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1960 Supreme(Bom) 89
IN THE HIGH COURT OF BOMBAY
IN THE HIGH COURT OF BOMBAY
Naik V.A. , J.
Appellants: In Re: Bilasrai Juharmal and Anr.
Vs.
Respondent:
Company Petn. No. 305 of 1959 Decided On: 09.12.1960
Counsels:
For Appellant/Petitioner/Plaintiff: J.C. Bhatt and R.J. Joshi, Advs.
For Respondents/Defendant: H.D. Banaji, S.V. Gupte and R.L. Dalal, Advs.
Headnote:
Petition for winding up of a Company under Section 439 of the Indian Companies Act of 1956. The main allegations on which the prayer for winding up is sought to be based are that the Company is, more or less, a glorified partnership; that irreconcilable disputes have arisen between the members of the two groups; that the management of the affairs of the Company by Brijlal group is oppressive and prejudicial to the interests of the Company; that although ostensibly there are six partners, in reality, there are only two partners, Bilasrai representing the first group and Brijlal representing the second group; that the interests of Bilasrai group are being ignored and that Bilasrai group has been driven to file suits against the Company and Brijlal group in the City Civil court and, therefore, a situation analogous to the situation of deadlock has arisen into the management of the affairs of the Company. The second category of allegations is that the main object of the Company, for which it was established, was to run the undertaking of supplying electric energy at Akola and other places with the previous consent of the Government. That object has failed by reason of the fact that the period of the licence granted by the Government under the Electricity Act to run the Company at Akola has expired and further there is no likelihood of any other licence being granted to the Company because of the policy, which the Government in pursuing viz., that electric undertaking should be taken over by the Government. The petitioners have also asserted that the only work that remains to be done is the distribution of the compensation money and they have expressed apprehensions that the compensation money would be frittered away by the Directors of the Company. The substratum of the Company, therefore, has gone.
Fact of the Case:
The main allegations on which the prayer for winding up is sought to be based are that the Company is, more or less, a glorified partnership; that irreconcilable disputes have arisen between the members of the two groups; that the management of the affairs of the Company by Brijlal group is oppressive and prejudicial to the interests of the Company; that although ostensibly there are six partners, in reality, there are only two partners, Bilasrai representing the first group and Brijlal representing the second group; that the interests of Bilasrai group are being ignored and that Bilasrai group has been driven to file suits against the Company and Brijlal group in the City Civil court and, therefore, a situation analogous to the situation of deadlock has arisen into the management of the affairs of the Company. The second category of allegations is that the main object of the Company, for which it was established, was to run the undertaking of supplying electric energy at Akola and other places with the previous consent of the Government. That object has failed by reason of the fact that the period of the licence granted by the Government under the Electricity Act to run the Company at Akola has expired and further there is no likelihood of any other licence being granted to the Company because of the policy, which the Government in pursuing viz., that electric undertaking should be taken over by the Government. The petitioners have also asserted that the only work that remains to be done is the distribution of the compensation money and they have expressed apprehensions that the compensation money would be frittered away by the Directors of the Company. The substratum of the Company, therefore, has gone.
Finding of the Court:
The petition fails and is dismissed with cost.
Issues: Whether the Company should be wound up under Section 439 of the Indian Companies Act of 1956.
Ratio Decidendi: The main object of the Company, for which it was established, was to run the undertaking of supplying electric energy at Akola and other places with the previous consent of the Government. That object has failed by reason of the fact that the period of the licence granted by the Government under the Electricity Act to run the Company at Akola has expired and further there is no likelihood of any other licence being granted to the Company because of the policy, which the Government in pursuing viz., that electric undertaking should be taken over by the Government.
Final Decision: Petition dismissed.
(1) This is a petition for winding up of a Company called the Akola Electric Supply Company (Private) Limited (hereinafter referred to as the Company) under Section 439 of the Indian Companies Act of 1956. When this petition came up before S. M. Shah, J for admission, the learned Judge did not accept the petition and rejected the same in limine. An appeal was preferred to the Division Bench of this Court (Appeal No. 1 of 1960). In appeal, the Division Bench set aside the order of dismissal, admitted the petition and sent it down for final hearing. The order that was passed by the Division Bench was on the basis of certain consent terms arrived at between the parties under which the respondent-Company gave an undertaking that the amount of compensation that may be received by the Company from the Bombay State Electricity Board would be deposited with the Companys Solicitors, M/s. Kanga and Co., pending the hearing and final disposal of the petition on merits in the trial Court. The usual formalities such as advertisement and notices being served, and the necessary preliminaries having been completed, the matter has now come up before me for final hearing. Before adverting to the affidavits that were tendered before me at the stage of the final hearing and the reasons, which induced the petitioners to do so, it is necessary to set out the facts in so far as they are necessary for determining the matters of controversy between the parties. I will begin with the facts which are either admitted or over which there is not much dispute.
(2) The aforesaid Company was incorporated in the year 1930 under the Indian Companies Act. 1913. It appears that the shares of the Company were purchased by the present share-holders in about the year 1937. The authorised capital of the Company is rupees four lakhs divided into eight thousand shares of Rs. 50/- each. The subscribed and paid-up capital of the company is rupees three lakhs divided into six thousand fully paid-up shares of Rs. 50/- each. The said six thousand shares in the share capital of the Company are held as under:
1. Bilasrai Juharmal (1st petitioner) . . . 1500 Shares
2. Jugmohanlal Rungta (2nd petitioner) . . . 1000 ""
3. Brijlal Ramjidas and the (1st petitioner) . . . 1000 ""
4. Mahavirprasad Badridas . . . 1000 ""
5. Narandas Ramjidas . . . 900 ""
6. Radhakrishna Brijlal . . . 500 ""
7. Brijlal Ramjidas . . . 100 ""
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Total 6000 Shares.
(3) The Managing Agents of the Company were M/s. Brijlal Bilasrai and Co. For over twenty years. The ostensible partners of the said Managing Agents firm were the first petitioner and the said Brijlal Ramjidas and the said Managing Agents firm was merely the nominee or benamidar of M/s. Sarupchand Prithiraj, a partnership firm consisting of nine partners including the members of the company referred to above. The Managing Agents were carrying on the management of the Company till 1957. Since then the management of the company is being carried on by three Directors viz., Mahavirprasad Badridas, Narandas Ranjidas and Radhakrishna Brijlal. The members of the Company are divided into two groups. One group comprises the two petitioners who are father and son respectively and the other group consists of Brijlal Ramjidas, Mahavirprasad Badridas, Narandas Ramjidas and Radhakrishna Brijlal. The group of the petitioners may, for the sake of convenience, be called as Bilasrai group and the other group of the remaining four members of the Company headed by Brijlal Ramjidas may be called as Brijlal group. The members of Brijlal group are closely related to one another. Disputes have cropped up between the two rival groups, at any rate, since 1956 and one of the reasons for these disputes appears to be that the dividends are not being distributed to
