The discretionary power of the court to wind up a company under S.433 of the Companies Act based on the company's failure to commence business within a year, and the need for fair indication and evidence of the company's intention to carry on business.

1. This is an appeal by the Malabar Iron and Steel Works Limited against the order in Company Petition No. 8 of 1962 allowing that petition and directing the winding up of the company. That petition was filed by the 1st respondent before us, the Registrar of Companies, Kerala, Ernakulam.

2. S.433 of the Companies Act, 1956, deals with the circumstances in which a company may be wound up by court. Circumstance (c) in that section is:

"If the company does not commence its business within a year from its incorporation, or suspends its business for a whole year." The circumstance invoked by the Registrar in this case is the fact that the company has not commenced its business within a year from its incorporation on the 28th November 1960.

3. To present a petition on the ground above-mentioned the Registrar should obtain the previous sanction of the Central Government. This is provided by the second proviso to sub-section (5) of S.439 of the Act.

4. The order granting the sanction formed an annexture to the petition. That order, issued by the Regional Director and dated the 31st March 1962, reads as follows: "Whereas the Registrar of Companies, Kerala, Ernakulam has reported that the Company Malabar Iron and Steel Works Limited has not commenced business within one year of its incorporation and is not in a position to commence business validly;

And whereas the Registrar of Companies, Kerala had in pursuance of the second proviso to sub-section (5) of S.439 of the Companies Act 1956 (I of 1956), read, with the Government of India, Ministry of Commerce and Industry, Department of Company Law administration, Notification No. G. S. R.556, dated the 25th June 1958, requested me to accord sanction to the presentation by him of a petition to the High Court at Kerala for the winding up of the company on the grounds mentioned in clause (c) of S.433 of the said Act;

And whereas an opportunity was given to the said Malabar Iron and Steel Works Limited, by me to make representations against the aforesaid prayer of the Registrar of Companies, Kerala;

And whereas after considering the representations made by the said Malabar Iron and Steel Works Limited I am of the opinion that the company did not commence business within one year of its incorporation and is not also in a position to commence business validly;

Now, therefore, in pursuance of the provisions of the second proviso to sub-section (5) of S.439 of the Companies Act, 1956 (I of 1956) read with the Government of India, Ministry of Commerce and Industry, Department of Company Law Administration, Notification No. G. S. R.556, dated the 25th June 1958, I hereby accord sanction to the presentation by the Registrar of Companies, Kerala, of a petition to the High Court at Kerala, for the winding up of the Malabar Iron and Steel Works Limited, on the grounds mentioned in clause (c) of S.433 of the said Act".

5. It is not contended that the Regional Director was not competent to grant the sanction. The only contention on this aspect of the case is that the ground for winding up stated in the petition is not the same as the ground specified in the order granting the sanction. Counsel for the appellant drew our attention to the opening paragraph of the order:

"Whereas the Registrar of Companies, Kerala, Ernakulam has reported that the Company Malabar Iron and Steel Works Limited has not commenced business within one year of its incorporation and is not in a position to commence business validily":

and to Para.11 of the affidavit of the Registrar in support of his petition which says:

"Though the Company was incorporated in 29th November 1960 it has not commenced business so far. The Company is also not entitled to commence business."

According to him the ground mentioned in the first extract is not the same as the one mentioned in the second extract.

6. We are unable to agree. The ground which formed the foundation of the sanction as well as the ground which formed the foundation of the petition ar