Gujarat High Court
Rameshbhai Ramanlal Patel vs Shree Bansidhar Pvt. Ltd. on 16 September, 2004
Equivalent citations: [2005]127COMPCAS806(GUJ), (2005)6COMPLJ277(GUJ), [2005]58SCL396(GUJ)
Author: K.A. Puj
Bench: K.A. Puj
JUDGMENT K.A. Puj, J.
1. The petitioners have filed this petition under Section 433(f) of the Companies Act, 1956 on the ground that it is just and equitable that the respondent Company be wound up.
2. It is the case of the petitioners that the substratum of the respondent Company is totally lost and its losses far outweighed its capital and its share capital was completely wiped out. It is also the case of the petitioners that the respondent Company was not carrying on any business for which it was formed and registered. There are no prospects of its carrying on any business in near future or even distant future. The respondent Company cannot carry on any business except at a loss. The carrying on of the warehousing business is only a stop gap business even as per the say of the respondent Company. The respondent Company is in insolvent circumstances and cannot pay its debts as and when they become due and payable. The respondent Company does not have any free assets worth the name which can be disposed off for the purpose of carrying on its business.
3. Mr. Ashwin L. Shah, learned advocate appearing for the petitioners has submitted that the respondent Company was originally before the B.I.F.R. and the scheme was framed and as per the said Scheme, the respondent Company was permitted to sell some of its fixed assets to enable it to generate revenue so that it was able to start its business of textile processing. A part of the sale proceeds was required to be deposited by the Company with the State Bank of India in respect of the guarantee given by the Company to the said Bank for the advances made by it to Shree Bansidhar Spg. and Weaving Mills Private Limited, a sister concern of the Company. However, the Company has committed default in complying with the order of B.I.F.R. by not depositing Rs. 53.52 Lakhs being the required amount with the said Bank. The Company had given the said guarantee to the said Bank in the year 1982 for the sum of Rs. 4 Crores and the said sister-concern has gone into liquidation in 1996 and the said liquidation is not yet over.
4. Mr. Shah has further submitted that as per the said scheme, the Company was not allowed to sell any further assets without the prior approval of B.I.F.R., Banks and Financial institutions. Inspite of this, the Company under the management of Ramanlal Group has sold the land at Kamod in 1997 which land was given by the Gujarat Government to the Company specifically for the purpose of starting a dyestuff industry to develop the said area. When the scheme was under implementation, the respondent Company had accumulated loss of Rs.1.50 Crores. As per the assurance and understanding given by the management of the Company at the time of hearing of the above case before B.I.F.R., the Company should have the projected accumulated debit balance of Rs. 28.76 lacs and Rs. 14 lacs in its profit and loss account for the year 1998 - 99 and 1999 - 2000 respectively as against which, it was Rs. 1.29 Crores. The said statement clearly shows that the Company had been totally mismanaged. The figures of the electricity expenses and the excise duty shows that the Directors of the Company used to clear the cloth without paying the excise duty and obtained secret benefit to themselves in that way. The management of the Company consisting of the Ramanlal Group had agreed to see that the Company made profit and carried on its business with the existing machineries. Despite this fact, the Company had spent huge amount to the extent of Rs. 38 Lacs in the purchase of the new machinery and thereby blocking the valuable resources in such machineries. As per the said Scheme, net worth of the Company at the end of the year 1998 - 99 ought to have been Rs. 1.04 Crores while, in actual fact, it was Rs. 8.67 Lacs only. The projected net worth of the Company at the end of the year 1999 2000 should have been Rs. 1.18 Crores while actually it was Rs. 09.68 Lacs only.
