9911796707
TMI Blog1963 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the present valuation of lands and buildings at Cuttack and its suburbs and on the basis of the high cost of machinery, materials, stores and other articles in the market in India, the present value of the land, buildings, machinery, materials and stores appertaining to the company's undertaking at Cuttack would be ₹ 80 lacs or thereabout. The authorised capital of the company is ₹ 10 lacs divided into one lac shares of ₹ 10/- each and the issued share capital is 66,014 shares of the value of ₹ 6,60,140/-. The amount of capital paid up or credited as paid up is ₹ 6,60,040/-. Octayius Steel and Company Limited previously were the Managing Agents and at present is the Secretary and Treasurer of the company. 2. The main ground upon which the petitioner seeks to have the company wound up is set out in paragraph 11 of the petition : ............the main object and the sole under. taking of the Company has all along only been to generate and supply electric energy at Cuttack. By the Government of Orissa purchasing the undertaking of the Company, the substratum of the Company is gone. There is no other business in which the Company is eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd fitters, mechanical engineers, metal-workers, colliery-owners, ship-owners and shipbuilders, tramway owners, manufacturers of any commodity in the manufacture of which electricity is employed or any other business which can be conveniently carried on in connection with any business which the Company is authorised to carry on, or which may seem to the Company calculated, directly or indirectly, to benefit this Company, and to acquire and carry on all or any part of the property or business, and to undertake any liabilities of any person, firm, association or company possessed of property, suitable for any of the purposes of this Company, or carrying on any such business as aforesaid, and as the consideration for the same to pay cash or to issue any shares, stocks, or obligations of this Company. 3 (12). To purchase or otherwise acquire and undertake all or any part of the business, property, and liabilities of any person or corporation carrying on any business which the Company is authorised to carry on or possessed of property suit-table for the purposes of the Company. 5. The principal argument on behalf of the petitioner is that the predominant object of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly held. The said two resolutions were proposed, seconded and carried unanimously. The petitioner did not attend the said meeting. The two resolutions unanimously carried at the Extraordinary General Meeting of the share-holders were these : Resolution No. 1. That the Directors be and they are hereby authorised to sell the undertaking of the Company to the Governor of the State of Orissa (subject to the right of the said Governor to direct that the said undertaking and possession thereof be transferred to the Orissa. State Electricity Board) for such sum as shall represent in the opinion of the Directors and of the said Governor the market value of the said undertaking or, in the absence of agreement between them, for such sum as may be determined by arbitration as representing such market value. Resolution No. 2. That the whole or any part of any sum that may be received by the Company in respect of the purchase price of its undertaking may be utilised by the Directors in their sole and absolute direction for the purpose of establishing, developing and maintaining any business which the Company is, by its Memorandum of Association, authorised to carry on. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether failure in 1929 to acquire the business of generating and supplying electric energy at Cuttack would have destroyed the substratum of the company. It might possibly have been thought that unless it got this business it was not really starting its career in the way in which the share-holders bargained it should be started. But the question we have to decide here is whether, that business having been acquired 34 years ago, the sale of it this year in the circumstances aforesaid amounted to a destruction of the substratum. In my opinion, the main and paramount object of this company was to carry on a business of electric light and power company in all its branches (of a general kind) as per Sub-clause (5) quoted above. It was one such type of business that was so long being carried by the company since 1929. This memorandum cannot be construed as limiting the paramount object and restricting the contemplated adventure of the shareholders to the carrying on of the business of generating and supplying electric energy at Cuttack only. The impossibility of applying such a narrow construction appears to be manifest when one remembers the observations of Lord Greene, M.R. in In Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at as soon as the company's undertaking was sold to the Orissa Electricity Board as aforesaid, the substratum of the company had gone. 11. Therefore, the position must be looked at on the footing that the main and paramount object of the company is to carry on a business of an electric light and power company in all its branches. All that the Resolution No. 2, unanimously passed at the Extraordinary General Meeting, empowers the company to do is that the whole or any part of the sale proceeds may be utilised for the purpose of establishing, developing and maintaining any business which the company is, by its memorandum of association, authorised to carry on. Thus it is clear that the resolution does not go beyond the objects for which the company was established. In fact, the company's agreement with the Government of Orissa for sale was not entered upon until March 29, 1963 that is after the share-holders had approved of the sale to the State of Orissa by Resolution No. 1 in the Extraordinary General Meeting held on December 28, 1962. So the agreement was entered into with the consent of the share-holders. The share-holders by Resolution No. 2 also consented to the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he framework of its memorandum of association and articles of association. In the explanatory note to Resolution No. 2 it is made clear that as it is not proposed to put the company into liquidation after disposing of its undertaking and as there will be available surplus funds, it is suggested that the company should embark on other activities authorised by its memorandum of association, and for this purpose the necessary consent of the share-holders was obtained at the meeting. 14. It is not that the company is suffering from any financial disability. In fact there is no financial disability which would prevent the company embarking on other activities authorised by its memorandum of association. The company is perfectly solvent; it has at present a total capital amounting to 31.5 lacs as aforesaid. It is in position to embark on other activities authorised by its memorandum of association and to continue such business within the primary object defined in its memorandum of association. 15. The fact that there is no concrete scheme before the Court for dealing with the proceeds of sale is no ground for making a winding up order. The common sense of the matter demands that ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranches within the area authorised by Sub-clause (i) of Clause 3; it cannot be said that the substratum of the company is gone merely because it sold its undertaking at Cuttack. 18. In view of my finding that the substratum of the company has not disappeared by reason of the sale of its undertaking at Cuttack to Orissa Electricity Board, it is unnecessary to deal with the other points raised by the respective parties in course of hearing of this matter. 19. As regards alleged suspension of business for one whole year from February 1, 1962 as a ground for winding up, this ground was not taken in the petition presented on February 13, 1963. The petitioner cannot be allowed to go beyond the statements contained in his petition. The petitioner is confined strictly to the grounds expressly taken in the petition; he is not permitted to extend or enlarge upon the grounds taken in the petition. That apart, even on merits this ground is wholly untenable. The company had to make over possession of the undertaking on February 1, 1962 as a result of the order of the Court in the writ petition O. J. C. No. 31 of 1962. On February 13, 1963 when the winding up petition was presented the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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