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2015 Supreme(AP) 448
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD
C.V. NAGARJUNA REDDY, J.
Ajay Kumar Gupta Dochania – Petitioner
Versus
M/s. Bhagyanagar Silk Mills Pvt. Ltd. & Another – Respondents
Company Petition Nos. 67 & 104 of 2006
Decided on : 17.07.2015
Advocate Appeared:
For the Petitioner: S. Ravi, Senior Counsel.
For the Respondents:V.S. Raju, Advocate.
Headnote:
Insurance Amendment Act, 2002 –State Financial Corporation Act, 1951 – Companies Act, 1956 – Section 13 – Shares – Winding up of company – Parties and the subject matter of both these petitions are common and therefore they are being disposed of together and the petitioners are shareholders of respondent No.1 – company Respondents in both the petitions are common. In both these petitions, the petitioners have prayed for winding up of respondent No.1 – company. As the grounds on which both the petitions have been filed are identical, it will suffice if the averments in C.P. No.67 of 2006 are referred to averments of the petitioner made in his affidavit filed in support of the company petition are briefly stated hereunder. Respondent No.1 is a private limited company incorporated by three groups of individuals -- first group of individuals being father of the petitioner his children, family members, and his friends and associates; second group of individuals are the family members, friends and associates of the Managing Director of respondent No.1 and the third group are friends and associates of respondent No.2. share holding details of the company have been set out in detail, reference to which may be unnecessary except to the extent that each group of shareholders was allotted 1/3rd shares –Held, . Even if the petition does not refer to a specific provision, if the substance of the averments makes a case fall under that provision, the Court is empowered to read the provision into the pleadings. In paragraph 9 of the petition (C.P. No.67 of 2006), the petitioner specifically averred that the object for which the company was established was printing, dyeing and processing of textiles; in paragraph 12 it was Pleaded that after three years of commencement of the business the company started suffering losses and slowly started to dwindle and the commercial activity of the company was completely stopped and has ceased; in paragraph 18 it was alleged that all the machinery and movable fixed assets of the company were sold away; in paragraph 19 it was averred that the objects of the company are also changed to include the unconnected matters thereto without following the procedures; and in paragraph 23 it was averred that as the company has been for long past, ceased to be a viable commercial entity, it is just, equitable and necessary that the company be wound up. These averments in unmistakable terms clearly bring the petition under Section 433(f) of the Act. Applying the legal position as discussed above, to the facts of the case, this Court has no hesitation to hold that the company has lost its substratum – Petitioners shall carry out publication of advertisement in two daily newspapers, viz., Times of India Hyderabad editions having circulation and the file proof of the same within 30 days from the date of receipt of a copy of this order
A. Introduction
The parties and the subject matter of both these petitions are common and therefore they are being disposed of together.
2. The petitioner in C.P. No.67 of 2006 and the petitioners in C.P. No.104 of 2006 are shareholders of respondent No.1 – company (hereinafter referred to as ‘the company’). Respondents in both the petitions are common. In both these petitions, the petitioners have prayed for winding up of respondent No.1 - company.
B. The Pleadings
3. As the grounds on which both the petitions have been filed are identical, it will suffice if the averments in C.P. No.67 of 2006 are referred to. The averments of the petitioner made in his affidavit filed in support of the company petition are briefly stated hereunder.
4. Respondent No.1 is a private limited company incorporated on 18.10.1978 by three groups of individuals -- first group of individuals being father of the petitioner (petitioner No.1 in C.P. No.104 of 2006), his children, family members, and his friends and associates; second group of individuals are the family members, friends and associates of the Managing Director of respondent No.1 and the third group are friends and associates of respondent No.2. The shareholding details of the company have been set out in detail, reference to which may be unnecessary except to the extent that each group of shareholders was allotted 1/3rd shares. The company was allotted Ac.2.30 gunts equivalent to 13,310 sq. yards at Phase-I, Jeedimetla, Medchal Mandal, Ranga Reddy District, on which it has built some sheds from the common funds pooled from the family members of the petitioner and the respondents. The business of the company was commenced in 1978-79 and term loans from the Andhra Pradesh State Finance Corporation (APSFC) and State Bank of India (SBI), Bible House Branch, Rashtrapathi Road, Secunderabad, were also obtained from time to time, after filing of proper charge with the Registrar of Companies. After three years of running of the business, the company started suffering losses and slowly started to dwindle and the commercial activity of the company thereafter was completely stopped and has ceased. The father of the petitioner, a very old and feeble man of eighty years of age was one of the Founding Directors and one of the First and Permanent Directors of the company under the Articles of Association and he has stopped taking interest in the affairs of the company since 1983.
5. That no meeting of the shareholders was ever formally held nor any notices of the General Meeting of the Company were ever sent to the father of the petitioner or his family members, friends or associates, including the petitioner. As the Office of the Registrar of Companies was undergoing major reorganization from Manual to Fully Computerized, in the transitory period no records of the company are available including the original records of the Memorandum of Association, the Articles of Association, the List of Directors and Members, and charges thereto, or as to Latest Annual Returns of the Company. However, from the fragmentary records available, it is understood that in the year 2002-03, the company had a total liabilities of Rs.1,02,11,800/- comprised the paid up capital of Rs.9,00,000/-, reserves and surplus of Rs.3,08,000/-, secured creditors of Rs.16,78,000/-, unsecured creditors of Rs.73,32,000/-, and current creditors of Rs.2,00,000/-. The assets of the company comprised Fixed Assets (land) valued at Rs.23,92,000/- and miscellaneous expenditure account of about Rs.78,26,000/-. Most of the cash balances and other reserves were siphoned out of the company illegally and unlawfully appropriated by respondent Nos.1 and 2 without notice and knowledge of the father of the petitioner and other shareholders. All the machinery and other movable fixed assets of the company were also sold away and amounts thereof were siphoned out of the company and illegally and unlawfully appropriated by the said respondents. The objects of
