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Lokenath Gupta and ors. Vs. Credits Private Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberC.P. No. 27 of 1964
Judge
Reported in[1968]38CompCas599(Cal),72CWN624
ActsCompanies Act, 1956 - Sections 136, 167, 210, 220 and 439
AppellantLokenath Gupta and ors.
RespondentCredits Private Ltd.
Appellant AdvocateSubrata Roy Chowdhuri and ;Tapas Kumar Banerjee, Advs.
Respondent AdvocateS.B. Mukherjee, Adv.
DispositionApplication dismissed
Cases Referred(see Lawang Tshang v. Goenka Commercial Bank Ltd.
Excerpt:
- .....and his son, lokenath gupta, two of the petitioners, one srikrishnadas agarwalla and his son, anand mohan gupta, both of no. 23, garanhata street, calcutta. the said promoters were appointed the first directors of the company and are still the directors of the said company. on or about november 8, 1958, anand mohan gupta was appointed the managing director of the said company for a period of 10 years by a resolution passed by the board of directors of the said company, the banking accounts of the said company are with the bank of india limited, burrabazar branch and the punjab national bank limited, lyons range. the said accounts could be and can be operated by the petitioners, lokenath gupta and the said srikrishnadas agarwalla.3. the grounds for winding up have been set out in.....
Judgment:

S.C. Ghose, J.

1. This is an application made by Lokenath Gupta, Kanailal Agarwalla and Ramratan Panday, three directors of the Credits Private Limited, hereinafter referred to as the said company for an order for winding up the said company on the ground that it is just and equitable that the said company should be wound up. The registered office of the said company is situate at No. 65/1, Maharshi Devendra Road, Calcutta. The said company was incorporated in the year 1958 and is a private company limited by shares. The objects for which the said company was established have been set out in paragraph 5 of the petition and sub-paragraphs thereunder.

2. The said company was promoted by Kanailal Agarwalla and his son, Lokenath Gupta, two of the petitioners, one Srikrishnadas Agarwalla and his son, Anand Mohan Gupta, both of No. 23, Garanhata Street, Calcutta. The said promoters were appointed the first directors of the company and are still the directors of the said company. On or about November 8, 1958, Anand Mohan Gupta was appointed the managing director of the said company for a period of 10 years by a resolution passed by the board of directors of the said company, The banking accounts of the said company are with the Bank of India Limited, Burrabazar branch and the Punjab National Bank Limited, Lyons Range. The said accounts could be and can be operated by the petitioners, Lokenath Gupta and the said Srikrishnadas Agarwalla.

3. The grounds for winding up have been set out in paragraph 16 and the sub-paragraphs thereunder. The main allegations are as follows :

(a) Since June 29, 1961, the said Anand Mohan Gupta has ousted the entire board of directors from the management of the company and has been mismanaging the affairs of the company to the prejudice of the company and its shareholders.

(b) The balance-sheet of the company as on September 30, 1961, and the profit and loss account of the company for the year ending September 30, 1961, has not yet been filed.

(c) The managing director of the company has been committing defaults in filing its annual returns since June 29, 1961, in spite of notices and reminders from the Registrar of Companies.

(d) The company has not held any general meeting since 1961 in spite of repeated notices from the Registrar of Companies, West Bengal.

(e) In spite of requests Anand Mohan Gupta has not called any meeting of the board of directors of the company.

(f) The books of accounts of the company and other papers have been taken possession of and removed by Anand Mohan Gupta from the registered office of the company.

(g) Anand Mohan Gupta has been collecting the dues of the company from various parties and misappropriating the same to his own personal use.

(h) Anand Mohan Gupta is in possession of the assets of the company, and has been trying to sell or dispose of the properties and assets of the company without sanction of the board of directors.

(i) Srikrishnadas Agarwalla used to make over blank cheques signed by him to Ananda Mohan Gupta who used to encash the same and utilise the proceeds thereof for his own personal benefit.

