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Issues: (i) Whether a contributory's failure to pay a further call made by the company (after presentation of the petition) bars him from maintaining a petition for compulsory winding up; (ii) Whether a provisional liquidator should be appointed and what interim reliefs (if any) should be granted pending determination of the winding-up petition.
Issue (i): Whether non-payment of a further call disqualifies a contributory from presenting a petition for winding up.
Analysis: Section 166 of the Indian Companies Act lists persons entitled to present a winding-up petition and contains a proviso specifying disqualifying conditions for contributories; the proviso does not mention non-payment of a further call. The court reviewed English authorities including In re Steam Stoker Co. and In re Diamond Fuel Co. and observed that while in some circumstances validly and legally made calls coupled with other facts may affect the right to petition, non-payment of a call alone is not expressly made a disqualification by the statute. The petitioners denied validity of the call and raised substantive objections requiring enquiry.
Conclusion: The non-payment of the further call does not, by itself, bar the petitioners from maintaining the winding-up petition; the objection is overruled.
Issue (ii): Whether a provisional liquidator should be appointed and what interim measures are appropriate pending final disposal of the petition.
Analysis: Petitioners relied on failures to file statutory report and hold statutory meeting, alleged cessation of substratum (due to non-grant of government licence), defective books and accounts, and misappropriation. The court found prima facie irregularities in maintenance of books and accounts and serious allegations meriting protection of shareholders' interests but also noted that the objections of the company could not be finally rejected on the present record. The court declined to adopt a rule that a provisional liquidator must be appointed whenever a prima facie case for winding up is shown where there is opposition, citing established practice that provisional liquidators are not appointed as a matter of course against opposition because such appointment may paralyse company affairs.
Conclusion: The appointment of a provisional liquidator is refused; however, interim protective measures are directed including audit of books by the company's appointed auditors, stay of two pending suits, convening of a general meeting of shareholders to decide on winding up, restraint on withdrawals by the managing director, and directions for notice and publication.
Final Conclusion: The Court overruled preliminary objections to the petition, refused to appoint a provisional liquidator but granted limited interim reliefs to protect shareholders' interests and to enable further inquiry; the petition remains pending for further proceedings.
Ratio Decidendi: Where the statute prescribes specific disqualifying conditions for contributories to present a winding-up petition and does not include non-payment of a further call, mere non-payment of such a call (absent a clear, valid call and supporting aggravating facts) does not in itself deprive a contributory of the statutory right to petition for winding up; appointment of a provisional liquidator against opposition is discretionary and may be refused where interim protective measures suffice.
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