TaxTMI 
TaxTMI 
1979 (12) TMI 133
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....d office of the company being situated at Andamukkom, Kerala State. The objects of the company were to carry on business of chit funds by enrolling members from the public. The company was incorporated with three shareholders. Subsequently, 7 other shareholders were admitted. The company was carrying on chit fund business through its branches at various places in the States of Kerala, Tamil Nadu, Karnataka and Orissa. The business of the company did not show any progress. The subscribers to the chit funds started interfering with the day-today management and began to press for the amounts they had subscribed. Suits were also filed against the company and, in a few cases, attachment, before judgment, of the properties was also ordered. Attem....
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....f the premises of the branches of the company situated in the different States and to take charge of the assets forthwith. The petitions for winding up stood posted to October 23, 1978. On October 23, 1978, the petitioners were directed to file a statement of all the movable and immovable properties of the company wherever situated and also to deliver all the books and papers up-to-date and also to file an affidavit. A statement of the affairs of the company as on date was also directed to be filed. Three weeks' time was granted for the above purpose. The petition was adjourned from time to time and on December 21, 1978, since no statements or documents were filed, the court posted the case for disposal to January 10, 1979. Thereafter, it w....
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....ovides the penalty for disobedience of orders of court in relation to filing of statements by the directors and the court should have followed the said provisions instead of dismissing the petition itself. Part VII of the Companies Act deals with winding up of companies. Section 425 mentions the modes of winding up and one of the modes mentioned therein is by order of court. Under section 433, the company may be wound up by court, among others, if the company has, by special resolution, resolved that the company be wound up the court, or if the company is unable to pay its debts or if the court is of opinion that it is just and equitable that the company is wound up. The word " may " in the section denotes that the court is vested with t....
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....rd with an application for winding up has no force. The nature and extent of the discretion would vary depending upon who files the petition, and the circumstances made out during the enquiry thereof. Ordinarily, when the company is itself the petitioner and it is made out that it is not in a position to continue its work due to rancor among the shareholders or otherwise or that it is running at a loss or is unable to pay its debts or that the business of the company has come to a deadlock clue to other reasons, the court would not and should not deny relief. If the number of shareholders is small, the company can be dealt with on a par with a partnership concern and the company should be allowed to be wound up if there exists such a ground....
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....for every day during which the default continues or with both. The contention put forward is that since sub-section (5) provides for the consequences of the default in the filing of the statement, the course open to the court in the case of such default is to proceed under the above provision and prosecute those responsible for the default. According to the appellant-company, since it was the directors who were responsible for filing the statement, the court should have taken steps against them and the order dismissing the petition itself without following the procedure mentioned in section 454(5) is not sustainable in law. There is force in the contention put forward on behalf of the appellant-company. Section 454(1) provides for filing....
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....ements under section 454 cannot be justified. There is another reason also for holding that the dismissal of the petition for winding up for violation of section 454(1) is not contemplated by the statute. Section 454, in so far as it makes the non-filing of the statement penal, creates a special offence. The section itself imposes the penalty for non-compliance of its provisions. When a statute of a special nature makes violation of its provision an offence and also provides the mode of penalty, a person guilty of violation is to be punished only in the mode provided in the statute and not in any other mode. If that be so, the directors of the company who defaulted in filing the statements which they were called upon to file were liable ....