TMI Blog2007 (8) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... place him, however illegal, such action can be justified to be in the interest of the company since the petitioners’ charge of defalcation against the second respondent was yet unproven. The petition fails and is permanently stayed - CP NO. 132 OF 2006 AND CA NO. 259 OF 2006 - - - Dated:- 28-8-2007 - SANJIB BANERJEE, J. Abhrajit Mitra and Ratnanko Banerjee for the Petitioner. Utpal Bose and Sushanta Dutta for the Respondent. JUDGMENT Sanjib Banerjee, J. - The petitioners seek winding up of the company on just and equitable grounds, citing complete deadlock in both the pre-dispute shareholding and directorial position in the company. According to the petitioners, the first petitioner and the second respondent are entitled to equal shareholding and say in the management of the company and upon such persons, brothers, having irreconcilably fallen out, the partnership firm run in the guise of the limited liability company needs to be dissolved. 2. The company was incorporated by the two brothers in 1999 for taking over the business of a partnership firm functioning as foreign money changers. The petitioners say that such business, the only that the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despite the first petitioner s signature in the financial statements of the company for the year ended 31-3-2004, the entries therein were dubious and the first petitioner was constrained to sign the papers upon the same being presented to him with little or no time left for the statutory deadline for filing such accounts. 5. The petitioners justify the first petitioner s action in requiring the banks to stop operation of the company s accounts on the allegation of mismanagement by the second respondent. The petitioners submit that the first petitioner was left with no option but to call upon the Reserve Bank of India, by a letter of 29-11-2005, to not renew the foreign money changers licence in favour of the company that was to run out by the end of 2005. The petitioners also called upon the second respondent to have the business of the company wound up, but this encouraged the second respondent to induct his wife into the company as a director without the first petitioner consenting to the same. 6. The respondents version of things is, expectedly, quite at variance with what the petitioners suggest. The respondents have set out the share structure shortly upon incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on its only effective business, there is no reason to doubt that the company s memorandum cannot be amended for it to pursue other businesses and retain the goodwill that it had developed over the years. The respondents urge that the grounds cited by the petitioners need investigation and the demand for just and equitable winding up cannot be supplemented by such other grounds without those being established in a properly constituted action. 9. The petitioners rely on the judgments reported at Modern Furnishers (Interior Designers) (P.) Ltd., In re [1985] 58 Comp. Cas. 858 (Cal.) and Brown Forman Mauritius Ltd. v. Jagatjit Brown-Forman India Ltd. [2004] 51 SCL 214 (Delhi). In Modern Furnishers (Interior Designers) (P.) Ltd. s case ( supra ), in proceedings instituted under sections 397 and 398 of the Companies Act, a Single Judge of this Court declined to pass any orders on the following reasoning : "If there is a genuine and irreconcilable difference of opinion between petitioner No. 1 and petitioner No. 2 on the one hand and the respondent Nos. 2 and 4 on the other, over the management of the company, then the classic position of a deadlock in management has arisen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. I am deliberately steering clear of discussing issues in minute details since a mere overview of the disputes and rival contentions leaves me in no doubt that it is just and equitable to wind up the Company. It is more than likely that the Petitioner and the respondent may initiate further litigation including arbitration against each other and, therefore, it would be expedient for the Company Judge to abjure from expressing views on the respective claims. The focal concern must be the Company s health alone." (p. 240) 11. At the beginning of the final hearing, the respondents have made an offer to buy out the petitioners at Rs. 72.50 per share, without prejudice to their contention that they were entitled to the company in view of the family partition. The petitioners have spurned such offer on the ground that they were unable to assess the bona fides of such offer and were equally unable to make a counter offer as the petitioners had no access to the company books and could not say for certain, in such circumstances, as to what would be the worth of the company. 12. The respondents have relied on the judgments reported at Jose J. Kadavil v. Malabar Industrial Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staying creditors winding up petitions pending adjudication of the disputes raised by the company, the present petition may also have been stayed upon the parties being required to obtain a decision on the case of family partition made out by the respondents and denied by the petitioners. 15. But there is the equitable consideration. Even if all the facts alleged by the petitioners against the respondents are accepted, there is the single act that would disentitle the petitioners from invoking the just and equitable clause : the petitioners conduct in having the company s foreign money changing business stopped on the first petitioner s representation to the Reserve Bank. That the company no longer carries on its only business, is the major plank on which this petition has been founded. Such ground is of the first petitioner s creation. Just as a creditor s winding up petition would not be received if the company s inability to pay is attributable to the creditor s conduct, a petitioner invoking the just and equitable clause for winding up a company should have done nothing to prejudice the company to be entitled to urge such ground. Even if there was no partition and the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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