TaxTMI 
TaxTMI 
TaxTMI 
1949 (12) TMI 28
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....ompany. The Gaya Sugar Mills Ltd. was originally a private company but was incorporated as a public company in 1934, the capital being 7 lakhs. This capital was increased to 12 lakhs, and then to 40 lakhs and finally, in 1944, to 1 crore. The reason for this was that the company embarked on an ambitious scheme to construct a large and up-to-date sugar factory and also a cardboard factory at Warisaliganj. The original factory is situated at Guraru which appears to be some distance from Warisaliganj. Warisaliganj was selected as a better site as it is situated in the centre of an area in which good sugarcane can be grown. Land was purchased and buildings were erected at Warisaliganj and orders were placed for new machinery. It is said that de....
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....ny on or before 24th July 1949, or resign his office as Managing Director. This undertaking is said to have been contained in a letter which Lala Gurusharan Lal handed over to another director, Chandmul Rajgarhia. Neither the letter nor any copy of it has been produced. At about this time, or somewhat later, one of the directors, Bhagwati Prasad Khaitan, resigned, and another, Birdhichand Bhalotia, forfeited his office in consequence of his failure to meet certain calls on his shares. According to the petitioners, Lala Gurusharan Lal did not implement the undertaking he had given. Thereupon, the three remaining directors, namely, Onkarnath Jajodia, Sohanlal Jajodia and Chandmul Rajgarhia, or, more probably, a majority of these consisting of....
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....lied for a winding up order. The broad ground on which such an order is asked for is stated thus in para. 46 of the application:- "The main purposes of the company has become impossible for performance and there are no funds adequate for carrying on the business of the company, and the company cannot go on except at heavy loss." Certain particulars are then given which the petitioners regard as going to support the ground they put forward. The existing factory at Guraru has a capacity of 800 tons, and it will probably benefit by the expenditure incurred at Warisaliganj on improving the yield and quality of sugarcane. The crushing season begins this month, and the company in its affidavit states that the necessary preparations have been ma....
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....oreover, what I am now concered with is not the making of a winding up order but the application for the appointment of a provisional liquidator. Such an application is not ordinarily allowed except on the petition of a creditor who has been unable to obtain payment of his money, or unless the company asks for or agrees to the appointment. The dangers involved in appointing a provisional liquidator and then finding that there is no justification for making a winding up order are obvious. The consequences to the company of the making of a wrong order in such a matter are far more serious than the granting of an injunction which has ultimately to be dissolved, the object in appointing a provisional liquidator is to ensure that there will be a....
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....een reached in which it is possible to say that the company is unable to pay its debts. Moreover, the application does not purport to be under clause (v) but under clause (vi) of section 162 of the Act. The learned Advocate-General reiterated the point that a deadlock had occurred in the management of the company and that its continuance was especially detrimental to the shareholders as the business of crushing sugarcane and manufacturing sugar is a seasonal business, which can only be carried on for five or six months at this time of the year. I doubt if the decision, In re Yenidje Tobacco Co. Ltd. [1916] 2 Ch. 426, which was cited in this connection by Mr. Jha, is an authority even for the proposition that a public company of the kind wit....