9911796707
TMI Blog2010 (2) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Rao, J. - This appeal is filed under section 483 of the Companies Act, 1956 read with Clause 15 of the Letters Patent, aggrieved against the orders of the learned Single Judge in Company Petition No. 2 of 2007, dated 24-4-2009 dismissing the petition filed by the petitioners herein under section 433( c )( f ) and ( g ) and section 439 of the Companies Act, 1956 read with Rule 9 of the Company Court Rules, 1959 seeking for winding up of the company under the provisions of the aforesaid Act. 2. Heard Sri S. Ravi, learned Counsel for the appellants and Sri V.S. Raju for the respondent-company and at their request the main appeal itself is taken up for disposal at the admission stage. 3. In the application filed by the appellants for winding up, the case of the petitioners was that having regard to the nature of the affairs which are not satisfactory, company needs to be wound up. It was alleged that the respondent-company was incorporated on 4-12-1971 for the purpose of carrying on the business which was run by a partnership firm under the name and style of "Pressteels Fabrications". The first petitioner who was the partner in the earlier firm later became a Director wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was sold for a nominal sum of Rs. 13.16 lakhs. Under these circumstances, the appellants/petitioners have approached the Company Law Board under sections 397 and 398 of the Companies Act, 1956 making various allegations of suppression and mis-management, however, the said petition was disposed of by an order dated 28-1-2003 directing the company to allot proportionate shares to the appellants. The appeal filed against the said order in CP No. 13 of 2003 before this Court was dismissed and same was confirmed by the Supreme Court. Still there was no improvement, hence it needs to be wound up. 4. Contesting the application, the case of the respondent-company was that the petitioners have not come out with true facts and circumstances and suppressed many earlier proceedings inter se. Initially the company had acquired Ac. 4.30 guntas of land at Fathenagar in Ranga Reddy District for the purpose of the aforesaid business and the petitioners who were allotted due shares i.e., the first petitioner initially was allotted 300 shares of Rs. 100 each and later 1107 bonus shares were allotted, as per his entitlement. He acquired further 412 shares through transfer from Smt. Raghavam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the instance of the first petitioner/the orders of the Revenue Divisional Officer were set aside and the orders of the Mandal Revenue Officer were restored. A writ petition was filed in WP No. 8780 of 2004 challenging the orders of the Joint Collector dated 3-5-2004. The company has filed another suit in OS No. 67 of 2001 and obtained an injunction restraining the first petitioner from interfering and the said suit was decreed on 3-3-2008. The appeal filed by the first petitioner is pending. Another suit in OS No. 241 of 2003 was filed before the Civil Court at Gudiwada for recovery of Rs. 85,609 against the first petitioner and the same was decreed, against which an appeal was filed by the first petitioner and the same is pending on the file of the District Court. Therefore, in view of these checkered events and the proceedings which have been suppressed by the petitioner, there are absolutely no bona fides, hence, there exist warrant nor any justification for winding up and sought for dismissal. The learned Single Judge after taking into consideration the rival submissions and the scope of provision under section 433(1) of the Companies Act, 1956 vis-a-vis the principles l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1980 and later he ceased to be in the said post of Director with effect from 20-6-1984. In the suit referred to above in OS No. 174 of 1986 which was filed by the first petitioner himself seeking for recovery of an amount of Rs. 18,45,280 towards the final payment after completion of the work to which he was entitled to, wherein a compromise decree was passed on 8-7-1988 for an amount of Rs. 16,78,763. Complaining that the said amount has not been paid, the first petitioner laid execution petition and the same was dismissed after contest by the Court orders dated 11-10-2006. 8. The petitioners have filed an application under sections 397 and 398 of the Companies Act in CP No. 27 of 2002 before the Company Law Board, against the company raising several contentions, which was ultimately disposed of as per the orders dated 28-1-2003 with a liberty to the petitioners to opt for additional shares as they are entitled as on 30-6-2001 and the company would give the liberty of inspection of the records and the balance sheets to them in accordance with the provisions of the Act. Not satisfied, the petitioners have filed an appeal in Company Appeal No. 13 of 2003 in this Court and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The entire gamut of the petitioners case in the present application is the case of mismanagement. It has been alleged that the company has not been carrying on any business from the year 1994 and there has been delay in filing reports without any explanation with a view to create the false records. Further, from the year 1995-2005, the company did not execute a single contract and the reason alleged was paucity of funds and bad market conditions. Therefore, apart from the litigation with which the company is faced, there is absolutely no activity on its part and no business is carried on for the past decade. The annual reports would indicate the financial position and its irregularities. Therefore on a reading of the application filed by the petitioners seeking for winding up of the company, the basis is the vague allegation of mismanagement. No specific averment or details are made out showing the incidents. Nothing has been shown as to any serious lapse or such irregularities having a direct impact on the very business or its activities much less on the finance of the company. Curiously, there is no proper reference or any explanation to those earlier litigations and the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne hand and the Company. The Company itself has laid bare the mal-intentions of the petitioners. There were suits filed by the Company against the Petitioners, which were decreed, upon contest. Therefore, all that one can say is this "all is not well between the Company and the petitioners herein". It could be a case of loss of confidence of the petitioners in the affairs of the Respondent-Company being managed by the present set of Directors. To dispel the misgivings entertained by the petitioners, the learned Counsel for the Respondent-Company has filed a Memorandum in this matter pointing out that the Respondent-Company has received a sum of Rs. 8,45,631 for the works executed by it from M/s. KCP Projects Limited, during the financial year 2007-08. It is therefore, difficult to assume that the total substratum of the Company has been lost out or eroded. Further, the Respondent-Company was shown paying Income-tax for the past few years, thus, indicating that the expenditure booked by it in its books of account towards staff salaries and the fee paid to the professional services secured by it, is not an act of auditing gimmick or artificial booking of an expenditure, but, a real a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials to show when the just and equitable clause is invoked, that it is just and equitable not only to the persons applying for winding up but also to the company and to all its shareholders. The company Court will have to keep in mind the position of the company as a whole and the interest of the shareholders and see that they do not suffer in a fight for power that ensues between two groups. When more than one family or several friends and relations together form a company and there is no right as such agreed upon for active participation of members who are sought to be excluded from management, the principles of dissolution of partnership cannot be liberally invoked. Besides, it is only when shareholding is more or less equal and there is a case of complete deadlock in the company on account of lack of probity in the management of the company and there is no hope or possibility of smooth and efficient continuance of the company as a commercial concern, there may arise a case for winding up on the just and equitable ground. In a given case the principles of dissolution of partnership may apply squarely if the apparent structure of the company is not the real structure and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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