Whereas in the best interests of the State of Tripura as well as of the Dominion of India it is desirable to provide for the administration of the said State by or under the authority of the Dominion Government." "As from the said day the Dominion Government will be competent to exercise the said powers, authority and jurisdiction in such manner and through such agency as it may think fit" ..... X X X X Extracts X X X X X X X X Extracts X X X X
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