1. The petition has been filed by petitioner for winding up of the company-Magikwand Media Ltd. (the company). Though in the cause title, it is mentioned, 'In the matter of Section 433(f) and 434 of the Companies Act', Shri Arsiwala appearing for petitioner started by saying it is under Section 433(e), namely, the company is unable to pay its debt.

2. Petitioner had subscribed and had issued 1,00,078, 6% non-cumulative optionally convertible redeemable preference shares of Rs. 10/- each. As a shareholder, for each financial year, petitioner was entitled to non-cumulative preferential dividend of 6%. Preference shares issued was with a conversion option under which petitioner could, in lieu of redemption, exercise the option for conversion of preference shares into equity shares between 1st October 2014 to 31st December 2014 in one or more tranche by giving prior notice to the company of not less than 60 days in writing. One preference share is to be converted into ten equity shares of Rs.10/- each. The Board also had option to convert the preference shares partly or fully in equity shares of the company with the consent of the petitioner on mutually agreed terms and conditions even before 1st October 2014. Redemption schedule was also provided whereby Rs.30/per share was to be paid out on 28th February 2015, Rs.35/- per share on 28th February 2016, Rs. 35/- per share on 28th February 2017. Admittedly, petitioner did not exercise its option to convert the preference shares into equity shares and admittedly, the company also did not exercise its option to convert preference shares partly or fully into equity shares.

3. At no point, the company declared any dividend even to the equity shareholders or preferential shareholders. At the time when this petition came to be filed, only the first redemption had become become finally due, i.e., redemption due on 28th February 2015 at Rs. 30/- per share. During the pendency of this petition, the other two installments have also fallen due. Effectively, the entire amount of Rs.1,00,07,800/- has become due and payable.

4. It is petitioner's case that despite being called upon to pay the redemption amount, the company failed and neglected to pay. Petitioner has also relied upon the annual accounts of the company for the period F.Y. 2012-13 upto F.Y. 2015-2016 to say that the company's net-worth has eroded. Shri Arsiwala submitted that except during the year 2013-14, when the company showed a profit of Rs.72.92 lakhs, at no other time has the company made any profit. Shri Arsiwala further submitted that during the financial year 2013-14, though the company had shown a profit of Rs.72.92 lakhs, its net-worth was (negative) Rs.1,18,06,604/- and in the following F.Y. 2014-15 the net-worth had gone down further to (negative) Rs.1,52,85,165/-. The counsel also relied upon the annual returns filed for F.Y. 2015-2016 to submit that the number of business activities of the company is shown to zero, turnover is zero and the net-worth was (negative) Rs.1,92,47,658/-. Shri Arsiwala submitted that the company, therefore, could be held to be unable to discharge its debts, commercially insolvent and wound up.

5. Shri Sawant appearing for the company, at the outset, submitted that the petition is not maintainable. Though in the cause title, petitioner has mentioned “In the matter of Section 433(f) and 434 of the Companies Act, 1956” and in paragraph 19 of the petition it is stated 'Strictly without prejudice and in addition to the above, petitioner states that Respondent Company is liable to wound up under Section 433(f), i.e., for the loss of its substratum', in Paragraph 31 of the petition, petitioner has framed its intention as to how it has approached this Court, i.e., 'petitioner has approached this Court as a creditor and not as a shareholder'. It will be useful to reproduce paragraph 31 of the petition :

“31. The Petitioner states that it is also in the process of initiating appropriate legal ac