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TMI Blog1971 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... all 1,040 ordinary shares of Rs. 100 each. Their holding comes to a little over 50% of the total paid up share capital of the company. On March 20, 1969, this petition was admitted in respect of prayers except those relating to winding up, namely, prayers ( g ) and ( j ). At that stage, the counsel for the petitioners stated that for the time being he was not pressing the petition in so far as it related to winding up and that the petition was kept pending for winding-up order. On August 10, 1970, counsel for the petitioners stated in the court that the petitioners did not press for reliefs under sections 397 and 398 of the Act and have decided to proceed with the petition as if it was a petition for winding up only. After that date, this petition came up on board for admission for almost nearly a dozen occasions but on most of the occasions, for one reason or the other, by consent of the parties, it was adjourned from time to time. To-day it has come up finally for admission so far as it relates to prayers for winding up. It is unnecessary at this stage to refer in detail to the various allegations that are made in the petition and in the affidavits filed in reply. It is suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken at its face value, it is quite clear that the entire amount of share capital subscribed by the shareholders has been eaten away by accumulated losses. Thus, the balance-sheet shows that the company is carrying on the business only on borrowed loans by reason of carried forward losses. If, hereafter, further losses are incurred, the persons to suffer as a result of these losses will be the creditors of the company. The position will be worse if any of the assets shown on the assets side are either over-valued or unrealisable. One thing, however, is clear, that the aggregate carried forward losses for the period ending 30th June, 1970, are sufficient to wipe out substantially the whole of the capital subscribed and paid up by the shareholders and the amounts of reserves. As the entire share capital is eaten away by the accumulated losses, the risk in further carrying on the business is only on those who advanced loans to the company. My attention has also been drawn by Mr. Shah on behalf of the company to the trial balance-sheet of the company for the period ending June 30, 1971, which has been duly audited by the chartered accountants, but which has not been put before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the dissolution of a partnership. See Palmer's Company Law, 21st edition, page 739. It is one of the contentions of the petitioners in this petition that the petitioners have entirely lost confidence in the management of the company by respondents Nos. 2 to 5 and that it is impossible for them to carry on the business of the company with them. Prior to October 15, 1966, this company comprised of shareholders who belonged to the family of respondent No. 2. In or about October, 1966, an arrangement has been arrived at between the petitioners and respondent No. 2 and the members of his group under which each of the petitioners agreed to subscribe for 500 shares of the company at a premium of Rs. 20. There was also an understanding that petitioner No. 1 will be appointed as electrical engineer with a salary of about Rs. 1,100 and that petitioner No. 2 will be appointed as electrical engineer upon a salary of Rs. 900 per month. Besides this, each of the two petitioners also agreed to deposit a sum of Rs. 40,000 in the company which they have done. Within a short time, after the petitioners subscribed for the shares, differences and disputes have arisen between the two groups, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited companies are indefinitely postponed from time to time before they are even admitted or before even they are heard and finally disposed of. Undoubtedly, there was some delay on the part of the petitioners. This petition was accepted by this court in the month of April, 1968. However, it was only in the month of March, 1969, that it was admitted in so far as it related to the prayers germane to sections 397 and 398 of the Act, while it was kept pending in respect of prayers ( g ) and ( j ), which related to proceedings for winding up of the company. In the month of August, 1970, the petitioner made it very clear that they did not want to proceed with the petition in so far as it related to reliefs under sections 397 and 398 of the Act and they have decided to proceed with the petition as if it is a petition only for winding up of respondent No. 1-company. It is unfortunate that even though such a decision was taken as early as August, 1970, parties got this petition adjourned from time to time on numerous occasions and on most of the occasions it was adjourned by consent of the parties. The petitioners are, therefore, not solely to be blamed for the delay that has taken pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1969-70 the company has incurred a loss of about Rs. 48,667. Thus, the carried-forward losses as at June 30, 1970, come to about Rs. 2,27,682, while the carried-forward losses as shown by the trial balance-sheet as at June 30, 1971, come to about Rs. 2,23,240. The subscribed and paid-up capital of the shareholders consists only of Rs. 2,04,000. The reserves and surplus including the share premium amount and the development rebate is about Rs. 38,693. These figures, therefore, prima facie show that by reason of the carried-forward losses, the entire capital subscribed by the shareholders has been eaten away and the business of the company has to be carried on from the borrowed money. When such is the financial position disclosed by the balance-sheet of the company it is eminently desirable in the interests of the company and more so of the creditors of the company that they should know the real position qua their dealings with the company. In considering whether the petition should be directed to be advertised it is not only the interests of the company that have to be looked at. The interests of all the persons, who are vitally interested in the assets of the company, has not to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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