TaxTMI 
TaxTMI 
2024 (6) TMI 253
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.... and is holding 300 equity shares of Rs. 100/- each against subscribed and paid-up capital of Rs. 15.12 lakhs and he is relying on the list of shareholders attached to the Annual Return dated 29.09.2012 of the Company to demonstrate that the appellant in all holds 600 equity shares of Rs. 100 each. He has filed Company Petition No. 2 of 2013 for winding up of the Company in terms of Section 433 (c) and (f) read with 439 (c) of the Companies Act, 1956 (hereinafter referred to as 'Act, 1956') 3. The appellant alleged that the Company has completely closed its business activities. Further alleged that the respondent - Directors of the Company who are stated to have sold the entire land in pieces at the rate of approximately Rs. 1,54,286/- per decimal. In this regard, appellant is relying on 29 sale deeds executed by the respondents - Directors. It is also alleged that respondents - Directors have demolished the building of cinema hall and sold the building materials, plants and machinery and have misappropriated sale proceeds. It is further alleged that the respondents - Directors have sold valuable land and building of Company at a throw away price of Rs. 1,54,286/- per decimal wh....
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....ed Company Judge dated 26.11.2015 passed in Company Petition No. 2 of 2013, the present Company Appeal No. 1 of 2016 has been presented. 8. Matter was heard from time to time. Thereafter, at the behest of the appellant, appellant counsel has filed written arguments so also the respondents have filed written notes of arguments in which they have stated: "Setting aside the order/judgement dated 26.11.2015 passed in Company Petition No. 02/2013 whereby the Company Petition filed by the Appellants under Section 433(c) and (f) read with Section 439 (c) of the Companies Act, 1956 praying winding up of Respondent No. 1 (Company) and appointment of Official Liquidator to take charge of the assets of the Respondent No. 1 (Company) was dismissed by the Hon'ble Company Judge." Respondent Nos. 1 and 3 have analyzed factual aspect of the appellant as well as respondents, they are as under : "The Respondent No. 1 (Company) was incorporated as a Private Company (Limited by shares) on 23.11.1976 having its Registered Office at Hajipur, Biharsharif (Nalanda). The Respondent No. 1 (Company) was established to carry on the business of Proprietors or Manager of T....
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....e report of the Auditors is required to be got approved by the Share Holders and thereafter only, the Balance Sheet and Profit & Loss Account could be filed before the Registrar of Companies in terms of Section 220 of the Companies Act, 1956. The Appellants (Company - Petitioners) alleged that an amount of Rs. 3,18,185/- shown in the Balance Sheet as on 31.03.2012, being lying with the Respondent Company, is claimed to be wrong. The Appellants (Company - Petitioners) in their Supplementary Affidavit has stated that the Respondent Company has been Authorized Capital of Rs. 24.00 Lakhs divided into 24,000 shares of Rs. 100/- each and subscribed capital of Rs. 15,12,000/- consisting of 15,120 Equity Share of Rs. 100/- each, out of which the Petitioners jointly subscribed 600 Equity Shares of value of Rs. 100/- each. The Appellants (Company Petitioners) in I.A. No. 4614/2013 has alleged that the Respondent Directors had sold 69.7182 decimals of land of the Respondent Company, out of total 1 Acre area of land and it is alleged that the remaining 30.2818 decimals of land would also be sold by the Respondent Directors and apprehending such, filed an Interlocutor....
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....1995 and thereafter one Sri Krishna Kumar was appointed as a new Managing Director of the Respondent Company. The Respondent Company works smoothly till the year 1995, but during the period of Sri Krishna Kumar, being the Managing Director of the Respondent Company, the Respondent Company suffered massive loss due to non payment of statutory liability, namely, liability of Entertainment Tax, Employees' Provident Fund, Electricity dues, Dues of Municipal Corporation ete, which led to initiation of recovery proceeding under the Bihar, Orissa and West Bengal Public Demand Recovery Act and action for auction sale of the property of company was also initiated. In the aforesaid background, the share holders of the company conveyed an extraordinary General Meeting on 15th February, 2008 in terms of Section 169 of the Companies Act, 1956 wherein in the presence of the 31 shareholders of the Respondent Company, the property of the company was unanimously resolved to be sold by authorizing the two Directors (Respondent Nos. 2 & 3) to execute deed or conveyance of the properties of the company for discharge of statutory liabilities which had led to initiation of recovery proceedi....
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....ppellants that the Respondent company is not carrying out the business of Cinema Hall, hence entitled to be wound up is not being made out as, as per the Memorandum of Association business of Cinema is not only the business for which the Respondent company was incorporated and hence the company has the option to diversify its existing business into any other business detailed in Memorandum of Association. On the aforesaid facts, the Respondents prayed for dismissal of the Company Petition filed by the Appellants." 9. In this backdrop, learned Company Judge framed the following issue : "Whether the present company petition needs to be admitted and steps be taken for liquidation of the company by appointing the Official Liquidator?" 10. The learned Company Judge after due analyzing the factual aspects of the matter had come to the conclusion that it is not a case for winding up for the reasons that appellant has not made out various ingredients for the purpose of invoking Section 433 (c) or Section 433 (f) of the Act, 1956. 11. The appellant in the present appeal reiterated the stand taken before the learned Company Judge to the extent that respondent - Com....
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....ts of the present case it is admitted that under duress, the Respondent Company to pay the statutory dues of various government departments, after resolution passed in extra-ordinary general meeting had sold the land of the Respondent Company and by the proceeds of such sale cleared the outstanding dues of the Respondent Company and the balance sale proceeds are secured in Fixed Deposit and Current Bank Account of the Respondent Company maintained in Canara Bank which has also been duly accounted for in the Balance Sheet as on 31.03.2012. Moreover, the Respondent Company is making endeavour to diversify its business in one of the object as mentioned in the Memorandum of Association and, therefore, it is not a fit case for passing an order of winding up under Section 433(f) of the Companies Act, 1956. It is not a case where the assets of the Respondent Company have been sold and its proceeds have been mis-utilized; to the contrary, the proceeds of sale was utilized for payment of statutory dues of the Respondent Company and the balance are secured in the name of the Respondent company in its bank account by way of Fixed Deposit or balance in the Current Bank Account. Hence,....
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....on'ble Orissa High Court in the case of Mohanlal Saraf Vs. Cuttack Electric Supply Co., reported in (1964) | Company Law Journal 58 has held that "where suspension of business was due to acquisition there was no sufficient reason for passing of winding up order against the Company". The Hon'ble Rajasthan High Court even in the case of Registrar of Company Vs. Jai Agro Industries Ltd., reported in 1987(62) Company Cases 358 has held that "though the business of the company has been suspended for more than year but then the company was in sound financial condition and, therefore, it need not be wound up". In the present case, the only ground urged by the Appellants seeking winding up of the Respondent Company is suspension of business of Cinema Hall for more than year. In this regard, it is submitted that the reason for suspension was not attributable to either the Respondent Company or to the Respondent Directors; rather, due to accumulation of huge statutory debt of different government organizations and, therefore, in view of the aforesaid judgments of various Hon'ble High Courts, considering the fact that the sale proceeds of the assets of the Respon....
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....e properties have been sold at a throw away price. To that effect, he has pointed out 29 sale deeds which were executed by respondent Nos. 2 and 3 (Directors) and they have sold 69.7182 decimals of land at a sum of Rs. 1,45,20,000/-. Such proceedings have been undertaken by respondent Nos. 2 and 3 without calling any meeting of the shareholders. Thereafter, certain procedures were required to be followed by the respondent Nos. 2 and 3 to the extent of compliance to Sections 215 and 210 of the Act, 1956. For compliance of the aforementioned statutory provisions, respondent Nos. 2 and 3 have not apprised this Court in the Company Petition in furnishing relevant documentary evidence or material information. Even amount shown in the balance sheet is incorrect as on 31.03.2012 to the extent of sum of Rs. 3,18,185/- On this issue, the respondents have not countered in producing relevant material to defeat the contentions of the appellant. They have also not countered in respect of supplementary affidavit filed on behalf of the appellant that the respondent - Company has been authorized capital of Rs. 24 lakhs divided into 24,000/- shares of Rs. 100 each and subscribed capital of Rs. 15,1....
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....narrated in the memorandum of association in particularly Clause A (iii) to run a Restaurant, Bar-cum-Restaurant, Bar, Hotel or Motel even to this day. It is only stated that respondent - Company is trying to resolve its pending problems in respect of some proceedings against it and proposing to start new business by diversifying existing business in terms of memorandum of association with the respondent - Company. For these many years what are the steps taken to commence new business is not forthcoming. 18. Respondents in their rejoinder statement/notes, they have narrated various factual aspects of the matter. However, supporting documents have not been placed on record to meet each and every contentions of the appellant. In the absence of these material information, the learned Single Judge has committed error in rejecting the Company Petition No. 2 of 2013 on 26.11.2015. 19. The winding up order may also be made if it is approved that the affairs of the Company have been conducted in a manner unfairly and prejudicial to the interest of some shareholders of the Company or its shareholders generally. In considering the various factual aspects of the matter the Court still s....