Judgement

Appeal (No. 87 of 1936) from a decree of the High Court (April 29, 1935).

The appellant Syndicate was a company registered under the Indian Companies Act. The respondent, who was the holder of a single ordinary share in the Syndicate, presented a petition to the High Court for the winding-up of the Syndicate under the Indian Companies Act (VII. of 1913), s. 162, on the ground that the Syndicate was unable to pay its debts. In his petition he set out, from his point of view,

Law. Rep. 64 Ind. App. 143 ( 1936- 1937) Bharat Dharma Syndicate, Limited V. Harish C handra

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certain facts and particulars relating to the position and working of the Syndicate to support the allegation that the Syndicate was unable to pay its debts.

In an affidavit filed on its behalf the Syndicate denied that it was unable to pay its debts, and answered the allegations made by the respondent. The respondent, in reply, filed an affidavit wherein he made several serious charges of fraud against Swami Gyananand, who controlled the Syndicates affairs.

The petition was heard by a Bench of two judges of the High Court, and they directed the winding-up of the Syndicate, stating in their judgment " We find that the Bharat Dharma Syndicate Limited is insolvent and unable to pay its debts. We find that the promoters of the Syndicate were guilty of fraud in its flotation. We find that throughout its existence those who controlled the policy of the Syndicate have been guilty of fraud, that they have falsified the books and balance-sheets of the company and have deceived the shareholders, creditors and the general public. We find that the approval of the High Court to the reconstruction scheme in 1929 was obtained by fraud. We find, further, that in the opposition to the present application those in charge of the Syndicates affairs have made false and fraudulent representations. In these circumstances it is the duty of the Court to order the Syndicate to be wound up.1

1937. Feb. 9, 11, 12, 15 and 19. Lionel Cohen K.C. and J. M. Parikh for the appellants.

[The argument for the appellants was mainly directed to the facts. It was submitted that the Syndicate was not insolvent and there was no evidence that any single creditor applied for payment and was not paid. On the question of fraud, it was submitted that an order for winding-up on that ground should not be made, for there was no suggestion of fraud in the petition, and that the findings of the High Court were not justified on the evidence.]

Sir Herbert Cunliffe K.C., Pullan, and Mrs. M. J. Clark for the respondents were not called on.

Feb. 22. The judgment of their Lordships was delivered by Lord Russell of Killowen. This is an appeal from a decree of the High Court of Allahabad, by which it was ordered that the appellant company, the Bharat Dharma Syndicate, Ld., be wound up. The decree was made on the petition of the respondent, who when he presented the petition was the holder of one ordinary share of Rs.25 upon which Rs.12 had been paid up. He deposited the balance of Rs.13 in Court during the proceedings.

The petition was heard by two judges, Thorn J. and Iqbal Ahmad J. A long and elaborate reserved judgment was delivered, which dealt in great detail with the history of the company from its formation down to the time when the petition was presented, and with the evidence and credibility of the witnesses in the case. The Court came to the conclusion that the company ought to be wound up on two grounds—namely, (i.) that it was insolvent, and (ii.) that it was just and equitable that it should be wound up, owing (to put it shortly) to its fraudulent flotation and its fraudulent career, and to the consequent advisability (in the interest of the public and all concerned) of bringing its undesirable life to an end.

Their Lordships have had the great advantage of a full argument by counsel for the appellants, in the course of which they made a close examination of the relevant facts, documents and eviden