5. Mr. Shah has further submitted that in July 1997, this Court has passed the order for the closure of the operations of the Company on account of the carbonizing process done by the Company. At the time of hearing before B.I.F.R., the Company has stated that it could carry on the business of processing, but had not mentioned that it intended to carry on the business of carbonizing. It had also not taken permission from the Ahmedabad Municipal Corporation to start the said process. Mr. Shah has further submitted that because of the excise problem and prevailing competition in the market, the processing business of the Company was not viable and has stated that the Company has started simply the business of warehousing on trial basis. The Company has only one property being the land and the factory building and the machinery thereon at Dariapur, Ahmedabad. The said property was also mortgaged with State Bank of India against the guarantee given by the Company. Except this, there is no other property of the Company. Thus, the Company has no property worth the name and it cannot raise any finance on the basis of such property. The respondent Company is being totally mismanaged under the management of the Ramanlal Group. The Company is not only mismanaged by the said group but the said group has also misappropriated large amounts from the Company thus bringing the Company to the present insolvent condition. The Company has reached a point of no return and such a Company should not be allowed to continue to exist and it is just and equitable and in the interest of all concerned that it is wound up under the provisions of the Companies Act, 1956. The management of the Company has scant regard for the law and has the habit of flouting the express directions of B.I.F.R. and understandings of assurances given to B.I.F.R. and its Bankers and financial institutions, Govt. of Gujarat, its Shareholders, Creditors and others having dealings with the Company. The Company has neither sufficient finance nor prospects nor capability to carry on any business with profit. Its present management has not only miserably failed in improving its position after the framing of the said Scheme, but has made the financial position of the Company worse. There is no practical possibility of remedying the position in which the Company is put by the present management on account of its mismanagement and misdeeds and fraudulent attitude all throughout.
6. Mr. Shah has further submitted that Mr. Ramanlal M. Patel, the father of the petitioner No.1 and his two brothers, namely, Mr. Chimanlal M. Patel and Mr. Raojibhai M. Patel and their respective family members including the petitioner No.1 were interested in various companies and partnership firms as shareholders and/or in the management thereof and partners including the Company. Some disputes have arisen between the groups of the said three brothers in connection with the management of the said companies and firms. As such, the members of the said three families had decided to divide, distribute and/or transfer the control and management of the said companies and firms to respective groups so as to achieve smooth of each of the business units after taking into consideration the various representations as to the requirement, capacity, etc. of each of the Groups. Accordingly, an agreement dated 28.12.1979 was entered into between the family members of the said three brothers including the petitioner No.1 under which the management and control of the Company came to the Group of the said Mr. Ramanlal M. Patel's family which includes the petitioner No.1. Thus, the company is a glorified partnership consisting of the said Mr. Ramanlal M. Patel, Mr. Vijaybhai R. Patel and the petitioners. The petitioner No.1 was the Managing Director of the Company till 1985-86. He was compelled to resign as such and after some time, he was compelled to resign also as its Director. The entire plan of the Ramanlal Group was so conspired that the petitioners' Group was ousted from the management of the Company by the Ramanlal Group. The conduct of the present management of the Company was lacking in probity. The petitioners have lost trust and confidence in the present management of the Company by the Ramanlal Group which has already proved to be highly detrimental to the interest of the Company and its Creditors, Bankers and Financial Institutions in general and the petitioners in specific. Mr. Shah has, therefore, submitted that when the partners in a partnership loose confidence and there is lack of probity, the partnership should be ordered to be dissolved. This principle should be applied to the Company in the present circumstances and the Company should be closed down by winding it up on the ground that it is just and equitable to do so.
7. Mr. Shah, in support of his submissions, has relied on the decision of the Karnataka High Court in the case of N. SUNDARASWAMY AND OTHERS V/S. BANGALORE TURF CLUB LTD. 103 COMPANY CASES 73 (KARNATAKA) which arose in the context of Court's jurisdiction to entertain the petition filed under Section 433(f) of the Companies Act, 1956. The Court observed that all institutions, irrespective of the character, are required to conform to broad democratic legal principles of fairness and in evaluating the concept of whether a state of affairs is just and equitable, these principles would have to be borne in mind. The Court has further observed that the Companies Act envisages that the High Court of the State shall exercise special jurisdiction under the provisions of the Companies Act and in a case which involves intricate points of law and where there is no dispute about the facts, it would not be available to the respondents to contend that the petitioners should be asked to seek their remedies before a Civil Court.
