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HIGH COURT OF CALCUTTA
A. N. RAY, S. K. MUKHERJEE
JAGANNATH GUPTA AND CO. PRIVATE LTD. - Appellant
Versus
MULCHAND GUPTA - Respondent
A. F. O. O. 96 Of 1968
Decided On : JULY 26, 1968
COMPANY - Winding up - Stay of - Grounds - Just and equitable - Sale of properties - Distribution of shares - Suppression of facts - Inherent powers of the Court - Appeal - Maintainability - Companies Act, 1956, Ss. 483, 235.
Fact of the Case:
The respondent, a former employee of the appellant company, filed a petition for winding up of the company on the grounds of sale of properties at a gross undervalue and illegal transfer of shares belonging to his father. The appellant company filed an application for stay of the winding-up petition, which was rejected by the trial court on the ground that the appellant company had suppressed the fact of sale of a property in its affidavit in support of the application for stay. The appellant company appealed against the order of the trial court.
Finding of the Court:
The High Court held that the order of the trial court was appealable under Section 483 of the Companies Act, 1956, as it was an order made in the matter of winding up of a company. The High Court further held that the appellant company was guilty of suppression of facts in its affidavit in support of the application for stay, as it had failed to disclose the sale of a property in the affidavit. However, the High Court also held that the sale of properties and the transfer of shares, which were the grounds for winding up, were not just and equitable grounds for winding up the company, as the respondent had himself been a party to the sale of properties and had acquiesced in the transfer of shares. The High Court, therefore, allowed the appeal and stayed the winding-up proceedings.
Issues: 1. Whether the order of the trial court refusing to stay the winding-up petition was appealable? 2. Whether the appellant company was guilty of suppression of facts in its affidavit in support of the application for stay? 3. Whether the sale of properties and the transfer of shares were just and equitable grounds for winding up the company?
Ratio Decidendi: 1. Yes, the order of the trial court refusing to stay the winding-up petition was appealable under Section 483 of the Companies Act, 1956, as it was an order made in the matter of winding up of a company. 2. Yes, the appellant company was guilty of suppression of facts in its affidavit in support of the application for stay, as it had failed to disclose the sale of a property in the affidavit. 3. No, the sale of properties and the transfer of shares were not just and equitable grounds for winding up the company, as the respondent had himself been a party to the sale of properties and had acquiesced in the transfer of shares.
Final Decision: The appeal was allowed and the winding-up proceedings were stayed.
( 1 ) THIS appeal is from the judgment and order of Datta, J. , dated 23rd April 1908.
( 2 ) THE order was made on the summons dated 4th September 19 (37 taken out by Jagannath Gupta and Co. Private Ltd. inter alia for the orders first, that the respondent Mule-hand Gupta the petitioner in Company Petition No. 158 be restrained from taking by himself his servant and agents or otherwise any further proceeding upon the said petition whether by advertising the same or otherwise, secondly, that the said petition be removed from the file of the proceedings and thirdly, for payment of costs.
( 3 ) IN support of the summons there is an affidavit of Bidya Bhusan Gupta affirmed on 4th September 19g7.
( 4 ) MULCHAND Gupta who preferred the Company Petition No. 158 of 1967 filed an affidavit in opposition affirmed on 13th November 1967. Bidya Bhusan Gupta fifed an affidavit in reply affirmed on 20th November 1967. There are further affidavits of Mulchand Gupta affirmed on 27th March 1968 and of Bidya Bhusan Gupta affirmed on 20th April 1968.
( 5 ) BIDYA Bhusan Gupta stated in his affidavit in support of the summons that the company from its inception carried on business in manganese and iron ore and brokerage in jute, gunny and hessian and that the company still continues to carry on the business. The further allegations in the said affidavit are that the total bank balance to the credit of the company's account as on 16th August 1967 is about Rs. 1,30,000. The company has been suffering some loss in the business of manganese ore on account of restriction by the Government on the export of ore and general trade depression. The capital of the company has not been exhausted. The assets of the company and the investments are worth Rupees 8,76,432 and are shown separately in Annexure C to the said affidavit.
( 6 ) IN the said affidavit the other allegations made by Bidya Bhusan Gupta are that the respondent. Mulchand Gupta until 30th April 1906 had been in the employment of the company as an officer at a salary of Rs. 700 per month when be voluntarily left and yet between the months of July 1966 and March 1967 he made claims against the company for his salary for the months of May to August 1966. It is also alleged in the said affidavit that Mulchand Gupta by a letter dated 8th October 1966 claimed partition inter alia of the properties at Ranchi Garden House, Bhaironpur Agricultural land properties and Guuraoro ancestral house and land belonging to the estate of the deceased Jagannath Gupta.
( 7 ) IT is also alleged in the said affidavit that the company had been holding its annual general meeting and laying its duly audited accounts before the meeting and notices were served on all the members. The respondent, it is alleged, all throughout had notice of the affairs of the company and never raised any objection.
( 8 ) IT is further alleged in the said affidavit that on or about 9th August 1966 the respondent Mulchand Gupta commenced a proceeding before the Regional Director, Company Affairs, Calcutta, against the company and its directors alleging that the company did not hold meetings and that no notice of general meeting had been received and that the company did not pay dividends and that the company had been continuously losing and dissipating the shareholders' assets and that there was no register of shares and shares were transferred without transfer deed, that address of shareholders and directors was not entered, that the directors did not send profit and loss account and balance sheets, that the directors did not give any information about the activity of the company and that all the properties of the company had been sold at a considerable loss and Vijay Kumar Saraf alias Gupta, aged 16 years, was admitted as a director on 4th September 1902, that he was not qualified to hold any shares of the company, and finally that the director submitted a fabricated report of the company's stock to the Bank of India and the pol
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