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K. Kempamma Vs. Peeceeyes Industries P. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKarnataka High Court
Decided On
Case NumberCompany Petition No. 19 of 1981
Judge
Reported in[1983]54CompCas368(Kar)
ActsCompanies Act, 1956 - Sections 433
AppellantK. Kempamma
RespondentPeeceeyes Industries P. Ltd. and ors.
Excerpt:
.....the act would have come into operation. - however, later averments of the petitions disclose clearly that 2,300 share have been issued and the subscribed capital is shown as rs. b dated november 8, 1980, clearly indicates that some of the shareholders, at least, are interested in the working of the company once again 5. the learned counsel for the petitioner has filed upon a decision of the house of lords in ebrahimi v......to which the company appears to have filed a return to the registrar as required, stating that she ceased to be a director of the company. petitioner has claimed that the same is illegal as she had not received any notices of the meetings at all. the matter is a matter which is required to be agitated in some other appropriate forum. the petitioner can seek a declaration in civil court as to her status on board of directors in a properly framed suit. merely because she had been removed allegedly illegally, it cannot be said to be a just and equitable ground to wind up the company. 3. in fact, annex. b to the affidavit filed indicates that the company is not a very sound financial position. some of the shareholders have sought permission to sell their shares to some others who are having.....
Judgment:

Chandrakantaraj Urs, J.

1. This petition under s. 433(1)(f) of the Companies Act, '1956, is made by one of the shareholders, an ex-director of the company, praying for an order of winding-up on just and equitable grounds.

2. Respondent No. 1 company was formed under the provisions of the Companies Act, 1956, (hereinafter referred to 'the Act'). The nominal capital of the company at the time of incorporation was Rs. 2,00,000 divided into 2,000 share of Rs. 100 each. However, later averments of the petitions disclose clearly that 2,300 share have been issued and the subscribed capital is shown as Rs. 2,30,000. Though there are several allegations of mis management of the company, practically knocking out the substrata of the company, that is not a ground available to the petitioner as an ordinary shareholder, not representing 10 per cent. of the total subscribed capital. The only ground urged by Sri K. G. Raghavan, learned counsel for the petitioner, in support of the petition being admitted and notices ordered to the respondents, is that she has been illegally excluded from participating in the management of the company, as she was founder-director of the company. The petition also discloses the reason for her removal, in spite of the provisions to the contrary contained in the articles of association of the company. It was solely on the ground that she absented herself from three consecutive board meetings, with reference to which the company appears to have filed a return to the Registrar as required, stating that she ceased to be a director of the company. Petitioner has claimed that the same is illegal as she had not received any notices of the meetings at all. The matter is a matter which is required to be agitated in some other appropriate forum. The petitioner can seek a declaration in civil court as to her status on board of directors in a properly framed suit. Merely because she had been removed allegedly illegally, it cannot be said to be a just and equitable ground to wind up the company.

3. In fact, annex. B to the affidavit filed indicates that the company is not a very sound financial position. Some of the shareholders have sought permission to sell their shares to some others who are having sufficient finance and who can run the company, which has not ceased to carry on its business. This is indicating of the fact that the company is not a total loss as yet. Even if it is, I do not see how a shareholder can move for winding up of the company on that ground.

4. No doubt the company has stopped its business somewhere in the year 1980. But the said letter at annex. B dated November 8, 1980, clearly indicates that some of the shareholders, at least, are interested in the working of the company once again

5. The learned counsel for the petitioner has filed upon a decision of the House of Lords in Ebrahimi v. Westbourne Galleries Ltd. [1972] 2 All ER 492; 2 WLR 1289. He has drawn my attention to the observation of the House of Lords therein to the effect that one of the tests to be applied in considering what constitutes just and equitable ground to wind up a company is to see whether a person who has a right to participate in the management has been excluded from the management unjustly or arbitrarily. On the facts of that case, exclusion of the director in question therein was legal. Nevertheless, the power exercised by the management in excluding him from the company was held to be a gross abuse of the power vested in it. The ground disclosed therein appears to be that the director was of the complaining type. That case is not of much assistance to the petitioner herein, because the facts are totally different. Here the director has been expelled and has ceased to be a director not account of the abuse of power used by the board of directors of the 1st respondent company but by operation of law as provided in the Companies Act. There is not case made out for entertaining this petition under s. 433(1)(f) of the Companies Act. Therefore, it is rejected without being admitted.


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