Just and equitable ground: petitioner evidence of management probity failures required respondents be called to enter defence.

Petitioners moved to wind up a company under the just and equitable limb of Section 162(6) on grounds including dominant shareholder control, related-party leases and sub-leases benefiting insiders, failure to supply balance sheets and auditors' reports as required by corporate rules, irregular dividend payments and diminution, and shareholders forced to sue for dividends. The court applied the principle that the just and equitable ground need not be ejusdem generis with other clauses and that lack of probity in management can satisfy the standard. The appellate court found petitioners' documentary and oral evidence required respondents be called to enter defence and set aside the dismissal.

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Issues: Whether the petitioners proved that the company should be wound up under Section 162, clause (6) of the Indian Companies Act on the ground that it is just and equitable that the company be wound up.

Analysis: The Court examined the factual matrix including dominant control of one shareholder, leases and sub-leases executed to the apparent benefit of related parties, failures to supply balance sheets and auditor's report as required by Rule 109 of Table A and Section 131, irregularity in payment and diminution of dividends, and instances where shareholders were compelled to sue for dividends. The Court referred to the principle that clause (6) of Section 162 permits winding up where it is just and equitable and that such grounds need not be ejusdem generis with clauses 1-5, noting authority recognising that lack of confidence arising from lack of probity in management may satisfy the just and equitable standard. The petitioners adduced documentary and oral evidence which the learned Judge below did not have answered by respondents; the Court found that the facts proved required the respondents to be called to enter on their defence and that the learned Judge's dismissal could not stand without such an opportunity for explanation.

Conclusion: The order dismissing the winding up petition is set aside and the appeal is allowed; the respondents must be called upon to enter their defence. Costs of the appeal will be costs in the cause and follow the event.

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