1. The petitioner is one of the shareholders of the respondent-company holding ten equity shares of Rs. 1,000 each. She has filed the present application under section 433(e) and 433(f) of the Companies Act, 1956 (in short, 'the Act'), for winding up of the respondent-company, namely, Combined Power and Energy Systems (P.) Ltd., inter alia, on the ground that it has lost its substratum and it is impossible for the company to carry on its business with the object for which it was constituted with profit. Keeping in view the allegations made in the petition and after due notice to the respondent-company and holding appropriate inquiry the case was admitted on January 25, 1990, by a speaking order. Subsequent to the advertisement some of the creditors have also appeared in the proceedings through Mr. Gopala Hegde in support of the prayer made herein.
2. The husband of the petitioner has been examined as PW-1 and the chairman-cum-managing director of the respondent-company namely, Sri P. V. Ramaiah has examined himself as RW-1. On behalf of the petitioner it has been deposed that the company has stopped its business since 1985. It has no assets and its liabilities are far in excess of its assets. Further, though the outstanding dues of the company are of more than Rs. 10 lakhs but the company is unable to pay its debts. Workers also remained unpaid for the work done by them and, therefore, out of disgust they have taken away the assets available at the premises of the company to appropriate against their wages and salaries. The said assertions made on oath on behalf of the petitioner remained uncontroverted, rather surprisingly more or less those have been admitted by the managing director. It is also borne out from the records that, since 1985, no balance-sheet has been prepared. Even the auditor of the company had given up the job for want of remuneration. Sri L. Pandurangaswamy, learned counsel appearing for the company, fairly concedes that the company has no case to demand its survival.
3. In the case of D. Davis and Co. Ltd. v. Brunswick (Australia) Ltd. [1936] 6 Comp Cas 227; AIR 1936 PC 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 question must be the question whether at the date of the presentation of the winding-up petition there is any reasonable hope that the object of trading at a profit, with a view to which the company is formed, can be attained.' In the case of Cine Industries and Recording Co. Ltd., In re [1942] 12 Comp Cas 215, 224; AIR 1942 Bom 23, Chagla J. referred to the aforesaid quotation from the decision of the Privy Council, relied upon it, and ultimately observed as follows :
'Therefore, on the authorities the position seems to be that the substratum, of the company is deemed to be gone when : (a) the subject-matter of the company is gone; or (b) the object for which it was incorporated has substantially failed; or (c) it is impossible to carry on the business of the company except at a loss which has been construed by the Privy Council to mean that there is no reasonable hope that the object of trading at a profit can be attained; or (d) the existing and probable assets are insufficient to meet the existing liabilities.'
4. This court as well in the case of Syndicate Bank v. Printersall (P.) Ltd. [1980] 2 KLJ 458; [1981] 51 Comp Cas 5 has held that :
'It is well-settled law both in England and our country that where the substratum of the company has gone or its only business has become impossible, the court would consider it just and equitable to wind up such company.'
5. For the said reasons, we have no option but to direct for the winding up of the respondent-company. The official liquidator shall take charge of the properties of the company and shall take all steps to recover the debts and other amounts due to the company. The official liquidator shall also cause a sealed copy of this order to be served on the company and the directors by pre-paid registered post. Consequently, the petitioner is directed to advertise the winding up order in the Times of India daily newspaper within 14 days from today. The petitioner shall also serve a certified copy of this order on the Registrar of Companies not later than one month from this day.
6. The company petition stands allowed.