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TMI Blog1982 (11) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interests of the general body of the shareholders and, finally, that the financial position of the company is deteriorating at quite a fast pace and this has raised a grave apprehension in the minds of the shareholders and creditors of the company. It is alleged that the company has even exceeded the maximum borrowing power which, according to the resolution of the company, is Rs. 1 25 crores. It is well settled that a prima facie case has to be made out before the court can take any action in the matter. Even admission of a petition which will lead to advertisement of the winding-up proceedings is likely to cause immense injury to the company if ultimately the petition has to be dismissed. In view of that, the proceedings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pite of a statutory notice of demand dated April 30, 1979, issued and received by the company, the said amount has not been paid. It is further alleged that the petitioner also holds deposit to the extent of Rs. 1,30,000 in the company and in spite of repeated demands, the company has failed to repay the said debts. It is also stated in the petition that the company has reached a stage where it is plainly and commercially insolvent as against the capital of Rs. 21,82,524, it is alleged that the company has incurred a net Joss of Rs. 17.20 lakhs during the year ending June 30, 1978. This loss is before providing for depreciation on fixed assets which comes to Rs. 5.25 lakhs, The turnover during the year June 30, 1978, has come down to Rs. 98 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It has, however, been stated that the said amount is subject to income-tax and the amount payable as such is less than Rs. 1 lakh. The ground of being unable to pay its debts does not survive any longer as the amount due to the petitioner already stands paid. This fact was not disputed. It was, however, submitted that a small amount of interest amounting to Rs. 3,000 or Rs. 4,000 still remains to be paid which amount is disputed. The learned counsel for the company had made a submission that the accounts can be settled, and if anything further is due, the same will be paid to the petitioner without any hesitation. In this situation, it cannot be said that the company is unable to pay its debts. The company has also explained the delay in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while at the same time the company was incurring fixed costs like payment of interest, salaries of staff and workmen, etc . The mini steel plant was restarted during the current year and has already made a sale of over Rs. 79 lakhs during the current year. Even after adjusting the losses referred to, the company, has a substantial reserve of nearly Rs. 14 lakhs in addition to its paid-up capital of Rs. 21.82 lakhs. During the period from July, 1978, to June, 1979, the company has carried out sales of about Rs. 1,85,00,000 as compared to the sales Rs. 98.28 lakhs only in the whole of the previous year. The sales of the current year have thus increased by 88% from that of the last year. It is also stated in the reply that the company is lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. " Admittedly, clauses ( a ) to ( e ) are not applicable in the present case and the only clause which remains is clause ( f ). Taking the position of the company as depicted above, the question for consideration is whether it can be said that it is just and equitable to wind up such a company. The Supreme Court in the case of Hind Overseas P. Ltd. v. Raghunath Prasad Jhunjhunwalla [1976] 46 Comp. Cas. 91 (SC) observed that the relief under section 433( f ) based on the just and equitable clause is in the nature of a last resort when other remedies are not efficacious enough to protect the general interests of the company. There must be materials shown for the "just and equitable "clause to be invoked, that it is just and equitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted has substantially failed, or ( c ) it is impossible to carry on the business of the company except at a loss which means that there is no reasonable chance that the object of trading at a profit can be attained, or ( d ) the existing and probable assets are insufficient to meet the existing liabilities. When none of the aforesaid tests can be applied to the facts of a particular case, the company cannot be wound up. I have given my careful consideration in the light of the aforesaid tests laid down by Chagla J. Taking into consideration the balance-sheet filed by the company, particularly the balance-sheet and the profit and loss account for the period July, 1981, to June 1982, it cannot be said that the aforesaid tests are fulfilled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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