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2006 Supreme(Bom) 253
IN THE HIGH COURT OF BOMBAY
Chloro Controls (India) Pvt. Ltd
Versus
Severn Trent Water Purification
Decided on, February 21, 2006
R. M. LODHA,J.
Headnote:COMPANIES ACT, 1956 - Sections 433(f) and 439 Winding up Allowed Appeal Petitioner not a registered shareholder of company Rebutted Petitioner a contributory under Section 439(1)(c) Petitioner does not have standing to maintain petition for winding up as contributor unless it is registered on Register of company of members. The Senior Counsel for the petitioner urged that the petition for winding up order is in the capacity of creditor as well.
This aspect was not canvassed by the petitioner before the learned Company Judge in response to the preliminary objection raised by the appellants that the company petition was not maintainable and, therefore, not considered by the Company Judge. This aspect has to be considered by the Company Judge before admitting the petition for winding up on the just and equitable grounds in the capacity as creditor. In so far as the reasons that have been indicated by the Company Judge for admitting the petition are concerned, these reasons are unsustainable. As already held, the petition for winding up order as a contributory under Section 433(f) read with Section 439(4)(b) of the Companies Act, 1956 is not maintainable. Until the petition is legally maintainable, the issue of deadlock in the company pales into insignificance.
COMPANIES ACT, 1956 - Sections 439 and 433(f) Winding up Corporate veil lifting Company law states, a party who approaches Court cannot ask Court to lift the corporate veil. The Senior Counsel for the petitioner also sought to contend that the Capital Controls (Delaware) Company Inc. is a 100% subsidiary of the petitioner and the Capital Controls (Delaware) Company Inc. was exactly the same as the petitioner inasmuch as it was represented by Severn Trent Group and to that extent, the Court must lift the corporate veil.
In this connection, he relied upon the judgment of the Supreme Court in the case of State of U.P. and others v. Renusagar Power Co. and others, AIR 1988 SC 1737. This is an argument in desperation. Legal position is settled that under the Company Law, the party who approaches the Court cannot ask the Court to life the corporate veil.
COMPANIES ACT, 1956 - Section 439(1)(a) to (f) Maintainability of petition Requirements thereunder Held It is necessary for petition to be under any of categories as prescribed under Clauses (a) to (f) of Section 439 of Companies Act Accordingly winding up petition shall not be maintainable. Unless the petitioner falls in any of the categories enumerated in Clauses (a) to (f) of Section 439(1), the petition for winding up shall not be maintainable. Before the learned Company Judge in response to the objection raised by the present appellants that the petition for winding up was not maintainable, on behalf of the petitioner, it was argued that the petitioner is the contributory and/or shareholder of the company and covered under Section 439(1)(c) and therefore, the company petition is maintainable. Alternatively, it was argued that the original shareholder viz., Capital Controls (Delaware) Company Inc. having ceased to exist by virtue of amalgamation amounts to death of the company and, thus, the shares have devolved on the petitioner by operation of law.
( 2 ) THE petitioner set up the case in the petition for winding up thus: (i) The petitioner is a Corporation organized and existing under the laws of the State of Pennsylvania, usa having its office and place of business at 3000 advance Lane, Colmar, Pennsylvania 18915, USA. (ii) The petitioner was formerly known as Capital controls Company, Inc. (iii) In or about the year 1990, the petitioners group acquired Capital Controls Company, Inc. and subsequently the name of Capital Controls Company, Inc. was changed to Severn Trent Water Purification, Inc. with effect from 1st April 2002. (iv) On March 31 2003 Capital Controls (Delaware) company Inc. merged with and into the petitioner and pursuant to the merger Capital Controls (Delaware) company, Inc. went out of existence. (v) That the reference to the petitioner includes reference to the Capital Controls Company, Inc. as well as Capital Controls (Delaware) Company, Inc. and, therefore, the petitioner in its present name is entitled to the rights and benefits of the Capital controls (Delaware) Company, Inc. and Capital Controls company, Inc. and to file and maintain the company petition. (vi) The Chloro Controls (India) Private Limited - a company controlled by Mr. M. B. Kocha and Capital controls (Delaware) Company, Inc. set up joint venture company - Capital Controls India Private Limited (the company) in Mumbai with the object of manufacturing (in india) and distributing within the geographical boundaries of India, Nepal, Bhutan and Afghanistan certain gas chlorination water treatment systems and a single product line of brine electro chlorination systems from component parts supplied by the petitioner. (vii) Authorised capital of the company is rs. 75,00,000 (Rupees seventy five lakhs) divided into 7,50,000 equity shares of Rs. 10/- each. The petitioner holds 3,75,000 equity shares being 50% of the equity share capital of the company. The other 50% of the shareholder of the company is Chloro Controls (India) private Limited. (viii) Chloro Controls (India) Private Limited has filed Suit No. 233/2004 with the object of circumventing the dispute resolution provisions in the joint venture agreement entered into between the parties. (ix) That due to the wrongful stand and intransigence of Chloro Controls (India) Private limited, the parties have deadlocked on several joint venture and management issues and despite several meetings between the parties and exchange of idea aimed at resolving differences, relations between the parties have become more strange. (x) The petitioner has terminated the joint venture agreement vide its letter dated July 21, 2004 due to the breaches committed by Chloro Controls (India) private Limited and Mr. M. M. Kocha and in the termination notice called upon Mr. Kocha to initiate winding up of the company. (xi) If Mr. Kocha is allowed to continue to run the company, the basic substratum of the company will be eroded and the company could inter alia be saddled with liabilities leading to depletion of net worth, third party claims. (xii) The company has been incorporated in the nature of partnership and both parties have equal share in the company, the parties are severely deadlocked on several issues and the petitioner has lost co