8. Mr. Shah has further relied on the decision of the Madras High Court in the case of S. SUNDARESAN V/S. PLAST-O-FIBRE INDUSTRIES PVT. LTD. 76 COMPANY CASES 38 (MADRAS) which elaborates several grounds for winding up of the Company under Section 433(f) of the Companies Act, 1956. The Court has held on a perusal of the various documents produced on record that the substratum of the Company had disappeared because the object for which the Company was incorporated had completely failed and the respondent Company had not been able to manufacture and sell such products on a commercial basis. The Company had also not paid any interest to the financial institutions, and the activities of the Company had virtually come to a standstill and, in the present financial state of affairs, there was no hope of the respondent Company becoming a viable unit. The substratum of the Company had failed and there was absolutely no hope of revival and hence, the company was liable to be wound up. The Court has further observed that the manner in which the petitioner had been excluded from the affairs of the Company and removed as Director, the failure to pay his salary and the irregular dealings with the Banks showed that there was also complete lack of probity in the management of the Company. Moreover, no attempt had been made after removal of the petitioner to run the Company properly and revive it. The Company was liable to be wound up on this ground also. The Court has further held that where a private limited company which is in the nature of partnership is formed on the basis of an understanding that a particular person would be a director, his expulsion from office would be a ground for winding up. The principles of partnership applied to the present case and the Company was liable to be wound up.
9. Mr. Shah, while meeting with the possible argument canvassed on behalf of the respondent Company to the effect that the petitioners have got an alternative remedy and hence, the present petition is not maintainable, has relied on the decision of the Bombay High Court in the case of JIVABHAI MARGHABHAI PATEL V/S. EXTRUSION PROCESSES PVT. LTD., 1966 (II) THE COMPANY LAW JOURNAL 74 wherein it is held that it may be taken as settled that clause (f) of Section 433 is not construed ejusdem generis with the other clauses (a) to (e). There must be a justifiable lack of confidence in the conduct and management of the company's affairs; such lack of confidence, if rested on a lack of probity on the part of the directors in the conduct of the Company's affairs it would be just and equitable to order the winding up; there need be no deadlock. The Court has further observed that it is true that the Court hearing the application under clause (f) of Section 433 may under Section 443(2) refuse to make the order for winding up if it is of opinion that an alternative remedy is available. It is then for the Court to consider whether such remedy would be effective and not merely a doubtful remedy and whether the petitioner is acting in an unreasonable manner in asking the Company to be wound up. The Court has also observed that so far as the petition under Sections 397 and 398 is concerned, the other minority shareholders might not be willing to join the petitioner and even an application to the Registrar of Companies under Section 234 for investigation of affairs or to the Central Government for permission to file a petition under Section 397 are hardly remedies which put an end to such an atrocious state of affairs, if it exists. The Court was, therefore, of the view that such alternative remedy cannot be said to be effective and are merely doubtful remedies.
10. Mr. Shah has further submitted that the petition is at present at the admission stage and there are serious grounds canvassed by the petitioners for the purpose of seeking winding up of the respondent Company under Section 433(f) of the Companies Act, 1956. If the petition contains allegations, on proof of which, a winding up order would be justified and the material placed on record showed that there is a fair possibility of those allegations being proved on a further and full investigation, then the petitioners are entitled to have the petition advertised so as to enable full investigation into the allegations. For this purpose, he relied on the decision of the Madhya Pradesh High Court Indore Bench in the case of VIRENDRASINGH BHANDARI AND OTHERS V/S. NANDLAL BHANDARI AND SONS P. LTD., 50 COMPANY CASES 54 wherein the Court has taken the view that at the stage of admission, the Court takes only a prima facie view of the petition on the material before it and has to consider whether that material would justify the Court in summarily dismissing the petition, or whether it would require further investigation. The Court has further observed that it is undoubtedly true that at the foundation of an application for winding up on the "just and equitable" rule, there must lie a justifiable lack of confidence in the conduct and management of the company's affairs. But this lack of confidence must be grounded on the conduct of the directors, not in regard to their private life or affairs, but in regard to the company's business. Furthermore, the lack of confidence must spring not from dissatisfaction at being outvoted on the business affairs or on what is called the domestic policy of the company. On the other hand, wherever the lack of confidence is rested on a lack of probity in the conduct of the company's affairs, then the former is justified by the latter, and under the statute it would be just and equitable that the Company be wound up. The Court has further observed that in an application of this type, allegations in the petition are of primary importance. A prima facie case has to be made out before the Court can take any action in the matter. Even admission of a petition which will lead to advertisement of the winding-up proceedings is likely to cause immense injury to the company if ultimately the application has to be dismissed. The interest of the applicant alone is not of predominant consideration. The interests of the shareholders of the Company as a whole apart from those of other interests have to be kept in mind at the time of consideration as to whether the application should be admitted on the allegations mentioned in the petition. The Court has also considered that it could not be argued for the Company that it was not necessary to advertise the petition for winding up as the alternative reliefs claimed in the petition could be granted under Ss. 397 and 398 of the Act. Avoidance of sales made by the Company to members of the majority group could not be granted in a petition merely under Ss. 397 and 398 of the Act in view of the shorter period of limitation prescribed for that purpose. The proper action would be a winding up order in case the allegations made in the petition could be ultimately substantiated and there was material to prima facie show that those allegations were capable of proof. The above circumstances were sufficient to indicate that the petitioners had made out a case to attract Clause (f) of Sec. 433 of the Act.
