TMI Blog1963 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ere being grossly mismanaged. As illustrative of this charge, it is alleged that the directors of the company have not been maintaining proper accounts; that they had not issued share certificates to the members of the company, that they have dug new channels contrary to the main purpose of the company, and that they have been supplying water to non-members. For a proper appreciation of the contentions raised in this petition, it is necessary to set out certain salient facts. The company was incorporated with an authorised capital of Rs. 2,00,000, out of which shares of the value of Rs. 1,00,000 were issued and subscribed. These shares were of the value of Rs. 100 each. All the share capital was fully paid up by about 148 shareholders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were dug pursuant to the plans submitted by the engineer of the company. It is important to note that the petitioner's father was the managing director of the company ever since its inception till about the month of October, 1956. He again became the managing director in 1957 and continued in that capacity till 20th December, 1957, when he died. In between, one Karumanchi Kotayya was the managing director. He is no other than the younger brother of the petitioner's father. On his father's death, the shares held by the deceased were transferred in favour of the petitioner. The petitioner was elected as a director of the company on 9th October, 1958, and he continued in that capacity for a period of ten months. During that period he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The alleged acts of commission and omission are referable to this period. The petitioner says that the persons who were in management of the affairs of the company, subsequent to the year 1959, have not improved the affairs of the company. Mr. A. Sambasiva Rao, learned counsel for the respondent, has argued that assuming that all the matters stated by the petitioner are true he does not admit that any of them are true and in fact has contested every allegation made by the petitioner there is no case for the winding up of the company under the provisions of the Companies Act. Section 433 of the Companies Act of 1956, which enumerates the circumstances in which a company may be wound up by the court, reads as follows: "433. Circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en whether the mismanagement of directors is a ground for a winding-up order under section 162 ( vi ) (corresponding to section 433 ( f )) becomes a question to be decided on the facts of each case. Their Lordships proceeded to say that where nothing more is established than that the directors have misappropriated the funds of the company, an order for winding up would not be just or equitable because if it is a sound concern, such an order must operate harshly on the rights of the shareholders. But if in addition to such misconduct, circumstances exist which render it desirable, in the interests of the shareholders, that the company should be wound up, there is nothing in section 162( vi ) (corresponding to section 433( f )) which bars the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be proved by production of exhibit A-6, which is said to be a private account of the company. This account book was produced by the petitioner in this court. He deposed that this private account book was handed over to him on the 29th of November, 1958, after he became a director of the company and its treasurer. He says that there was a balance of Rs. 3,82954 nP. in the private account on the date of his taking over that account book. With respect to this balance, he got a promissory note executed in his own favour. The genesis of this private account may be briefly stated. Even before the formation of the company the villagers of Krishnayapalem had been making a concerted effort to provide common facilities and amenities and were col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of his father, but the question really is whether the present management was responsible for these alleged acts of omission and commission of which the petitioner complains. Then again the non-issue of the share certificates which is one of the charges levelled by the petitioner is referable to the period when the petitioner's father himself was the managing director. It is nobody's case that the company or its shareholders have suffered any detriment by reason of the non-issue of the share certificates. The petitioner was registered as a member of the company in the place of his father, when he died. These are the main charges levelled by the petitioner. On a consideration of the evidence, I find that none of them have been substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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