(1) This is a petition for winding up of a company filed by the Registrar of Companies under Section 166(aa) with the previous sanction of the State Government.
(2) The ease made out in the petition is that the company had as of November 30, 1949, a paid-up capital of Rs. 41,923 and that the accounts of the company for the year ending November 30, 1943, showed that it had incurred a loss of Rs. 73,821-13-2. The company was, therefore, insolvent and unable to pay its debts. It is on these facts that the State Government accorded its sanction to the presentation of this petition by the Registrar. That sanction was given on 6-11-1950, but the petition was not presented until 23-6-1952. In the interval the company had published the balance-sheets for two subsequent years The balance-sheet for the year ending with 30-11-1950, has been dealt with at some length in the petition, but the net result shown by this balance-sheet is an ultimate loss of Rs. 1,04,593-7-4. The petition then mentions, almost in passing and as if it had no bearing on the question with which the petition related, that the balance-sheet for the year ending 30-11-1951, showed a profit of Rs. 97,180-3-6, which practically wipes out all the loss accummulated over some years.
(3) Now, to this petition a preliminary objection has been raised on behalf of the respondents that the sanction of the State Government which has been obtained is not such sanction as is required by law, and therefore the petition is not competent. The contention is that the sanction was based on the financial condition of the company as of November 30, 1949, while the petition is based on the financial position of the company at the date of the presentation of the petition which must include the balance-sheets for the years ending with 30-11-1950, and 30-11-1951. These two balance-sheets were never placed before the sanctioning authority nor did they apply their minds to them, and, therefore, the sanction accorded is not the sanction which is contemplated by Section 166(aa), Companies Act. Now, on behalf of the petitioner, it is urged that the section does not provide for a period of limitation during which a petition for winding up is to be presented after obtaining the sane-lion, and, therefore, once a sanction has been obtained, it is competent to the Registrar to present the petition at any time thereafter. I cannot countenance any such contention. If the contention were sustained, it would mean that on the sanction obtained in this case in 1950 the Registrar would be enabled to present a petition for winding up of the company at any time thereafter. That could not have been the intention of the Legislature; and it is obvious to me that a petition filed by the Registrar for winding up with the sanction of Government must be filed within a reasonable time of the obtaining of such sanction, failing which the Court will refuse to recognise the sanction as a valid sanction. The proviso to Section 166, Sub-section (aa), Sub-clause (ii), shows that the sanction shall not be given unless the company has been afforded an opportunity of being heard. This safeguard in the interest of the company will be rendered completely nugatory if sanction was to be obtained on one set of facts which were placed before the sanctioning authority and the petition was to be based on other facts which were not before the sanctioning authority. It appears to me to be also implicit in the obtaining of the sanction that the sanction must be obtained in relation to the facts on which the petition is based, and if sanction is obtained in relation to one set of facts and the petition is based on another set of facts, again, the Court will refuse to consider the sanction as valid. In this particular case; the only facts placed before the sanctioning authority was the balance-sheet of the year ending 30-11-1949, and the financial position of the company as it was at that date. The subsequent balance-sheets on which reliance has been placed and which are at any rate as regards the balance-sheet of the year ending November 1950, dealt with at length in the petition were never placed before the sanctioning authority, and, 'in my opinion, therefore, there is no sanction which the Court can recognise as sufficient for the purpose of enabling the Registrar to present a winding up petition.
(His Lordship concluded).
(4) The petition, therefore, will be dismissed.
(5) Although costs usually follow the event, as the petitioner in this case, the Registrar of Companies, who is a statutory authority not personally interested in the winding up of any company, and as there was no decision of any Court on the validity of a sanction such as the one in this case, and as the respondents had not prior to the hearing of this petition offered to write off the two amounts of Rs. 13,474-1-9 and Rs. 9,252 but for which I may possibly have taken a different view, on the merits ofthe petition, the fair order for costs will be'that each party will bear its own costs.
(6) Petition dismissed.