11. Mr. Shah has further relied on the decision of the Orissa High Court in the case of ORISSA TRUNKS AND ENAMEL WORKS LTD., In re, 43 COMPANY CASES 503 wherein it is held that where the business of a company had been suspended for more than six years before the application for winding up under Section 439 of the Companies Act, 1956, and there were no assets of the Company, and adequate funds were not available to run the business, and it was also clear that there was mismanagement of the affairs of the Company and no possibility of remedying it, it was just and equitable that the Company should be wound up.
12. Mr. Shah has further relied on the decision of the Punjab & Haryana High Court in the case of DELHI AUTOMOBILES PVT. LTD. V/S. MARUTI LTD. 48 COMPANY CASES 576 for the proposition that if the Company is unable to carry out its objects or meet its liabilities, the Company is required to be wound up under Section 433(f) of the Act. The Court in this case has held that one of the main objects of the Company was the manufacture of motor cars, automobiles and other mechanised vehicles. It was admitted on behalf of the company that the company has not been able to manufacture cars for sale. Thus, the very object for which the Company was incorporated had failed and, therefore, the substratum of the Company has virtually disappeared. It has been admitted by the company in the pleadings that due to paucity of funds, it was not possible to make payments to the various creditors, that the business of the company had collapsed and that the skilled labour had already left. The evidence leaves hardly any room for doubt that financially it would be impossible to carry on the business of the company and, in any case, not otherwise than at a loss. The existing and possible liquid assets of the company were insufficient to meet even the current and immediate liabilities which must be met in the ordinary course of its business. Even the liability for the salary of its employees could hardly be met in the months of March and April, 1977, and capital assets and goods had to be sold for meeting the liabilities on the salaries account alone. The Managing Director resigned in February, 1977, and the two other directors resigned in April, 1977. No appointments have been made in their place and the Company has been left rudderless. On these facts, the Court has taken the view that both the interests of the shareholders as well as its creditors would be better served by winding up the Company, and its assets, if prudently realised, might be able to meet its liabilities.
13. Mr. Shah has further relied on the decision of the Andhra Pradesh High Court in the case of A. RAMCHANDRAN AND ANOTHER V/S. NARASARAOPET ELECTRIC CORPORATION LTD. AND ANOTHER, 42 COMPANY CASES 182 wherein it is held that the main object of the Company was to supply electrical energy in and around Narasaraopet and that the other objects were only theoretical and had no real significance, in the context of the business to be carried on or intended by the Company and that when the substratum of the Company had failed and it was impossible to carry out the main object of the Company for which it was formed, it was just and equitable that the Company should be wound up.
14. Mr. Shah has further relied on the decision of the Hon'ble Supreme Court in the case of RAJAHMUNDRY ELECTRIC SUPPLY CORPORATION LTD. V/S. A. NAGESWARA RAO AND OTHERS, 25 COMPANY CASES 91. This case arose under the Companies Act, 1913 and Section 162(vi) of that Act is parimateria with Section 433(f) of the Companies Act, 1956. The Hon'ble Supreme Court has held that the words "just and equitable" in Section 162(vi) are not to be construed ejusdem generis. Whether mismanagement of directors is a ground for winding up order under Section 162(vi) is a question to be decided on the facts of each case. 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 interest of the shareholders that the company should be wound up, there is nothing in section 162(vi) which bars the jurisdiction of the Court to make such order.
15. On the basis of the facts found, evidence adduced, contentions raised and the authorities relied upon, Mr. Shah has strongly urged that the respondent Company is required to be wound up under Section 433(f) of the Companies Act, 1956 and this Court, in the larger interest of the Shareholders, Creditors and public at large should exercise its discretionary jurisdiction under the provisions of the Companies Act, 1956.
