Just and equitable grounds: Court orders compulsory winding up where directors' misconduct and defeated schemes make resuscitation impossible.

On the dominant issue whether the company's affairs justified winding up on just and equitable grounds, the HC found that successive court sanctioned schemes of arrangement had been subverted by directors' conduct, deliberate concealment, and large scale trading of deposits at heavy discounts producing potential undue preferences; resuscitation was no longer reasonably possible and the board could not recover substantial director debts. The court applied the just and equitable principle to reject alternative private liquidation under the schemes and allowed the petition, ordering compulsory winding up of the bank.

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Issues: Whether the affairs of Peoples' Bank of Northern India, Limited have reached a stage making it just and equitable that the company be wound up by the Court under the Companies Act.

Analysis: The Court examined the history of successive court-sanctioned schemes of arrangement adopted under Section 153, payments made to creditors, the extensive indebtedness of director-debtors, and evidence of deliberate departures from the sanctioned schemes-in particular the large-scale buying and selling of the bank's deposits at heavy discounts that produced potential undue preferences and a regular traffic in deposits. The Court found that resuscitation was no longer reasonably possible, that the present Board had not and could not effectively recover the substantial debts due from former directors, and that the directors' conduct, including concealment and permitting adjustments contrary to the sanctioned schemes, undermined the very foundation of the alternative mode of liquidation chosen by creditors and shareholders.

Conclusion: The petition for compulsory winding up is allowed and the Peoples' Bank of Northern India, Limited shall be wound up by order of the Court; decision in favour of the petitioner.

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