Substratum lost and just-and-equitable winding up can follow despite wide objects; oppression claims need continuous conduct and unfair prejudice.

A company may be wound up when its real and dominant business has been destroyed, even if its memorandum contains wide objects. The Court treated the acquisition of the banking undertaking as having destroyed the substratum and held that, in the circumstances, it was just and equitable to wind up the company because dissenting shareholders should not be compelled to finance a wholly new venture with government compensation. Relief for oppression under sections 397 and 398 required proof of continuous oppressive conduct and that winding up would unfairly prejudice the applicants; that test was not met, and complaints about compensation, meetings, and majority control did not establish oppression or mismanagement.

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Issues: (i) Whether the company should be wound up on the ground that its substratum had disappeared or that it was otherwise just and equitable to wind it up; (ii) Whether the petition under sections 397 and 398 of the Companies Act, 1956 was maintainable and whether oppression or mismanagement was established.

Issue (i): Whether the company should be wound up on the ground that its substratum had disappeared or that it was otherwise just and equitable to wind it up.

Analysis: The company had carried on banking as its real business from incorporation, and the acquisition of its banking undertaking under the 1980 Ordinance deprived it of the only business for which shareholders had invested. The existence of wide and independent objects in the memorandum did not prevent the Court from identifying the real and dominant purpose of the company. The Court held that the taking over of the banking business destroyed the substratum and, independently, the circumstances made it unfair to compel dissenting shareholders to finance a wholly new venture with the compensation received from the Government. The just and equitable jurisdiction is of wide import and is not confined to cases where the substratum alone has vanished.

Conclusion: The company was liable to be wound up, and the winding-up relief was granted in favour of the petitioners.

Issue (ii): Whether the petition under sections 397 and 398 of the Companies Act, 1956 was maintainable and whether oppression or mismanagement was established.

Analysis: For relief under section 397, it was necessary to show both oppression and that winding up would unfairly prejudice the members seeking relief. That condition was not satisfied because the petitioners themselves preferred winding up. The objection based on consent under section 399(3) was rejected for want of proof that the consent was invalid. On merits, the complaints relating to the choice of compensation, the conduct of the general meeting, apprehended control by the majority, and alleged conduct in other companies did not establish continuous oppressive conduct or mismanagement in the affairs of the company concerned. Mere outvoting of the minority or apprehension of future prejudice was insufficient.

Conclusion: No relief was made out under sections 397 or 398, and the petition on that score failed.

Final Conclusion: The winding-up relief succeeded, but the allegations of oppression and mismanagement were not proved.

Ratio Decidendi: Even where a company's memorandum contains wide independent objects, the Court may order winding up if the company's real and dominant business has been destroyed and the surrounding circumstances make it just and equitable to wind it up; relief for oppression requires proof of continuous oppressive conduct and that winding up would unfairly prejudice the applicants.

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