Research › Search › Judgment

Orissa High Court · body

2006 DIGILAW 569 (ORI)

Shaikh Mahfooz v. Hotel OASIS Pvt. Ltd.

2006-07-28

M.M.DAS

body2006
JUDGMENT M. M. DAS, J. : This is an application filed under Section 433 read with Section 439 of the Companies Act, 1956 (hereinafter referred to as ‘The Act’). 2. It appears from the averments made in the petition that the petitioners 1 and 2 are husband and wife respectively. The opp.party No.1 is a Private Limited Company which is sought to be wound up. The opp.party No.4 is the father of opp.parties 2 and 3 and the uterine brother of petitioner No.1 3. The case as made out by the petitioners in the company petition is that plot No.76 in Budhanagar, Kalpana square, Bhubaneswar originally belonged to the father of the petitioner No.1 and the opp.party No.4. The petitioners claim that the said property was purchased from the money advanced by them through the father of the petitioner No.1, namely, late Sk. Ahmed. During the life time of said Sk. Ahmed, he executed a gift deed making a gift of 50% of the undivided share in the said plot to the petitioner No.1 and 25% share each to the opp.parties 2 and 3 respectively. Subsequently, being persuaded by the opp.parties 2 and 3 invest money in the business to be carried on from the buildings situat¬ed over the said plot by converting it to a multi-storied build¬ing, the petitioners invested about Rs.24.00 lakhs. The petition¬ers were living abroad. It appears that there were also some other transactions over the said properties between the parties and ultimately, the opp.party No.1-company was incorporated in September, 1995. The allegations made by the petitioners are regarding the mis-management of the company by the opp.party No.4 who describing himself as the Managing Director of the said company has borrowed huge sums of money from different financial institutions. It further appears from the petition that various criminal cases have been instituted by the petitioners by lodging First Information Reports before the concerned Police Stations. It also appears that a suit for partition of the property being C.S. No.492 of 2004 is pending before the learned Civil Judge (Sr. Division), Bhubaneswar. It further appears from the petition that various criminal cases have been instituted by the petitioners by lodging First Information Reports before the concerned Police Stations. It also appears that a suit for partition of the property being C.S. No.492 of 2004 is pending before the learned Civil Judge (Sr. Division), Bhubaneswar. On the above allegations, the peti¬tioners have urged that this being a case of clear mis-management and oppression of minority over the majority leading to breach of trust and loss of confidence, it is a fit case where the company should be wound up and the petitioners claiming themselves to be the major share holders have taken a resolution alleged to be in the Extraordinary General Body Meeting held on 11.7.2004 for winding of the company. 4. The two grounds advanced by the petitioners in support of their claim for an order of winding up of the opp.party No.1-company, are the purported resolution dated 11.7.2004 said to have been passed in the Extraordinary General Body Meeting for winding up of the company and allegation of mis-management and oppression of minority over the majority leading to breach of trust and loss of confidence amongst the members of the opp.party No.1-Company. 5. The resolution dated 11.7.2004 which has been annexed to the petition as Annexure-10 discloses that only the petition¬ers 1 and 2 were present in the said meeting. Though it is stated in the said resolution that notice convening the meeting along with the explanatory statement was circulated to the members previous to the said meeting and copies of the aid notices are attached to Annexure-10, but nothing is revealed from the said copies of the notices that those were served on the other opp.parties who are admittedly share holders/Directors of the company. It further appears that the petitioners have not pro¬duced any document to show that they constitute the major share¬holders of the opp.party No.1-company. No document is also forth¬coming to show that the resolution under Annexure-10 has been filed before the Registrar of Companies. I am, therefore, unable to rely upon the said resolution for passing an order of winding up of the opp.party No.1-company as the said resolution cannot be said to be a special resolution as contemplated under Section 433 (a) of the Act. 6. I am, therefore, unable to rely upon the said resolution for passing an order of winding up of the opp.party No.1-company as the said resolution cannot be said to be a special resolution as contemplated under Section 433 (a) of the Act. 6. The second ground canvassed by the petitioners for passing an order of winding up of the opp.party No.1-company is equally untenable. An order of winding up of a company on the ground of mis-management and oppression can only be passed under Section 433 (a) of the Act where the Court is of the opinion that it is just and equitable that the company should be wound up. The petition¬ers, in the present case, however, except alleging mis-management and oppression by the minority shareholders, have not produced any document from which such mis-management and oppression can be inferred. It is well settled that Section 433 of the Act does not confirm on any portion a right to seek an order that a compa¬ny shall be wound up. It only confers power on the Court to pass such an order of winding up in the appropriate cases. The words “Just and Equitable” appearing in Clause (f) of Section 433 of the Act are not to be read ejusdem generis with the preceding clauses. The power under this clause can only be utilized when there is a very strong ground leading to the conclusion that in the facts and circumstances of the case, the Court should direct winding up of the company, since ordinarily as far as possible a company should be left to self-Government and self-determination through the wishes of the majority shareholders. This being an equitable relief, it would be open for the Court to ignore the well known maxims of equity. 7. From the facts of the present case where admittedly various criminal cases have been initiated by the petitioners against the opp.parties 2 to 4 and, as a matter of fact, a civil suit for partition is pending between the parties who belong to one family, in my considered view, it would not be equitable to direct winding up of the opp.party No.1-company by applying the provisions of Clause (f) of Section 433 of the Act. 8. 8. However, since allegations of mis-management of the company in question have been made by the petitioners, which according to them, is in a manner oppressive to the petitioners who are admittedly the members of opp.party No.1-company, it would be open for them to approach the Company Law Board for appropriate relief under Section 397 of the Act, if they are so advised. The Company Petition is accordingly disposed of. Petition disposed of.