A. Sreedharan Nair vs Union Hardwares (Private) Ltd.

Mathews P. Mathew, J.—This petition is filed u/s 433(c) and (f) read with Section 439 of the Companies Act, 1956, by one of the shareholders seeking to wind up the company. The main ground alleged is that though the company was established in December, 1984, it stopped business from 1987 onwards. Even during the time when the company did business it is alleged that the company was incurring huge loss. The petitioner was examined as PW-1. The deputy chairman of the company was examined as PW-2. Both of them gave evidence to the effect that the company did not do any business after March, 1987. CW-1 and CW-2 were examined to show that the company had in fact been doing business after 1987 also. However, there is no positive reliable evidence tendered by them to show that the company did any business after March, 1987. Much reliance is sought to be placed by the shareholders who sought to be impleaded in the above petition, but permitted only to assist this court, on exhibit A-2 which is a photostat copy of the cash bill/proforma invoice alleged to have been issued to one Cap. K. K. Kaimal (retired deputy chairman, Union Hardwares (P.) Ltd., PW-2. Cap. K. K. Kaimal, has denied having made any purchase covered by exhibit A-2. No one has given any evidence to show that the company or anybody on behalf of the company did purchase the goods covered by exhibit A-2 as alleged. The mere production of a bill or invoice showing the purchaser''s name as that of the company cannot be taken as proof of the fact that the said company actually purchased the goods covered by the said cash bill in so far as such a cash bill could be obtained by any stranger in the name of the company. Therefore, from the evidence in the case it is to be taken that the company did not carry o any business since March, 1987, in the absence of any contra evidence in this regard.

Section 433(c) of the Companies Act is very clear. As per Section 433(c) a company may be wound up by the court if the company does not commence its business within a year from its incorporation or suspends its business for a whole year. In the present case, the company petition was filed in October, 1990, on the allegation that the company has not been doing any business from the year 1987. As such the ground given in Section 433(c) of the Companies Act is clearly established in support of the present petition.

In order to ascertain the views of the majority shareholders on the question as to whether the company should be wound up or not a meeting of the shareholders was held as per the orders of this court under the chairmanship of the advocate commissioner on July 3, 1993. The advocate commissioner has filed his report dated July 7, 1993, wherein it is shown that out of the 48 members 34 members supported the proposal for winding up of the company and four members opposed the same. Out of the 34 members who supported the winding up the support lent by six members was objected to on the ground that they had not paid the call money on the shares and the support lent by three other members was objected to on the ground that members who had executed the proxies were outside India and the signature of the members is open to doubt. Objections to the report has been filed by the advocate, Mr. A. T. Varghese, who sought to implead himself in the petition but was allowed only to assist the court. According to the petitioner, the company''s shares were fully paid-up and there was no question of failure on the part of anybody to pay call money as there were no call at all issued by the company. This contention is not seriously disputed by anyone. Apart from the fact that the signatures of the members who are now outside India are said to be open to doubt, no reliable evidence is forthcoming to disqualify the proxies accepted by the chairman. In the circumstances, it is to be taken that 34 out of the 48 members voted in support of the proposal for winding up and only 4 against the same. In any view there can be no doubt that the majority of the shareholders are in support of the proposal for the winding up of the company. The learned advocates, Sri N. Subramaniam and Sri Philip Mathai, vehemently opposed the proposal for winding up of the company. According to them, the company can be profitably run if the management is handed over to efficient and honest members. It is also submitted that if the company is permitted to be wound up, the misdeeds of the present management would be buried along with the company and it is necessary that the company be kept alive so that the members would get an opportunity to take action against those who are responsible for the downfall of the company. Suffice it to say that there are sufficient safeguards provided in the Companies Act to bring to book any person who is responsible for any misdeed if so alleged and proved even if the company is ordered to be wound up. At any rate, in view of the fact that the ground urged u/s 433(c), viz., the suspension of business for more than one year stands clearly established, there is sufficient justification for winding up of the company. It is all the more fair and equitable to do so in view of the majority opinion of the shareholders expressed in a special meeting called for this purpose. In the circumstances, I allow the petition and the official liquidator who has been functioning as the provisional liquidator of the company is appointed as the official liquidator and the registry is directed to issue orders in Form No. 52 of the Companies (Court) Rules.

The petitioner shall pay an amount of Rs. 3,000 to the official liquidator to cover the initial expenses in the matter within a period of three months from today.