16. Mr. Nirav C. Thakkar, learned advocate appearing for the respondent Company has strongly opposed the present petition. He has submitted that the petition is not maintainable on the ground interalia that an alternative efficacious statutory remedy is available to the petitioner which is not availed of by the petitioners. The petition also suffers from the defects of delay, laches, suppression of material facts, misrepresentation and lack of bonafides. The petitioners have got an alternative efficacious statutory remedy under the Provisions contained in Section 397 and 398 of the Companies Act, 1956. The petitioners have raised the contention that there is mismanagement of the affairs of the Company and hence, it is just and equitable ground to wind up the Company. He has submitted that there is no mismanagement of the affairs of the Company as alleged by the petitioner. This issue can be raised by filing the petition under Sections 397 & 398 of the Companies Act, 1956. The Company Law Board has been given the jurisdiction and powers to make such orders as it thinks fit as and when an application is made before it under Section 398 of the Act. The present petition was filed by the petitioners with malafide intention even when the Company is carrying on its activities and earning profits and is also commercially solvent. The attempt on part of the petitioners to get the Company wound up is itself an indication that the petitioners have come with malafide intention and not with clean hands.
17. Mr. Thakkar has further submitted that the petitioner No.1 was Director of the respondent Company from 16.07.1975 to 24.01.1986. From 16.07.1977 to 1978, the petitioner No.1 was the Chairman of the respondent Company and from 18.02.1980 to 21.04.1986, the petitioner No.1 was the Managing Director of the respondent Company. During the period in which the petitioner No.1 was either Chairman or the Managing Director, the Company had constantly made losses. He has also drawn the attention to the affidavit-in-reply filed by the respondent Company wherein figures of losses during the period from 1974- 75 to 1985 - 86 were given. He has further submitted that because of the mismanagement of the petitioner No.1 as well as the activities which were detrimental to the interest of the Company, the Company had made losses and thereafter, the reference was made to B.I.F.R. Mr. Thakkar has further submitted that the respondent Company has not committed any default in complying with the orders passed by B.I.F.R. as alleged by the petitioners. After framing of the Scheme dated 06.11.1990, there has been deviation in the said scheme because of the circumstances beyond the control of the respondent Company and the said deviations were put before the B.I.F.R. for its consideration. The B.I.F.R. in its meeting held on 29.04.1994, had considered these deviations and approved the same by order dated 29.04.1994. The petitioners have not mentioned these facts in the petition by making the claim for an equitable relief from this Court by suppressing material facts before this Court. The sale of part of the land at Kamod was after the Company was out of B.I.F.R. The allegations made with regard to non-payment of excise duty are totally false. Against the excise duty payable by the respondent Company, the respondent Company has preferred three appeals before the Commissioner (Appeals) and the said Appeals are still pending. With regard to the dues of the Ahmedabad Electricity Company Limited, the respondent Company is in constant touch with the A.E.C. and the dues are likely to be settled soon. He has further submitted that because of the Suo-Motu action taken by this Court against the Industrial Units in Ahmedabad which were allegedly polluting units, the carbonizing process which is a part of textile process was required to be closed down. There is no need to take permission of A.M.C. to start the textile processing if the Company complies with required conditions for prevention and control of pollution. Mr. Thakkar has also vehemently argued that the allegations levelled by the petitioners against the respondent Company to the effect that the substratum of the respondent Company is totally lost or that its losses far outweigh its capital or that the respondent Company is not carrying on any business for which it was formed and registered and that no prospects of its carrying on any business in near future or distant future, are absolutely false and baseless. The warehousing business is a profitable business and the Company plans to carry on the business of warehousing in the part of the premises even after starting the textile business. The respondent Company is in solvent circumstances and has been paying its debts as and when they become due and payable. Except the petitioners, none of the other Creditors of the Company have raised any demand or given any notice for repayment of its debts. The petition filed by the petitioners is, therefore, required to be rejected.
