( 1. ) THIS is a contributories application for appointment of a provisional liquidator under Section 450 of the Companies Act, 1956, filed on October 18, 1973, during the pendency of their petition for compulsory winding up under Sections 397, 398 and 439 of the Act. ( 2. ) THE material facts, in brief, are as follows :

The erstwhile joint Hindu family trading under the name and style "m/s. Nandlal Bhandari and Sons" held 5,836 shares and 1 scrip of "m/s. Nandlal Bhandari Mills Ltd. ", a public limited company incorporated on March 1, 1922 (hereinafter referred to as "the Mills Ltd. " ). On March 29, 1949, there was a partition in the family and the separated members formed " M/s. Nandlal Bhandari and Sons Ltd. ", which was incorporated as a company limited by shares, and ultimately converted into a private limited company styled as " M/s. Nandlal Bhandari and Sons (Pvt.) Ltd. " (hereinafter referred to as " the company") and incorporated as such under the Companies Act, 1956. By a division of the capital account, which included shares, the 5,836 shares and 1 scrip of the Mills Ltd. , which had by then increased to 11, 772 shares and 1 scrip by reason of issue of bonus shares, were transferred to the company. Subsequently, in the year 1969, the company purchased 6, 327 shares of the Mills Ltd. from one Shrikishan Chandmal at Rs. 325 per share. Thus, the company held 17,099 shares and 1 scrip, i. e. , 85 percent, of the share capital of the Mills Ltd. By virtue of the company being the holding company, it is the sole selling agents of the Mills Ltd. Under an indenture dated November 10, 1970 (R-14) the selling agency is to continue till December 31, 1975.

( 3. ) THE company has three sources of income :

(i) the selling agency commission ; (ii) guarantee commission ; and (iii) rental income. The sole selling agency is the main source and yielded by way of commission Rs. 2,67,993, Rs. 3,08,132 and Rs. 3,35,195 in the years 1969, 1970 and 1971, respectively. The guarantee commission is about Rs. 5,000 per month from the Mills Ltd. whereas the rental income is to the tune of Rs. 3,000 per month from the properties owned by the company.

( 4. ) THE other lines of business were manufacture of vanaspati and a flour mill under the name and style " Nand Vanaspati" and "dewas Flour Oil and De-oiled Cake Factory ". These two units, which were placed with the petitioner, Virendrasingh Bhandari, as the director-in-charge have, however, been closed. ( 5. ) INCIDENTALLY, the Bhandaris also floated M/s. Gajendrasingh Randhira-singh Oil Mills (P.) Ltd. , which was incorporated on August 24, 1950, as a private limited company (hereinafter referred to as " the G. R. Oil Mills") to carry on the business of ginning cotton. It has a paid up capital of Rs. 2,00,000, and three directors, the petitioner, Virendrasingh Bhandari, and his two brothers, Bhanwarsingh Bhandari and Surendarsingh Bhandari.

( 6. ) THE case presents a sorry state of affairs. Out of the 17,099 shares and 1 scrip of the Mills Ltd. , 3,350 shares were pledged with the State Bank of Indore, and 1,600 shares with the Bank of India, in the year 1970. In 1971, 4,000 shares were pledged with the State Bank of Indore as additional security. The balance-sheet and the profit and loss account for the year ending December 31, 1972, shows that the total liabilities of the company were to the tune of Rs. 1,36,84,585. The largest creditor was the State Bank oi Indore. The statement filed by the bank shows that a sum of Rs. 75,85,638. 13 was due. Out of this, Rs. 50,20,790. 40 were due on account of the " Dewas Flour Oil and De-oiled Cake Factory" and the " Nand Vanaspati", secured on equitable second mortgage of lands, buildings, plants and machinery at Dewas. The Bank of India, in its statement, has disclosed that it had given credit facilities to the company in respect of these two units to the extent of Rs. 1,25,000 and a sum of Rs. 1,13,619. 14 was due thereon. The company was also ind