Only petitioning creditors benefited by the order of winding up.

This is an appeal against the judgment and order of Panchapakesa Ayyar, J., directing the winding up of a company called the Karnataka Vegetable Oils and Refineries, Ltd. The company is the appellant. It was incorporated under the Indian Companies Act as a public limited company. Its authorised capital is Rs.20 lakhs, out of which a capital of Rs.10,13,519 was paid up. The registered office of the company is at Hagari Bommanahalli, Bellary District. The respondent who was the petitioning creditor is the Madras Industrial Investment Corporation, Ltd. The company borrowed from the respondent a sum of Rs.6,50,000 and secured the said sum by a mortgage, dated 24th October, 1950. The hypotheca included lands situated at Hospet in the Bellary district and the engines, machinery, plant and factories belonging to the company and which might be erected at anytime during the continuance of the mortgage. The principal amount was repayable in 16 equal annual instalments, the first of such instalments to be paid on 30th June, 1953. Interest was payable at the rate of 6½ per cent. twice each year on the 15th June and 15th December. If the interest was paid regularly, there was provision for a rebate of 1 per cent. and in case of default there was provision for compound interest with half-yearly rests. It is common ground that the instalments due on 15th December, 1950 and 15th June, 1951, were duly paid. But the company defaulted in payment of interest due on 15th December, 1951. Though there were several demands by the respondent the company failed to pay the same. On 14th June, 1952, the company sent cheques for Rs.21,554-15-3 and asked that the said amount may be credited towards the interest due for the half-year ending 30th June, 1952 and also claimed a rebate. The respondent refused to adjust the said sum towards interest for a subsequent instalment when interest due for a previous instalment was in arrear. Meanwhile the chief accountant of the respondent Corporation inspected the accounts of the company and submitted a report. Thereupon the respondent filed an application under sections 162 and 166 of the Indian Companies Act praying that the company may be wound up. The grounds on which the winding up was sought fell within one or other of the following clauses of section 162, viz., clauses (iii), (v) and (vi). The respondent alleged that the company had suspended its business from the end of the year 1951, that it was unable to pay its debts, that the affairs of the company were in a chaotic condition, that there was a deadlock in its management, that the accounts of the company had not been properly kept, and that the financial position of the company was such that it was not possible any longer to work the concern for a profit. The petition was opposed by the company. Though the default in payment of interest was admitted, the allegations of mismanagement and deadlock were denied. The company inter alia stated that the petitioning creditor had other rights and remedies which could be pursued to enforce its rights, that the financial embarrassment of the company was only temporary and due to causes beyond their control, and that a winding up of an industrial concern like the company would not be in the best interests of the country. The company also stated that the creditors of the company other than the petitioner were not in support of the petition and were not pressing for their debts.

The application was heard and disposed of by Panchapakesa Ayyar, J., who considered that the company deserved to be wound up, mainly for two reasons: (1) that the company had suspended production and business since Christmas 1951 and there was no prospect of resumption of business or production, and (2) that the company was unable to pay its debts. The learned Judge recognised that it was an unfortunate case where the company had erected a building costing more than the loan advanced by the petitioning creditor but where due to th