Skip to content


Murlidhar Roy Vs. the Bengal Steamship Company Limited - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in59Ind.Cas.542
AppellantMurlidhar Roy
RespondentThe Bengal Steamship Company Limited
Excerpt:
companies act (vii of 1913), section 162 - suspension of business--winding-up--discretion of court--dead lock--substratum gone, principle of, when applicable. - .....than those two, and that there were no means of overruling, by the action of a general meeting of share-holders, the trouble which was occasioned by the quarrels of the two directors and share-holders, in such circumstances the company should be wound-up, if there existed such a ground as would be sufficient for the dissolution of a private partnership at the suit of one of the partners against the other. the same principle was applied in newbridge sanitary stiam laundry, in re (1917) 1 ir. r. 67 at p. 87 and an order for compulsory winding-up was made on the ground that, in the situation which had arisen, such winding-up order afforded the only means of enabling justice to be done to the petitioners., in the case before us, the circumstances are, however, of an entirely different.....
Judgment:

Asutosh Mookerjee, J.

1. We are invited in this appeal to consider the propriety of an order dismissing a petition for the winding-up of a Company incorporated under the Indian Companies Act, 1913. The fasts are fully set out in the judgment of Mr. Justice Greaves and we need not recapitulate them.

2. The application is supported here on three grounds, namely, first, that the Company has suspended its business for a whole year; secondly, that there has been a dead-look, and thirdly, that the substratum is gone; the first of these grounds falls within the third Clause of Section 162 and the second and third are comprised in the sixth Clause which provides for the winding-up of a Company if the Court is of opinion that it is just and equitable that the Company should be wound-up.

3. As regards the first of these grounds Mr. Justice Greaves has pointed out that the matter rests entirely in the discretion of the Court, as is clear from the decisions in Metropolitan Railway Warehousing Company, In re (1868) 17 L.T. 108 : 36 L.J. Ch. 827 : 15 W.R. 1121, Middlesbrough Assembly Rooms Company, In re (1880) 14 Ch. D. 101 : 49 L.J. Ch. 413 : 42 L.T. 609, 28 W.R. 868 and Capital Fire Insurance Association. 'In re (1882) 21 Ch. C. 209 : 52 L.J. Ch. 20 : 47 L.T. 123 : 30 W.A. 941. The power will be exercised only when there is a fair indication that there is no intention to carry on the business; if the suspension is satisfactorily accounted for and appears to be due to temporary causes, the order may be refused. Now, in the present case, if it be conceded, that the business has been suspended for a whole year, the suspension is due to very exceptional circumstances. To carry on their business, the Company employed a steamer and two flats. The flats were acquired by Government during the War and the Company have not yet been able to replace them in view of the rise in prices. Consequently, the suspension of business for a whole year is satisfactorily accounted for, and does not furnish an indication that there is no intention to carry on the business. In our opinion, no ground has been made out to justify the winding-up of the Company on the ground mentioned in Section 162(iii).

4. As regards the second ground, it is contended that the proceedings of the meetings of the Company furnish ample indication that there is a complete dead lock. The chief promoters of the Company are three brothers Muralidhar Roy, Sasadhar Roy and Halodhar Roy. These three formed themselves into a firm which became the managing agents of the Company. Subsequently, there was disagreement amongst the brothers and the firm was dissolved with effect from the 1st November 1918. There is no room for doubt that there are acute differences amongst the brothers, and the proceedings disclose much bitterness of feeling. In view of these circumstances, reliance is placed, on behalf of the appellant, upon the decision of the Court of Appeal in Yenidje Tobacco Co, In re (1916) 2 Ch. 426 : 86 L.J. Ch. 1, 116 L T, 530 : 60 S.J. 707 : 32 T.L.R. 709, In that case, no doubt, the Master of the Rolls (Lord Cezens-Hardy) pointed out that the two Directors were not on speaking terms, that the so called meetings of the Board of Directors had been almost a farce or comedy, that the Directors would not speak to each other on the Board and that some third person had to convey communications between them which ought to go directly from one to the other. But the circumstances of that case were very peculiar and the real reason for the decision of the Court of Appeal was that there was no way to put an end to the state of things which existed, except by means of a compulsory order. Warrington, L.J. laid stress on the fact there were only two persons interested, that therefore no share, holders other than those two, and that there were no means of overruling, by the action of a general meeting of share-holders, the trouble which was occasioned by the quarrels of the two Directors and share-holders, in such circumstances the Company should be wound-up, if there existed such a ground as would be sufficient for the dissolution of a private partnership at the suit of one of the partners against the other. The same principle was applied in Newbridge Sanitary Stiam Laundry, In re (1917) 1 Ir. R. 67 at p. 87 and an order for compulsory winding-up was made on the ground that, in the situation which had arisen, such winding-up order afforded the only means of enabling justice to be done to the petitioners., In the case before us, the circumstances are, however, of an entirely different description. No doubt, the firm of Managing Agents composed of three members, was dissolved on the 31st October 1918; but since then at Extraordinary General Meetings steps have been taken to appoint new Managing Agents. We need not express an opinion as to the propriety or legality of the proceedings taken; bat it is sufficient for our present purpose that there are ample indications that it is possible to carry on the business of the Company. In such circumstances, it is impossible for us to hold that there is a complete dead-look which must be got rid of by a compulsory winding-up; the Act creates as between the share-holders a domestic Tribunal, and, unless a clear case is made out, the Court will be slow to withdraw from it the decision whether the Company's business shall or shall not be carried on, In our opinion, the second ground urged in support of a winding-up order has not bean established.

5. As regards the third ground, it is urged that the whole substratum of the business has become impossible. Mr. Justice Greaves has pointed out that there is really no foundation for this contention. The objects of the Company, as stated in the Memorandum of Association, are, inter alia, to purchase charter, hire, build, or otherwise acquire steam or other ships or vessels with all equipments and furniture and to employ the same in the conveyance of passengers, mails, live stock, grain and other agricultural produce and treasure and also of goods and merchandise of every description and species on the principal rivers of India and Burma with their tributaries, and also to ran vessels to sea, to any port or ports whatsoever, whether inland or sea board and to take vessels, flats, barges and other crafts in tow of its vessels as the Company may from time to time determine, and to acquire postal subsidies and enter into mail or other contracts.' No doubt, the business has hitherto been carried on with one steamer and two flats, and that the flits have bean taken up by Government. But that does not prove that the objects of the Company, as set out in the Memorandum, cannot be fulfilled in other ways or by the employment of other agencies. The principle of substratum gone clearly cannot be applied to a case of this description. Two illustrations of that class of cases will be found in Haven Gold Mining Co., In re (1882) 20 Ch. D. 15 : 51 L.J.Ch. 24,2 : 45 L.T. 322 : 30 W.R. 389 and German Date Coffee do., In re (1882) 20 Ch. D. 169 : 51 L.J. Ch. 564 : 46 L.T. 327 : 30 W.R. 717. In the first case, the principal and substantial object of the Company was to acquire, a particular gold mine in New Zealand, and the title to the gold mine altogether failed. In the second case, the object was to manufacture from dates a substitute for coffee under a German Patent, but the German Patent was not and could not be obtained. In such cases, it could be rightly held that the substratum was gone, notwithstanding that the Memorandum of Association contained general objects and it might be justly ruled that a majority could rot hold a minority to the speculative continuation of a scheme which had proved futile. That doctrine has plainly no application here. We are consequently of opinion that there is really no foundation, for the application which has been rightly dismissed.

6. The appeal is accordingly dismissed with costs, one set of costs to the Company and one set to the opposing share-holders.

Fletcher, J.

7. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //