Substratum Principle: company wound up where primary business became impossible and management conduct prejudiced minority, justifying relief.

Where the company's paramount object of banking became impossible to pursue and operations ceased, the HC applied the substratum principle and held that winding up is appropriate because the company cannot resume its declared business; alternatively, the court found just and equitable grounds where dominant shareholders and board control benefited the majority (Goenka group) through large connected-party advances and negligible repayments to the prejudice of the minority, making continuation oppressive. The court rejected availability of alternate remedies as adequate and granted the petition for winding up.

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Issues: Whether the company should be wound up on the grounds that (i) the substratum of the company is gone and (ii) it is otherwise just and equitable to wind up the company.

Analysis: The memorandum of association shows banking as the primary object (sub clauses (1)-(3)) despite other independent object clauses. Evidence established that the company ceased carrying on banking business following runs and governmental prohibition, majority shareholding and board control vested in the Goenka group, large advances were made to Goenka connected concerns with negligible repayments leading to mounting bad debts, and the company carried out little or no business with no realistic prospect of resuming banking operations. The court examined authorities on substratum and the just and equitable principle (including In re Suburban Hotel Co., German Date Coffee Co., Kitson & Co., Taldua Rubber Co., Loch v. John Blackwood Ltd. and Cotman v. Brougham) and applied the principles that where the paramount object of a company has become impossible to pursue and the continuing management benefits the dominant group to the prejudice of the minority, winding up on just and equitable grounds may be appropriate. The court also considered but rejected the argument that alternative remedies (e.g., under section 398) made winding up unreasonable in the circumstances.

Conclusion: The petition is allowed and a winding up order is made; the substratum of the company has disappeared and, alternatively, it is just and equitable to wind up the company.

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