TaxTMI 
TaxTMI 
1993 (7) TMI 269
X X X X Extracts X X X X
X X X X Extracts X X X X
....amachandra Rao describing himself as the managing director of the company had executed receipts on behalf of the company evidencing those deposits, bearing receipts Nos. 2/3, 2/14, 2/20, 2/23 and 2/26, respectively. The deposits should bear interest at 15 per cent, per annum. On the death of his mother, the first petitioner became entitled to recover the above amounts. He sent legal notice to the company on April 26, 1989. The managing director and the executive director of the company had acknowledged the above notices. The second petitioner, likewise, deposited an amount of Rs. 30,000 on various dates. The managing director of the company had acknowledged receipt of the above amounts in receipts Nos. 2/11, 2/15, 2/19 and 2/21. He sent a legal notice requiring the return of the amount along with 15 per cent, interest. The managing director of the company received the notice on May 12, 1989, and the executive director on May 3, 1989. The third petitioner, Smt. K. Anuradha, deposited a sum of Rs. 40,500 on various dates under receipts Nos. 1/44, 1/47, 2/1, 2/4 and 2/9, respectively. She also sent a notice on April 26, 1989, for the return of the above amount with interest. The man....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n evidencing the appointment of Sri C. Ramachandra Rao, as the managing director of the company. He submitted that Sri Bapuji himself had attested his (Sri Ramachandra Rao's) signature in his capacity as the executive director. Reference is also made to a letter dated June 24, 1989, issued by Sri Bapuji's sister-in-law, Smt. K. Nagamani, addressed to Sri C. Ramachandra Rao, managing director of the company, calling upon the company to pay an amount of Rs. 16,000 which she had lent to the company on various dates. The address of the above letter was said to be in the handwriting of Sri Bapuji. Sri Ramachandra Rao left for the United States on December 12, 1987, and returned only in April, 1988. He submits that he had handed over the minutes book, etc., along with the cheque book to Sri Bapuji, when he left, and that on his return, the same were not handed over to him back. It was submitted that it was, therefore, not possible for Mr. Ramachandra Rao to produce the books. Sri Ramachandra Rao, however, stated that the company had borrowed about 2.5 lakhs of rupees while he was its managing director during the period from September, 1986, to February, 1987. He stated that the amounts w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er-in-law who is also the mother of the first petitioner has filed O.S. Nos. 325 of 1989, 736 of 1989, 24 of 1990, 43 of 1990 and 72 of 1990 for the amounts of Rs. 10,150, Rs. 7,200, Rs. 2,200, Rs. 5,800 and Rs. 13,775, respectively, on the basis of identical transactions against the company. The maternal first cousin of Sri Ramachandra Rao has filed four suits, viz., O.S. Nos. 18 of 1990, 28 of 1990, 37 of 1990 and 66 of 1990 for the amounts of Rs. 13,725, Rs. 11,600, Rs. 7,250 and Rs. 10,875, respectively. The fourth petitioner who is the daughter of the first petitioner and niece of Sri Ramachandra Rao filed two suits O.S. Nos. 20 of 1990, and 69 of 1990, for the recovery of a sum of Rs. 21,407 whereas the son-in-law of the first petitioner filed five suits, O.S. Nos. 119 of 1989, 22 of 1990, 26 of 1990, 67 of 1990 and 171 of 1990, for the amounts of Rs. 8,700, Rs. 13,050, Rs. 12,325, Rs. 9,475 and Rs. 7,250, respectively, for an aggregate amount of Rs. 50,800. It was, therefore, submitted that all the claimants who had lent monies have filed suits in the court of the District Munsif, Kovvur, and the transactions are similar, in that they are based on receipts issued by Sri Ram....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e inability of the company to return which is said to be the reason for filing the petition for winding up of the company, do not exist as a matter of fact or law. Winding up of a company is a serious proceeding with drastic consequences. It may perhaps be the last resort. Its effect is to decimate the company. The courts shall ordinarily be wary in ordering winding up, except when no other course is left open. It may be that the substratum of the company has been eroded disabling the company to honour its obligations. It may be the company has become insolvent. It may be that the continuance of the company may be oppressive of its constituents and creditors. In all such extraordinary situations and only on proof of the existence of such circumstances, can a court initiate proceedings for winding up. Even when notice is ordered in cases which do not call for such drastic action, the consequences on the company may be disastrous. In cases of alleged inability of the company to pay its debts, the court is to be doubly cautious. It is a trite saying that a petition to wind up shall not be a more expedient substitute for recovery of monies. In all cases where such actions are based on....