TMI Blog1973 (8) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... each. The issued, subscribed and paid up capital is Rs. 20,000 with 200 equity shares of Rs. 100 each fully paid up in cash. The four shareholders of the company hold 200 equity shares each having fifty shares. It is said that the company did not commence its business within one year of its incorporation. Further, it is said that the reserve and surplus of the company is nil and that the statement of profit and loss for the last three years, namely, years ending with 31st March, in the years 1968, 1969 and 1970, shows losses to have been incurred. It is further said that after the scrutiny of the balance-sheet as on 31st of March, 1967, a notice was issued to the company to show cause why it should not be wound up under the provisions of section 433( c ) of the Act. The company thereafter informed the Registrar that they were not inclined to carry on any business at the relevant time and they sought the advice of the Registrar whether it would be in order if the company was put into liquidation. The Registrar advised the company to put itself into liquidation. For the period of two years next, however, the company did not take any step in the matter. Thereafter the Registrar reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able as it is not satisfactorily explained; that the company never replied to the letter issued by the Regional Director asking the company to produce documentary evidence in support of the statement that they proposed to set up an industry at Dhanbad and that they could not do so on account of financial difficulties. Learned counsel for the petitioner has urged that the facts which are not disputed in the present case are, firstly, that the company had not commenced its business until the year 1969 and 1970; that in the three years ending with March, 1968, 1969 and 1970, the company had been incurring losses; that the company had no intention to carry on the business until the years 1969-1970; that the surplus and reserve were nil and that the company itself at the earlier stage sought the advice whether it would be in order to put it into liquidation. It has further been urged that the only fact upon which reliance can be placed by the company is that it had commenced business in the year 1970-71 and earned a small profit. This by itself, however, it is said is not enough to show that there was any good ground for the company not having commenced any business until then. Upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t one year some further arrangement would be possible. It appears from the letter (annexure "III") dated 22nd September, 1971, from the Regional Director to the Company Law Board that they had been asked to furnish data and produce evidence to show that there was any good ground on which it could justifiably be hoped that arrangement would be possible to undertake the business for which the company had been registered : in other words, to show that what they said was not merely wishful thinking. It appears that no reply whatsoever was given by the company or its director to the aforesaid letter of the Regional Director. The only inference which can be drawn thus is that the directors were not in a position to furnish any such data or evidence in support of their hope. Even at the hearing of this application there is nothing specific which has been said by way of the reasons which did not enable the company to commence the business. It said that "at the initial stage after incorporation of the company due to other heavy engagements the only shareholders- cum -directors of the company were not much inclined to carry on any business". We do not know what were those heavy engagements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. This is an argument which cuts both ways, inasmuch as it will appear therefrom that the company will not be able to secure business relating to such collieries. The memorandum of association itself shows that one of the main objects of the company was to acquire or take over as a going concern any business of colliery. The object of the company cannot be promoted at least in this field in view of the nationalisation of such industry. In view of all these considerations aforesaid I find that the company is not in a position to be able to carry on business at a profit. The circumstances, which I have enumerated above, therefore, justify the conclusion that the company deserves to be wound up. It will be relevant in this connection to refer to a few decisions of different courts which support the view which I have taken. In the case of D. Davis Co. Ltd. v. Brunswick ( Australia ) Ltd . [1936] 6 Comp.Cas. 227; A.I.R. 1936 P.C. 114 their Lordships of the Judicial Committee said that although no general rule can be laid down as to the nature of the circumstances which have to be borne in mind whether the case comes within the "just and equitable "clause," the decisive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition was not the same as the ground specified in the order granting sanction. I am not concerned with that aspect of the matter. The learned judges then considered the question of discretionary nature of the jurisdiction under section 433 of the Companies Act. Reference was made in this connection to the case of Metropolitan Railway Warehousing Co. Ltd. [1867] 36 L.J. Ch. 827 as "a direct authority for the proposition that the provision does not make the fact that a company has not commenced its business within a year from its incorporation anything in the nature of evidence of an act which gives a vested right to say that the company shall be wound up; and that the court will not exercise the discretionary power conferred on it to wind up a company which has not commenced its business within a year from its incorporation, where the past delay has been sufficiently accounted for, and there is no evidence of any improbability of its commencing its business within a reasonable time". In the circumstances of the case before them the learned judges felt that there was justification for giving the company an opportunity to carry on business and, therefore, sitting in appeal, they re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present application mentions the provision of law, under which it has been filed, as subsection ( c ) of section 433 of the Companies Act. It does not mention subsection ( f ). During the course of arguments, therefore, learned counsel for the opposite party pointed out that the question whether it would be just and equitable to order winding up of the company does not arise in the present case. Learned counsel for the petitioner has, however, stated that it is the facts alleged in the case which would invite the proper provision of law and even though a wrong provision of law is mentioned in the heading portion of the application, it is still open to the court to apply a correct provision of law. This argument of learned counsel is well-founded. The court does not get jurisdiction in respect of the matter only because of the provision of law mentioned by the applicant. It is for the court to apply the correct provision of law even though there may be a mistake about it. If the facts in the present case show, as they do, and this court is satisfied that it would be just and equitable to order winding up the non-mention of the provision of law is, in my view, of no avail. Considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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