Just and equitable grounds absent; winding-up dismissed where new board and continued trading plus alternative statutory remedy available.
Petitioner sought winding up on grounds of alleged past mismanagement, related-director control, misappropriation, trading losses and sale of undertakings; court found most misconduct attributable to a prior board, a new board in office with no substantive allegations, continued ability to trade and retention of undertakings within the memorandum, and no commercial insolvency. Petitioner was a small shareholder who declined a premium offer and had an alternative statutory remedy available. The court concluded just and equitable grounds were not made out and dismissed the winding-up petition in limine.
Issues: (i) Whether the petitioner has made out just and equitable grounds for winding up the company; (ii) Whether the winding-up petition should be dismissed in limine in view of available alternative remedies.
Analysis: The petition alleges mismanagement by a board largely composed of related directors, past misappropriation, persistent trading losses, and disappearance of the company's substratum through sales of undertakings. The facts demonstrate that most alleged misconduct related to the previous board and that a new board took office in August 1963 with no substantive allegation against it. Financial statements show a small carried forward loss relative to paid up capital and continued trading ability; the market price of shares improved after the new board took charge. The company's memorandum permits acquisition and disposal of estates and the company still retains undertakings enabling it to carry on authorised business. The petitioner is a very small shareholder and rejected an offer to buy his shares at a premium; no case is shown that the new board is privy to past misconduct or that the company is commercially insolvent. The court also notes that, on the pleaded facts, the petitioner has an alternative statutory remedy under Section 398 read with Section 399 of the Companies Act, 1956, rather than seeking winding up.
Conclusion: The petition does not disclose sufficient just and equitable grounds for winding up and the winding-up petition is dismissed in limine.
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