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Issues Involved:
1. Failure of the respondent company to commence its business within one year of incorporation. 2. Whether it is just and equitable to wind up the respondent company. Issue-wise Detailed Analysis: 1. Failure to Commence Business Within One Year of Incorporation: The petitioner, Registrar of Companies, sought the winding up of the respondent company under section 439(5) read with section 433(c) and (f) of the Companies Act, 1956, on the ground that the respondent company did not commence its business within one year of its incorporation. The respondent company was incorporated on December 28, 1983, and it was alleged that it had not started its main business of stock exchange within the stipulated time. The petitioner argued that this non-commencement of business within one year is sufficient to order the winding up of the company. The respondent company countered that it was formed to promote commerce and other useful objects, and not for profit-sharing among its members. It emphasized that it had taken all necessary steps to obtain recognition under the Securities Contracts (Regulation) Act, 1956, but faced delays due to circumstances beyond its control, including civil litigations and the need to comply with numerous regulatory requirements. The respondent argued that the delay was sufficiently explained and that it had every intention to commence its business. The court noted that under section 433(c) of the Act, the jurisdiction to wind up a company for not commencing business within a year is discretionary. The court referred to precedents, including Malabar Iron and Steel Works Ltd. v. Registrar of Companies and Paramjit Lal Badhwar v. Prem Spinning and Weaving Mills Co. Ltd., which established that an order for winding up should not be made if the delay is sufficiently accounted for and there is a reasonable prospect of the company commencing its business. The court found that the respondent company had taken steps for recognition, prepared bye-laws, held regular board meetings, and faced litigation that hindered its progress. The delay was reasonably explained, and there were fair prospects that the company would commence its business in the future. Thus, the court concluded that the discretionary power under section 433(c) should not be exercised to wind up the company. 2. Just and Equitable Grounds for Winding Up: The petitioner also contended that it was just and equitable to wind up the respondent company under section 433(f) of the Act. However, the court observed that the Registrar of Companies initially sought sanction for winding up under section 433(c), and the sanction granted by the Regional Director included grounds under section 433(f) as well. The court noted that the discretionary power under section 433(f) should be exercised judiciously and only when there is clear evidence that the company has no intention to carry on its business. The court found that the respondent company had taken appropriate steps for achieving its objectives, including seeking recognition under the Regulation Act, preparing bye-laws, and holding regular board meetings. The company was not a profit-sharing entity and had every intention to run its business. The court concluded that there was no merit in the petition filed by the Registrar of Companies on the grounds of just and equitable winding up. Conclusion: The court dismissed the petition for winding up the respondent company, finding that the delay in commencing business was reasonably explained and that the company had every intention to carry on its business. The discretionary power under section 433 of the Companies Act, 1956, was not exercised, and the petition was dismissed with no order as to costs.
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