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Issues: (i) Whether the petition for compulsory winding-up is barred by (a) a prior dismissal of an earlier petition and (b) the petitioners' failure to pay a subsequent call; (ii) Whether a provisional liquidator should be appointed and what interim measures (if any) should be granted pending determination of the winding-up petition.
Issue (i): Whether the petition is barred by a prior dismissal or by the petitioners' failure to pay a further call.
Analysis: The Court reviewed the record of the earlier petition and noted that it was dismissed as premature on the petitioners' withdrawal, not on merits; therefore the prior dismissal does not bar a fresh petition lacking the same defect. The Court considered the scope of Section 166 of the Indian Companies Act and its proviso specifying disqualifications for contributories; since non-payment of a further call is not enumerated there, failure to pay a later call does not automatically deprive a contributory of the right to present a winding-up petition. English authorities were discussed, and the Court recognised that, while non-payment of a valid call together with other facts might affect standing, the petitioners had denied the validity of the call and raised arguable objections requiring inquiry.
Conclusion: The objection based on the prior dismissal is overruled, and the objection based on non-payment of the further call is overruled; the petition is not barred on these grounds (conclusion in favour of petitioners).
Issue (ii): Whether a provisional liquidator should be appointed and what interim relief is appropriate.
Analysis: The Court examined the grounds relied on by the petitioners (failure to file statutory report and hold statutory meeting, alleged failure to commence business within a year, alleged disappearance of substratum due to licence refusal, and alleged mismanagement and defective books). The Court found that some allegations (non-filing of statutory report and non-holding of statutory meeting; deficiencies in books and accounts) are conceded or supported by evidence and require investigation, but that the petitioners had not established an uncontested case warranting appointment of a provisional liquidator. The Court applied the principle that provisional liquidators are not appointed as a matter of course where there is opposition because such appointment may paralyse company affairs; where opposition exists the Court will not appoint a provisional liquidator unless clearly justified. Balancing the need to protect shareholders and allow inquiry, the Court framed targeted interim measures (audit by appointed auditors, stay of pending suits, convening a shareholders' meeting, and an injunction against withdrawals by the managing director) rather than appointing a provisional liquidator.
Conclusion: The petitioners have not established entitlement to a provisional liquidator; appointment is refused. The Court grants interim measures in favour of petitioners (ordering audit, staying related suits, directing a shareholders' meeting, and restraining withdrawals by the managing director) (partly in favour of petitioners).
Final Conclusion: The Court overruled preliminary objections to the winding-up petition, refused appointment of a provisional liquidator on the present record, and granted limited interim reliefs to protect the interests of petitioners and shareholders while the petition proceeds to further hearing.
Ratio Decidendi: Failure to pay a subsequent call does not by itself disqualify a contributory from presenting a winding-up petition under Section 166 of the Indian Companies Act, and a provisional liquidator will not be appointed where opposition exists unless the petition establishes a clear case justifying such drastic interim relief; targeted interim measures may be ordered instead.
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