TaxTMI 
TaxTMI 
1985 (12) TMI 346
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....s. 100 each. The amount of the paid-up capital is Rs. 3,54,200 divided into 3,542 equity shares of Rs. 100 each. The objects for which the company was established are as under : (1)To manufacture, refine, import, export, buy, sell and deal in drugs, medicinal, chemicals and pharmaceuticals and preparation of all kinds and all substances, apparatus and things capable of being used in connection with such products. (2)To carry on business as chemists, drysalters, druggists and pharmacists in all their branches. Besides the aforesaid main objects, there are 56 other objects incidental or ancillary to the main objects, as per memorandum and articles of association of the company. In the said company, the petitioners hold 1,680 equity shares and the shares held by the respondents are 1,800. Respondent No. 2, Ram Chandra Joshi, is the executive director of the said company. Further, according to the petitioner, because of serious differences between Shri Om Prakash Ameria, who was appointed as a managing director of the company, and respondent No. 2 with regard to the policy matters of the company, respondent No. 2 approached petitioner No. 5, Shri Ram Kuber Dubey, to purchas....
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....of money from the coffers of the company and committed many illegalities which imposed heavy liabilities on the company with the result that the working capital is almost extinct, the resources of the company are completely blocked and the business has come to a standstill. The accounts maintained by respondent No. 2 were found to be false by petitioner No. 4, Sanjai Dube, who was appointed as a manager of the company and the stock pledged is spurious. In short, the company is heavily indebted to the tune of Rs. 17,96,001, the details of which are as under : Rs. P. (1) M. P. Financial Corporation loan and interest amount (secured loan) 6,29,139.60 (2) Loan taken from respondent No. 3-Bank of India (secured loan) 6,71,541.00 (3) Industries Centre, Indore 1,763.10 (4) Money due to creditors 98,055.85 (5) Money due to depositors 1,40,487.70 (6) Remuneration, wages and salaries due to directors, officers and employees (approximately) 1,00,000.00 (7) Sales tax dues  ....
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.... respondents have also made serious allegations and levelled charges against the petitioners for their misconduct, instances of which have been quoted by them in the said reply. In short, they have totally denied the allegations made by the petitioners. Further, according to these respondents, who are majority shareholders, they are trying to revive the company and for this purpose have taken necessary steps to obtain restoration of the electric connection and that they hope to revive the company by bringing it to a profitable position within a couple of years. In fact, suits were filed by the M. P. Financial Corporation as also the Bank at the behest and instigation of petitioners Nos. 4 and 5, even though normally these suits would not have been filed before 1989. Learned counsel for the petitioners, after taking me through the documents which have been placed on record along with the petition, submitted that a bare perusal of these documents would indicate as to how respondent No. 2 has been acting against the interest of the company and has been indulging in selfish activities, has kept false and bogus accounts and admittedly, there being no production going on though heavy ....
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....interest. In the present case, the petition is not filed by a creditor himself, but by a group of minority shareholders and it appears their apprehensions are that their investment as shareholders may not be lost, though at the hearing learned counsel for the respondents gave an offer that the respondents are ready to purchase the shares held by the petitioners to which learned counsel for the petitioners kept quiet. In what circumstances a provisional liquidator should be appointed have been laid down in a decision (Virendrasingh Motilal Bhandari v. Nandlal Bhandari and Sons P. Ltd. [1979] 49 Comp Cas 532 (MP)). In Madhusudan Gordhandas and Co. v. Madhu Woollen Industries P. Ltd. AIR 1971 SC 2600; [1972] 42 Comp Cas 125 (SC), it has been held that head note of AIR): "In determining whether or not the substratum of the company has gone, the objects of the company and the case of the company on that question have to be looked into where the company alleges that with the proceeds of an intended sale of machinery it intends to enter into some other profitable business, the mere fact that the company has suffered trading losses will not destroy its substratum unless there is n....