18. Mr. Thakkar has further submitted that before making allegations against the respondent Company, the petitioners should have looked at their own conduct. The petitioners have filed Company Petition Nos. 200 & 201 of 2001 before this Court under Section 433(e) of the Companies Act, 1956. The dues of the petitioners were satisfied by the respondent Company and the said petitions were withdrawn. He has further submitted that though the present petition is also filed in 2001, the petitioners have not pressed for any relief till this date and only when the dues of the petitioners were satisfied and the said petitions filed under Section 433(f) of the Act were withdrawn, the present petition was pressed for hearing. It shows the conduct of the petitioners and their only intention is to get the Company wound up. Mr. Thakkar has further submitted that even under the Provisions of O. 2, R. 2 of C.P.C., the present petition is not maintainable as the petitioners have already filed the winding up petition earlier wherein they have not raised the ground regarding winding up on the basis of just and equitable clause. Once having filed the winding up petition and withdrawn, it is not permissible to the petitioners to pursue the present petition on different ground.
19. Mr. Thakkar has relied on the decision of this Court in the case of ATUL DRUG HOUSE LTD., 41 COMPANY CASES 352 wherein it is held that the petitioners have alternative remedies under Sections 397 & 398. They have availed of their remedy of investigation under Section 408 and failed to disclose this fact in their petition. The petition for winding up could not, therefore, be admitted. The Court has further observed that the principle of dissolution of partnership would be applicable to a Company only if the Company is a domestic company. Further, there should be irresolvable deadlock in the administration of the Company. By introducing Sections 397 & 398 the legislature must be taken to have clearly indicated that the irresolvable deadlock should be because of something in the constitution itself. The Court has further held that at the time of admission of a petition for winding up under Section 433(f), the petitioner must convince the Court not only of a just and equitable ground for so doing but also that there is no alternative remedy open to the petitioner. This is because if such a petition is admitted and there is a public advertisement, it would cause irreparable harm to a solvent company even if the company succeeds ultimately.
20. Mr. Thakkar has further relied on the decision of this Court in the case of KAPIL N. MEHTA, SURAT V/S. SHREE LAXMI MOTORS LIMITED, 1999 (2) COMPANY LAW JOURNAL 267 wherein it is held that Section 443(2) of the Companies Act, 1956, mandates the Court that if there is other remedy available and if the petitioners are acting unreasonably in seeking to have a company wound up, instead of pursuing that other remedy, the Court may refuse to make that order. Here the word 'may' will have to be read as 'shall'. Thus, where these two conditions are satisfied, the Court is not expected to make an order of winding up on the ground that it is just and equitable. The so-called grievance of the petitioners is that they are removed from the management, but it is settled law that the general interests of the shareholders should not be readily sacrificed at the altar of squabbles of directors for power to manage the company. The powers under Section 402 are wide enough and, on an appropriate application being made and a case being made out, powers under that section may be exercised.
21. Mr. Thakkar has relied on the decision of this Court in the case of KIRITBHAI R. PATEL V/S. LAVINA CONSTRUCTION & FINANCE LTD. AND OTHERS, 40 (2) COMPANY CASES 1056 wherein it is held that in order to obtain an order for winding up of the Company, the contributory seeking exercise of the discretionary powers of the Court under Sec. 433(f) of the Companies Act has to establish the circumstances justifying the winding up of the Company and has further to show that no alternative remedy is available to him. Relief under Sec. 433(f) based on the just and equitable clause is in the nature of the last resort without other remedies being not efficacious enough to protect the general interest of the Company. Therefore, the remedy to wind up the Company is the last resort, the contributory should resort to. It is settled law that the Court can refuse to order of winding up a Company, if it is of the opinion that other remedy is available to the petitioner and that the petitioner is unsuccessfully seeking remedy of winding up.
22. On the basis of the defence raised by the respondent Company in its affidavits-in-reply and the contentions raised before this Court as well as the authorities cited above, Mr. Thakkar has submitted that looking to the petitioners' own conduct in the matter and their intention behind preferring this petition, the Court should not entertain the present petition and it should be summarily dismissed with cost.
