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4. The second respondent has also filed a separate counter statement wherein he has denied various allegations made against him by the petitioner.

5. Mr. C. Harikrishnan, learned senior counsel appearing for the petitioner submitted that the first respondent company is liable to be wound up as the first respondent company has not carried on any activity except functioning as trustee for no remuneration and the only activity of the first respondent company throughout from the date of incorporation is that it has been acting as trustee. Learned senior counsel submitted that the scheme of the Companies Act also warrants that it must carry on some commercial activity with profit motive in mind, though it may not result in any profit actually, but however, the motive to earn profit by undertaking commercial activity is the pre-requisite for the existence of the company under the Companies Act. He submitted that the first respondent has not carried on any activity for profit. Learned senior counsel submitted that the first respondent has not only carried on any commercial activity during the years prior to the filing of the company petition, but its paid up capital has also been eroded, and the result is that the company is mainly acting as trustee and actually it is a service organisation. He also referred to Section 25 of the Companies Act and submitted that Section 25 deals with charitable companies and licence from the Central Government is necessary so that company can be formed for promoting commerce, art, science, religion, charity or any other useful objects with no profit motive in mind. He also referred to Section 11 of the Companies Act and submitted that in all cases, the company must carry on some trading or commercial activity and the object of the company must be to earn income. He also submitted that in the case of a company which is formed to act as trustee, such company must also carry on the activity for profit and unless there is an activity for profit, it would be of no benefit either to the company or to the shareholders who have invested money to the company. He submitted that the first respondent company has been acting only as trustee and though the first respondent has several objects, it has not carried on any other activity other than acting as a trustee and there is no gain for the members. His submission was that the very existence of the first respondent is not sufficient and if it is allowed to continue like this with no profit, no loss, no reserve, no expenditure, or no income either to the company or to the shareholders, the purpose of incorporation of the company would be defeated and the existence of such company would be against the provisions of the Companies Act itself. In this context, he referred to Section 433 of the Companies Act and submitted that the emphasis under the Companies Act is that the company must commence business activity, but the first respondent has not carried any business activity within the period of one year from the date of its incorporation and therefore, it is liable to be wound up. He also submitted that the company has no reserve and the company has no liability and the company merely exists in paper. He submitted that the company exists only to nominate the second respondent as trustee in the Thanthi Trust and the second respondent has packed his own men and women in the Board and is controlling the affairs of the Thanthi Trust and by that, he is getting personal advantage and therefore the existence of the company is not in the public interest and hence, the company is liable to be wound up. He therefore submitted that the company cannot act for gratis when it functions as trustee and the first respondent company should receive adequate remuneration for acting as trustee and the absence of any return and the presence of the second respondent as a trustee in the Trust clearly show that the corporate character of the first respondent company has been utilised by the second respondent to meet his own ends and since the second respondent is using the corporate character of the first respondent for his personal advantage, the first respondent company is liable to be wound up. He further submitted that the first respondent company exists only for the benefit of the second respondent and not for any other purpose. He submitted that the first respondent has not done any activity except to act as a trustee for several years and it cannot continue for ever he also submitted that the fact that the petitioner has approached the civil court with the proposed suit by invoking the provisions of Section 92 C.P.C. does not debar the petitioner from filing the petition under the Companies Act to wind up the first respondent company as the first respondent company does not carry on any business and it exists only for the benefit of the second respondent. He therefore submitted that there are two remedies open to the petitioner and the remedy sought for by the petitioner in the civil court under Section 92 C.P.C. is for the removal of the second respondent as a trustee from the Thanthi Trust and it has nothing to do with the petition for winding up of the first respondent company and both the remedies are separate and independent and the grant of remedy in one proceeding does not depend upon the grant of remedy in the other proceeding. He also submitted that the second respondent has fairly admitted that the Board of Directors of the first respondent has been packed with the employees and his own men and hence, the continued existence of the first respondent would only enable the second respondent to commit acts of fraud not only against the trust, but also against the provisions of the Companies Act. Learned senior counsel submitted that the mere delay in approaching the court is not a relevant factor and what has to be seen is whether the ingredients for winding up of the company are satisfied and the petitioner has established that all the ingredients for winding up of the company are satisfied and hence, the mere delay in approaching the court is not relevant and fatal. He submitted that the balance sheets of the company prior to 1994 clearly show that the first respondent company has become commercially insolvent as its paid up capital has been seriously eroded and the later balance sheets after the filing of the petition are all made up balance sheets and no reliance can be placed on the balance sheets subsequent to the filing of the company petition. His main submission is that the first respondent company exists only to act as a service organisation for the benefit of the second respondent and it is not a company and since the first respondent company has not carried on any other activity and there is in-fight between the petitioner and the second respondent and hence, the first respondent company is liable to be wound ap on just and equitable ground. He therefore submitted that the first respondent is liable to be wound up on the ground that it has not carried on any business activity. He has also submitted that the first respondent is liable to be wound up on just and equitable ground. He submitted that the first respondent is also liable to be wound up as it exists only for the personal interest of the second respondent by nominating him continuously as representative to act as trustee in the Trust. He submitted that the first respondent company has become commercially insolvent and for several reasons mentioned in the petition as well as in the arguments advanced by him, the company is liable to be wound up.

