1. This petition is filed under Section 433(e) and (f) of the Companies Act. 1956 to wind up Kamadhenu Metal Rolling Mills Pvt. Ltd., Thirupur, Coimbatore District., The Company was incorporated on 30-5-1962 as a private limited company by shares. The main object of the company is to deal and sell metal wares and products and to establish iron foundry and rolling mills. The petitioner claims to be a shareholder as well as a creditor. According to her, a sum of Rs. 16,840-48 is due to her as per the books of the company. Her case is that the company is commercially insolvent and is unable to pay its debts, that there has been increase in the loss from year to year, that the affairs of the company are being mismanaged and that it is, therefore, just and necessary that the company should be wound up.
2. The petitioner is the wife of Subbaraya Chettiar, the Managing Director of the respondent company. The Managing Director has sworn to a counter-affidavit stating that there is misunderstanding between him and his wife, that the petitioner has come forward with this application to cause annoyance to him on account of the family quarrel, that the petitioner is neither a share-holder nor a creditor and that he has advanced his own money and made entries in the name of the petitioner benami for his benefit. it is also his contention that though the company has not been able to make profit due to initial difficulties during the period of recession and other causes, the company is slowly turning round the corner and would very soon be able to show profit. It is his submission that the petitioner should not be allowed to use the provisions of the company law for the purpose of spiting him. The petitioner has filed a reply affidavit denying the allegations of benami set up by her husband.
3. Prior to the institution of the petition, there was no statutory notice of demand for the payment of the amount said to be due to the petitioner. So far as the financial position of the company is concerned the report filed by the respondent to Registrar of Companies, to which is attached the auditors' report, no doubt shows that all is not well with the company. The company appears to be commercially insolvent. The company also appears to be a regular defaulter in the matter of filing balance sheets and annual returns, with the result some criminal proceedings have been taken against the directors for such defaults. The auditors report also shows that the accounts have not been kept in a proper way.
4. The further case of the petitioner is that her son Anandan is also a creditor, the amount due to him being Rs. 14512-10. But the contention of the managing Director is that his son also is a benamidar so far as the amount entered in the son's name is concerned. The son has not chosen to file an affidavit in support of the allegation of the petitioner. But in the family quarrel, the son seems to be on the side of the mother, the petitioner.
5. It is no doubt true, as seen from the report of the Registrar of Companies and the auditors' report, that the company is not commercially solvent and that the affairs of the company are not being conducted in such a way as they should be conducted. But the question is whether it is just and equitable that the company should be wound up. As already pointed out, this petition appears to be the result of estrangement of feeling between the petitioner and her husband, the Managing Director. The explanation of the Managing Director is that ever since the incorporation of the company in the year 1962 it had to meet with some difficulties or other resulting in some loss, and that in view of the change in the industrial market at present, he hopes to met the situation and work the company to the advantage of the share-holders. One important thing to be noted in this connection is that no other creditor or share-holder of the company either opposes or supports this petition. That clearly shows that the other share-holders and creditors have allowed the husband and wife to fight out their battle through this company petition. That again lends support to the view that the object of the petitioner is only to take revenge against her husband on account of the family quarrel between them. I do not think that the court should give a helping hand to the petitioner. There are no other forums in which the petitioner can seek redress, if she has a case.
6. So far as the question of benami set up by the Managing Director of the respondent company is concerned. Mr. Harikrishnan, appearing for the petitioner, contended that such a plea is not open and that the court should go only by the names that appear in the records of the company. In support of this contention he referred to S. 153 of the Companies Act, which reads thus:--
'No notice of any trust, express, implied or constructive shall be entered on the register of members or of debenture holders or be receivable by the Registrar.'
7. I do not think that this provision is a bar against the Managing Director from contending that the petitioner is only his benamidar. The object of the section appears to relieve the company from any obligation to take note of equitable interests in its shares and also to preclude any person claiming an equitable interest in shares from treating the company as a trustee in respect thereof. All that the section says is that no notice of any trust etc., shall be entered on the register of members of debenture-holders. The register is a notice to persons dealing with the company as regards the ownership of the shares or debentures. The object of Section 153 seems to be that such persons dealing with the company may not be affected by the entry of any kind of trust. Therefore, I do not see any ground to hold that the company itself cannot take notice of or recognise any trust brought to its notice otherwise than by entry in the register. It would be open to the company to say that it cannot take note of any relations between the trustees and the cestui que trust in respect of the shares of the company. If a trustee is on the company's register as a holder of shares, the relations which he may have with some other person in respect of the shares are matters with which the company has nothing whatever to do. But if the company itself is aware that the person in whose name the share is entered is only a benamidar there is nothing in the language of Section 153 to preclude the company from putting forward that contention.
8. No decided case was cited on behalf of the petitioner in support of the contention that under Section 153 the company and the Managing Director are precluded from saying that the petitioner is only a benamidar for the Managing Director. The auditors' report shows that entries in respect of certain controversial amounts were found adjusted in the name of the Managing Director and also in the account of the Managing Director's deceased father. That circumstance lends support to the contention of the Managing Director that he has made entries in the name of the petitioner benami for his benefit with his own funds. It is unnecessary to go further into this question as this is not the proceeding in which this question of benami can be gone into. There is bona fide dispute about the status of the petitioner both as a creditor and share-holder. Though this petition has been ostensibly presented for the purpose of winding up the company, the real object seems to be to bring pressure upon the Managing Director by the petitioner for settlement of her private claims arising out of family quarrels. It would be, in my opinion, proper exercise of the discretion of the court to refuse to accede to the request of the petitioner, as this application, seems to be an abuse of the process of court. The petition is accordingly dismissed with costs.
9. Petition dismissed.