TMI Blog1964 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the company made an application praying for the dismissal of the winding up petition in limine on the score that it disclosed no adequate grounds, that it was prompted by mala fides , and that the petitioner, if he was really aggrieved, had other remedies and was acting unreasonably in seeking to have the company wound up instead of pursuing those other remedies. The very institution of winding up petition against a company, more so its advertisement, adversely affects the reputation of the company, and, if done without reasonable and probable cause, is a wrong which can be lined by suit. It is also the duty of the court before admitting a winding-up petition, especially one brought by a contributory, to satisfy that there are pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged are : (1)that the directors of the company, who are closely related to one another, are mismanaging its affairs for their own benefit and have been guilty of misappropriation and other misconduct ; (2)that the company has been working at a loss ; and (3)that the company has sold a number of its undertakings and is about to sell its two remaining undertakings with the result that its sub stratum has disappeared or is aisappearing. I am satisfied that there is not much substance in any of these grounds so that they add up to little and can, even cumulatively, scarcely justify a winding-up order. Taking the first ground first, it is true that four of the five directors of the company are closely related to one another, two being br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sconduct and mismanagement are not by themselves sufficient for at winding-up order, and the significant feature in the present case is that almost all the acts of misconduct and mismanagement alleged by the petitioner related to periods before the new board took charge. It is not the petitioner's case that any member of the new board, in particular, the director-in-charge, who is actually conducting the management, was in any manner privy to the mismanagement which took place while the old board was functioning or that the new board has failed to pursue remedies avail able to the company against the old board.' All that is alleged against the new board is that on the 5th October, 1963, it resolved to sell what remained of the Little Flower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption account with the State Bank of Travancore the debentures are actually redeemable only in 1968 and that the rest of the money has been utilised for the working of the company including the development of the Munderi Group. That the debentures have been purchased and cancelled and that a sum of Rs. 89,000 and odd lies in deposit in the bank is not disputed, and, with regard to the balance, there are certainly no grounds disclosed for thinking that the money has not been duly brought to account but has been misappropriated. It is not denied that the company has been regularly holding its annual general meetings and laying its duly audited accounts before the meeting and that neither the petitioner nor any other member has so far raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to earn a profit, and the fact that between 1958-59 and to-day it has suffered a loss of Rs. 23,000 and odd is certainly no ground for saying that the company should be wound up. It is not suggested that the company is commercially insolvent, not even that it is not a sound concern. In this connection I might remark that it is not disputed that the company's two rupee fully paid up share which were selling at between 80 nP. and 85 nP. per share before the new board took charge are now selling at Rs. 123 nP. This is not an indication that the company's affairs are deteriorating. Coming now to the alleged disappearance of the substratum it is true that the company has, in the past, sold some of its undertakings and acquired new under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution has been passed for the sale of the remaining portion of the Little Flower Estate subject to the sanction of the company in general meeting. Even where the sole undertaking of a company has been actualy sold, it cannot be said that its substratum has disappeared so long as there is some other business it can carry on coming within the objects stated in its memorandum see In re Kitson Co. Ltd. [1946] All ER. 435 and In re Taluda Rubber Co. Lid. [1946] 2 All ER. 763. In the present case, however the company still owns undertakings for carrying on its business, and the fact that it at one time thought that it might be desirable to dispose of one of its under takings and now thinks that it might be desirable to dispose of the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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