23. After having heard learned advocates appearing for the respective parties and after having considered their arguments and the authorities cited by them in support of their contentions, this Court is of the view that it is not a fit case where the Court has to exercise its judicial discretion under Section 433(f) of the Companies Act, 1956 to wind up the respondent Company. The scheme of the Act is such that the Court hardly exercises its discretion under Section 433(f) of the Act. Section 433(f) states that a Company may be wound up by the Court if the Court is of the opinion that it is just and equitable that the Company should be wound up. The words "just and equitable" are not defined under the Act. The power under this clause should be exercised only when there is a very strong ground, because companies, as far as possible, should be left to self-government and self determination through the wishes of majority of shareholders. This being an equity jurisdiction, the Court cannot ignore the well-known maxim of equity. Section 443(2) of the Act states that whether the petition is presented on the ground that it is just and equitable that the Company should be wound up, the Court may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing with other remedy. The petitioner has to satisfy the Court that it is just and equitable to wind up the Company and that there is no alternative remedy available to the petitioner. Looking to the grounds raised by the petitioner for winding up of the respondent Company, the first and foremost ground raised was that the affairs of the Company were mismanaged and the persons who are in charge of the affairs of the Company have misappropriated the funds of the Company. This grievance can be ventilated by the petitioner by filing petition under Sections 235 or 237 of the Act for investigation of the affairs of the Company. The petitioners can also approach to the Company Law Board under Sections 397 & 398 of the Act on the ground that the affairs of the Company are being conducted in a manner prejudicial to the public interest or in a manner oppressive to any member or members or in a manner prejudicial to the interest of the Company. Instead of resorting to these provisions, the petitioners have chosen to file the winding up petition by invoking the provisions under Section 433(f) of the Act. It is, therefore, incumbent upon the Court to inquire into and ascertain as to whether the conduct of the petitioners is such which inspires the confidence of the Court so as to grant the relief prayed for in the petition.
24. Here in the present case, it is important to note that the petitioner was in the management of the respondent Company. As observed earlier, the petitioner No.1 was the Director of the respondent Company. He was the Chairman of the respondent Company in 1977 - 78 and he became the Managing Director on 18.02.1980 and he held that position till 21.04.1986. It is equally important to note that the Company has constantly made losses during this period. As a result of such continuous losses, the Company had approached to B.I.F.R. and revival scheme was framed before B.I.F.R. The grievance of the petitioners was started after the revival scheme was framed and was under implementation. Because of the circumstances, the Company had to under go a change in its business operations and warehousing activities were undertaken. By virtue of this Court's order, the Company had to close down its unit of carbonized process. This fact by itself is not sufficient to bring the winding up of the Company under Section 433(f) of the Act.
25. The conduct of the petitioners appear to be some what strange to the Court as the petitioners have also filed Company Petition Nos. 200 & 201 of 2001 before this Court under Section 433(e) of the Companies Act. They have waited for quite some time and during the pendency of those petitions, the petitioners have not pressed for the hearing of this petition. The respondent Company has satisfied the dues of the petitioners in Company Petition Nos. 200 & 201 of 2001 and it is only thereafter the petitioners have insisted for the hearing of this petition and pressed for the winding up of the respondent Company. This speaks volume about the conduct and the intention of the petitioners. The very fact that the Company has discharged its liability towards the petitioners in Company Petition Nos. 200 & 201 of 2001 itself makes it clear that the Company has not lost its financial substratum or it has not failed to discharge its liabilities as contemplated under Section 433(e) of the Act. Moreover, the petitioners cannot invoke the jurisdiction of this Court by separately presenting the petition under Section 433(f) of the Act on the ground that it is just and equitable to wind up the Company especially when petitioners presented winding up petitions under Section 433(e) of the Act and were contended with the outcome thereof. On the contrary, it is not just and equitable on the part of the petitioners to bring such petitions before this Court and pressed it, once their dues having been satisfied by the respondent Company.
26. In view of the above two distinguishable features which are found by the Court in the present petition, the Court is not inclined to accept the submissions made by Mr. Shah on behalf of the petitioners that the substratum of the respondent Company is totally lost and that its losses far outweighed its capital or that the respondent Company is not carrying on any business for which it was formed and registered and that no prospects of its carrying on any business in near future or distant future are found. The authorities cited by Mr. Shah are also of not much assistance to the petitioners in view of the peculiar facts of the present case. On the other hand, the decision of this Court in the case of ATUL DRUG HOUSE LTD., (SUPRA) supports the case of the respondent Company as the petitioner must convince the Court not only of just and equitable ground for so doing but also that there is no alternative remedy open to the petitioner. Having regard to the facts and circumstances of the present case, the Court is of the opinion that there is no just and equitable ground for winding up of the respondent Company. The Court is also of the view that the petitioners have got an alternative remedy either under Section 235 & 237 of the Act or under Sections 397 & 398 of the Act.
27. In the above view of the matter, the present petition fails. Notice discharged without any order as to costs.