Winding up for deadlock and loss of substratum: company's suspended business, debts and stalled management justified admission of the petition.

A company may be wound up where business has remained suspended for more than a year, statutory returns and accounts have not been filed for several years, and continuing disputes between the only active stakeholders have paralysed management. The Delhi High Court noted that a small shareholding base, a partnership-like working structure, deadlock between factions, mounting debts, and inability to carry on business showed that the company's substratum had disappeared and that winding up was just and equitable. The grounds under section 433(c), section 433(f) and section 433(g) of the Companies Act, 1956 were held to be made out, and the winding-up petition was admitted.

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Issues: Whether the company was liable to be wound up under section 433(c), section 433(f) and section 433(g) of the Companies Act, 1956.

Analysis: The business had remained suspended for more than one year, the annual returns and accounts had not been filed for several years, and the company was paralysed by continuing disputes between the only active stakeholders. The company had a small shareholding base and functioned more like a partnership concern. The deadlock between management factions had brought business to a standstill, and the substratum of the company had effectively disappeared. The court also noted the burden of debts and the inability of the company to carry on its business, which supported the conclusion that it was just and equitable to order winding up.

Conclusion: The grounds under section 433(c), section 433(f) and section 433(g) were held to be made out, and the petition for winding up was admitted.

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