27. Learned senior counsel for the petitioner also submitted that if the company pursues its objects, it must result in some gain or income. Learned senior counsel also referred to certain paragraphs which have been relied upon by the learned counsel for the respondent in The Law Quarterly Review. He referred to the provisions of Section 8 of the Executors' Companies Act which was referred to in the article, Administration of Trusts by Joint Stock Companies. Section 8 of the said Act deals with the question of remuneration and provides that the company may charge their clients at any commission at the prescribed rates. It also provides that the rate of remuneration is subject to the revision of the court and liable to reduction in case of its being deemed excessive. But, a close reading of the article, viz., Administration of Trusts by Joint Stock Companies in The Law Quarterly Review shows that it is possible to have a trust company and unless it is made by lawful Act, it is not possible for the trustee to get remuneration for the services rendered. He also submitted that the company must indulge in some activity which must result in the benefit of the company and the object of the activity must be to earn income. He therefore submitted that the company must carry on some business activity. I am unable to accept the said submission as the Companies Act makes a distinction between the commercial companies and the companies which are to function as trustees and where there is a prohibition either under the Trusts law or under the deed of Trust to receive remuneration by trustees, the trust companies cannot be wound up only on the ground that it has failed to receive remuneration for acting as a trustee. The question whether the company fails to earn income would depend upon the nature of the company. Besides, the Court has to look into the provisions of the Trusts Act and the trust deed and where there is a prohibition against the receipt of any benefit by way of remuneration by the trustee, the company cannot be said to be not pursuing its objects for which the company has been formed. The company is merely an instrumentality and it acts only through individuals and no doubt it exists for the benefit of its members, and when the trustee company carries on its activity to achieve its objects for which it was formed, the company cannot be wound up, whether there is a profit or not. It would be a different matter if the company has not pursued any of its objects. On the other hand, where the company pursues its objects by carrying on its activities, the non-receipt of remuneration is not material and the company cannot be wound up.

It is, no doubt, true that the learned Judge has held that the 'object' means the object which the corporation during its corporate life is to pursue, and on fulfilment of its object, it must seek to earn profit. The law has been laid down with reference to a commercial corporation as the Court of Appeal was dealing with the company which was a commercial corporation.

Therefore, it cannot be stated that the said observation would perforce apply to the case of a trust company. It is true that it will be open and permissible for a trustee company to pursue its objects of being a trustee by carrying on the activities on a commercial scale, depending upon the terms of the deed of trust or the orders of the Court, as the case may be, but the non-receipt of remuneration or its willingness to perform the functions as a trustee without remuneration would not detract from its essential quality of a corporation when it pursues its activities without the receipt of remuneration. In my view it would all depend upon the willingness of the corporation and the terms of the deed of trust or the orders of the Court, as the case may be. I therefore hold that a trust company is a legal entity under the company law so long as it pursues its object of acting as a trustee. The non-receipt of remuneration is not material, and on that account, a trust company cannot be wound up.

31. Further, Section 32 of the Indian Trusts Act, 1882 also provides that the trustee is entitled to get reimbursement out of the trust property all expenses properly incurred in relation to the execution of the trust property and for preservation of the trust property. Therefore it cannot be stated that the first respondent company is not pursuing its object viz., to act as a trustee. The evidence produced by the first respondent clearly show that it acts as a trustee. As far as the remuneration by the trustee is concerned, as already observed, unless it is provided in the trust deed, it is not open to the trustee to claim remuneration. Therefore the non-receipt of remuneration is not material. As far as the benefits to members are concerned, I find that except the petitioner, other shareholders of the company names of whom are given in the petition have not raised any objection that they have not received any benefit from the company. Since it is a company formed to act as a trustee, the non-receipt of remuneration is immaterial. Further, I have already observed that the first respondent company has other objects also and in future, it may expand its activity in carrying on other objects and in such situation, it will be possible for the members to obtain return on the investment. Further, the right of the shareholders in the shares is not confined only to the receipt of dividend, but it varies and the rights of shareholders are bundle of rights and so long as shareholders exercise their rights as shareholders in the company, it cannot be stated that the shareholders are not exercising their rights as shareholders in the company.