4. The allegations of the petitioners further are that the substratum of the company is gone.

5. The said company, according to the petitioners is in the nature of and in substance a partnership, the shareholders of the company are relatives and/or friends. Anand Mohan Gupta has taken complete control of the company and has excluded the petitioners from management or control of the company. In the affidavit filed by Anand Mohan Gupta affirmed on 16th January, 1967, Anand Mohan Gupta has stated that one of the business of the company was to act as financiers and the company has been till now carrying on the said business as financiers. The company has also applied for distributorship of condensed milk. The said Anand Mohan Gupta has denied the allegations mentioned in paragraph 16 and sub-paragraphs thereunder of the petition as well as other allegations contained in the petition.

6. Mr. Subrata Roy Chowdhury appearing on behalf of the petitioners contended before me that it is just and equitable that the said company should be wound up inasmuch as (1) the substratum of the company has gone, (2) there is a deadlock in the board of directors for reasons of relationship of parties and (3) there is oppression of minority shareholders which has led to justifiable lack of confidence in the person or persons namely, Anand Mohan Gupta and his relatives who are in control of the said company. Mr. Roy Chowdhury has relied on the relevant passages in Palmer's Company Precedents, Part II (17th edition) pages 28,29,30,35, and 36. Mr. Roy Chowdhury has also relied on the case of Great Indian Motor Works Limited v. Chandi Das Nundy, [1953] 23 Comp. Cas. 287, 57 C.W.N. 220 and the case of Loch v. John Blackwood Ltd., [1924] A.C. 783, 788, 791, 793, 796

7. It must be stated at the outset that the grounds of lack of confidence in the persons in control of the company have not been alleged in the petition and as such I am unable to take any notice or consider the said grounds in the instant case.

8. It is true that where the substratum of the company has gone or its only business has become impossible it has been held that it was just and equitable ground for winding up (See In re Haven Gold Mining Co., [1882] 20 Ch.D. 151, In re Taldua Rubber Co., [1946] 2 All E.R. 763, In re Hindustan Co-operative Insurance Society Ltd., [1960] 65 C.W.N. 68 But where the substratum has not completely gone and other business can be carried on, the company should not be directed to be wound up on the ground that it is just and equitable that the said company should be wound up. In the instant case, in my opinion, it has not been established that the main business or the only business of the company is gone or that there are no other objects in the memorandum of the company which can be carried out (see Muralidhar Roy v. Bengal Steamship Co. Ltd., A.I.R. 1920 Cat. 722, 723).

9. Mere mismanagement or misappropriation or misconduct on the part of the directors or the managing director, as has been alleged in the instant case, by itself is no ground for winding up (see Lawang Tshang v. Goenka Commercial Bank Ltd., [1961] 31 Comp. Cas. 45 ; 64 C.W.N. 828, Halsbury's Laws of England (3rd edition) volume 6 page 535, article 1035, In re Cuthbert Cooper and Sons Ltd., [1937] Ch. 392; [1937] 2 All E.R. 466 ; [1938] 8 Comp. Cas. 131, In re Anglo Continental Produce Co. Ltd., [1939] 1 All E.R. 99 General allegations of oppression of minority shareholders also is not a ground. In the instant case it has not been alleged that Anand Mohan Gupta and his nominees or supporters are the majority of the shareholders. Such allegations, if any, are contained in paragraph 22 of the said petition. The said paragraph 22 has been verified as submission to this court and cannot be relied upon, in my view, on a question of fact. In the instant case it has not been proved that prejudice is being caused to the company by abuse of majority voting power or that it is impossible for the business of the company to be carried on for the benefit of the company as a whole, in view of the fact that they show the way in which the voting power is held and used.

10. In the instant case the petitioner has alternative remedies for the redress of his grievances. The said remedies can be found in Sections 163, 167, 210 and 220 of the Companies Act. The said remedies can also be found in Clauses 66, 69 and 73 of the articles of association of the said company (see Anglo-Greek Steam Co. In re, [1866] 2 Eq. 1, 10, Cuthbert Cooper & Sons Ltd. In re, [1937] 1 Ch. 392, Janbazar Manna Estate Limited, In re : AIR1931Cal692 .

11. In the premises I am of opinion that there is no reasonable ground for the petitioners to make this application. The petitioners, in my view, have failed to establish that it is just and equitable that the said company should be wound up. This application, therefore, must fail and is dismissed with costs.


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