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Issues: (i) Whether the High Court had jurisdiction to entertain a winding-up petition against a foreign company carrying on business in India as an unregistered company. (ii) Whether the petition disclosed a prima facie case for admission on the grounds that the company had ceased to carry on business, its substratum had gone, and the business carried on was ultra vires and by persons not validly appointed as directors.
Issue (i): Whether the High Court had jurisdiction to entertain a winding-up petition against a foreign company carrying on business in India as an unregistered company.
Analysis: A company incorporated outside India falls within the definition of a body corporate, and where such a company has been carrying on business in India and has ceased to do so, it may be wound up as an unregistered company under Part X of the Companies Act. The existence of a place of business and head office in Bombay was sufficient to show that the company had been carrying on business in India, notwithstanding that its principal operations were connected with Burma.
Conclusion: The Court held that it had jurisdiction to entertain the petition.
Issue (ii): Whether the petition disclosed a prima facie case for admission on the grounds that the company had ceased to carry on business, its substratum had gone, and the business carried on was ultra vires and by persons not validly appointed as directors.
Analysis: The company's original and dominant object was petroleum business, and the later activities of advancing money on shares and investing the company's funds in shares of other companies were treated as outside its memorandum. The Court also held that the subsequent alteration of objects did not justify summarily rejecting the petition, especially when its validity was under challenge elsewhere. The allegations regarding invalid appointment of directors were treated as relevant to the enquiry. At the admission stage, the Court found a sufficient prima facie basis to investigate whether the company had ceased to carry on business, whether its substratum had failed, and whether it was just and equitable to wind up the company.
Conclusion: The Court held that the petition should be admitted and advertised for further hearing.
Final Conclusion: The proceedings were allowed to go forward, with costs awarded up to the stage of admission, because the petition disclosed a fit case for inquiry rather than summary dismissal.
Ratio Decidendi: A foreign company that has been carrying on business in India may be wound up as an unregistered company, and a winding-up petition should be admitted where the facts disclose a prima facie case of cessation of business, failure of substratum, and ultra vires conduct warranting judicial inquiry.
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