At, High Court of Karnataka
By, THE HONOURABLE MR. JUSTICE G.C. BHARUKA & THE HONOURABLE MR. JUSTICE V. GOPALA GOWDA
For the Appearing Parties: K.Gopala Hegde, L.Pandurangaswamy, Udaya Holla, Advocates.
G.C. BHARUKA, J.
( 1 ) THE petitioner is one of the shareholders of the respondent-Company holding ten equity shares of Rs. 1,000/- each. She has filed the present application under Section 433 (e) and (f) of the Companies Act, 1956, (in short 'the Act') for winding-up of the respondent-Company, namely, M/s. Combined power and Energy System (P) Limited inter alia on the ground that it has lost its substratum and it is impossible for the company to carry on its business with the object for which it was constituted with profit. Keeping in view the allegations made in the petition and after due notice to the respondent-Company and holding appropriate inquiry the case was admitted on 25-1-1990 by a speaking order. Subsequent to the advertisement some of the creditors have also appeared in the proceedings through Mr. Gopala Hegde in support of the prayer made herein.
( 2 ) THE husband of the petitioner has been examined as P. W. 1and the Chairman-cum-Managing Director of the respondent-Company namely, Sri P. V. Ramaiah has examined himself as R. W. 1. On behalf of the petitioner it has been deposed that the Company has stopped its business since 1985. It has no assets and its liabilities are far in excess of its assets. Further, though the outstanding dues of the Company are of more than Rs. 10 lakhs but the Company is unable to pay its debts. Workers also remained unpaid for the work done by them and therefore out of disgust they have taken away the assets available at the premises of the Company to appropriate against their wages and salaries. The said assertions made on oath on behalf of the petitioner remained uncontroverted, rather surprisingly more or less those have been admitted by the managing Director. It also bears out from the records that, since 1985 no balance-sheet has been prepared. Even the auditor of the Company had given up the job for want of remuneration. Sri L. Pandurangaswamy, the learned Counsel appearing for the company, fairly concedes that the Company has no case to demand its survival.
( 3 ) IN the case of D. Davis and Company Limited v Brunswick (Australia) Limited and Others, their Lordships of the Judicial committee said that although no general rule can be laid down as to the nature of the circumstances which have to be borne in mind whether the case comes within the "just and equitable" clause, "the decisive question must be the question whether at the date of the presentation of the winding-up petition there is any reasonable hope that the object of trading at a profit, with a view to which the Company is formed, can be attained". In the case of Cine Industries and Recording Company Limited, Chagla,. , referred to the aforesaid quotation from the decision of the Privy Council, relied upon it, and ultimately observed as follows: ?therefore on the authorities the position seems to be that the substratum of the Company is deemed to be gone when, (a) the subject-matter of the Company is gone; or (b) the object for which it was incorporated has substantially failed; or (c) it is impossible to carry on the business of the company except at a loss which has been construed by the privy Council to mean that there is no reasonable hope that the object of trading at a profit can be attained; or (d) the existing and probable assets are insufficient to meet the existing liabilities". 3-A. This Court as well in the case of Syndicate Bank v Printersall Private Limited and Others, has held that:". . . . . IT is well-settled law both in England and our Country that where the substratum of the Company has gone or its only business has become impossible, the Court would consider it just and equitable to wind-up such Company".
( 4 ) FOR the said reasons we have no option but to direct for the winding-up of the respondent-Company. The Official Liquidator shall take charge of the properties of the Company and shall take all steps to recover the debts and other amounts due to the company. The Official Liqu
Please Login To View The Full Judgment!
idator shall also cause sealed copy of this order to serve on the Company and the directors by pre-paid registered post. Consequently, the petitioner is directed to advertise the winding-up order in "times of India" daily newspaper within 14 days from today. The petitioner shall also serve a certified copy of this order on the Registrar of the company not later than one month from this day. ( 5 ) COMPANY petition stands allowed.