P.C. Misra, J.
1. The petitioner is a shareholder and one of the members in the board of directors of the company M/s. Utkal Flour Mills Private Limited situated at Charampa (Bhadrak) in the district of Balasore. The petitioner, in this application, seeks winding up of the company under Section 433(f) of the Indian Companies Act, 1956, on just and equitable grounds. The allegations in the application on the basis of which the aforesaid prayer has been made are as follows:
(a) That the above named company was originally a partnership firm prior to its conversion and incorporation as a company under the Indian Companies Act, 1956. The partnership consisted of seven partners, namely,
1. Ramakrishna Sharma,
2. Smt. Durgadevi Sharma,
3. Srikrishna Sharma,
4. Sachikanta Routray,
5. Gadadhar Dixit,
6. Bishnumohan Routray,
7. Nirmal Chandra Routray.
The partnership was carrying on its business in the name and style ' M/s. Utkal Flour Mills' having its office and place of business at Bhadrak.
(b) The partnership was dissolved on August 23, 1975, for the purpose of conversion and incorporation as a company under the name and style M/s. Utkal Flour Mills (P.) Ltd. and the value of the net assets at the time of dissolution was Rs. 1,00,000 only. The nominal share capital of the said company is Rs. 15 lakhs divided into 1,500 equity shares of Rs. 1,000 each.
(c) That the partners of the aforesaid dissolved partnership firm, on becoming shareholders of the newly formed company, continued to hold and retain their respective shares in the said company as they had in the dissolved partnership. The net asset of Rs. 1,00,000 of the dissolved partnership firm got transferred to the newly formed company and the same was treated as share capital and their respective interests in the company stood as follows :
1. Ramkrishna Sharma 5%2. Smt. Durgadevi Sharma 3%3. Srikrishna Sharma 30%4. Sachikanta Routray 11%5. Gadadhar Dixit 31%6. Bishnumohan Routray 10%7. Nirmal Chandra Routray 10% The other assets like land, building, machinery etc. belonging to the dissolved partnership were in fact transferred to the newly formed company, but there has been no registered deed of conveyance in support of the transfer.
(d) In the newly formed company, the board of directors consisted of the following members :
1. Sachikanta Routray,
2. Gadadhar Dixit,
3. Ramkrishna Sharma,
4. Srikrishna Sharma,
5. Nirmal Chandra Routray,
(e) The board of directors had mutual co-operation, trust and confidence in conducting the business of the company till 1978. The petitioner was, however, kept out and ignored during the year 1978-79 as he was not given notice nor was he invited to attend the meeting of the board of directors of the company and balance-sheet prepared for the year 1978-79 was not disclosed to him. No annual general body meeting was held and the statutory returns were not submitted to the Registrar of Companies for which the company as well as the directors thereof were prosecuted in the court of S.D.J.M., Cuttack and each of them was convicted and sentenced to pay a fine of Rs. 50 in the said case. The petitioner protested against all these illegal activities and he was threatened to be assaulted. The petitioner was, therefore, compelled to resign on September 22, 1981. Various acts of mismanagement were alleged in the application of the petitioner which may be summarised as follows :
(i) Oh the eve of formation of the company, the total liability of the company was Rs. 11,32,148.64 paise as against the total assets of Rs. 12,34,148.64 paise. The balance-sheet of the company for the year ending as on June 30, 1980, disclosed that the company has transacted a total business of Rs. 1,79,88,915 and had earned a net profit of Rs. 3,43,202.96 but no dividend has been declared or paid so far, either during that year or any time thereafter ;
(ii) The unsecured loan of the company has gone up to Rs. 17,36,000 which are all benami, shown to have been obtained mostly from the relatives of the managing director.
(iii) During the year 1979-80, a lot of expenses have been shown under different heads such as repairs, travelling allowance of directors etc. which were never incurred and the accounts have been made up to suit the convenience of the managing director and his associates.
(iv) Despite good business and admitted profits of substantial amount earned by the company, the debts were not repaid, but the funds of the company were diverted in a clandestine manner for the personal benefit of the present set of directors. The debts not having been cleared up, Smt. Phula Devi Dixit, wife of the petitioner, a creditor of the company has filed Company Act Case No. 11 of 1982 praying for winding up of the company, Smt. Dixit had advanced a loan of Rs. 80,000 to the company, but she has not been paid any interest nor even a part of the principal as yet.
(v) That fake loans have been shown in the names of different persons related to the managing director, and they are being paid interest regularly, as shown in the accounts.
(vi) The accounts of the company are being manipulated and substantial amount has been diverted towards the share money of the present managing director in a firm named and styled as 'Kalinga Chemicals' situated at Jagatpur, The managing director of the company now owns substantial shares in Lingaraj Flour Mills Pvt. Ltd., Berhampur and is one of its directors. He has also purchased land in the town of Bhadrak paying huge consideration. The aforesaid investment by the managing director has been made out of the funds of this company clandestinely taken by him as he had no means to invest such a huge amount.
(vii) The managing director, Sachikanta Routary, has started a personal business in the name and style ' Utkal Roller Flour Mills' and the same has been located inside the premises of the aforesaid company. The said Utkal Roller Flour Mills is a fake firm having no land, machinery or building nor even electric connections and its creation is only for the purpose of draining out the assets of the aforesaid company. The said firm (or concern) has been established since 1980, purporting to do identical business in the very premises of the company and has been deliberately devised to misappropriate the funds of the company and to defraud its shareholders.
All these are instances to show that the affairs of the company are being managed in a most prejudicial and fraudulent manner and further continuance of this company would be detrimental to the interest of the shareholders and of the company as well.
(f) Even though the petitioner was one of the promoters of the company and at present holds nearly 28% of the shares in the paid up capital of Rs. 1,11,000 of the company, he has been kept out of the management of the company and no notice was sent to him to attend the meeting of the board of directors, or the annual general body meeting or any extraordinary general body meeting of the company. He is being kept out of the picture even when very important business or policy matters of the company are being decided. Giving some instance, it has been stated that there is complete lack of probity on the part of the present directors and the affairs of the company are being carried on in a clandestine manner destroying the mutual trust and confidence of others. The petitioner group has thus been oppressed by the present board of directors constituting the majority of the shareholders.
(g) Though the company is a private limited company, in substance and in reality, its structure is that of a partnership concern. There is no mutual trust and confidence amongst the three groups forming the company and there is no possibility of restoration of the same. In substance, the petitioner has been completely ousted from the management of the company during the last four years and the lack of probity has created a deadlock in the smooth functioning of the company.
(h) The present directors of the company have been deliberately misusing their powers for oblique and extraneous purposes and their dealing and conduct in respect of the funds, assets and equipment of the company are neither fair nor above board.
2. On the aforesaid allegations, it was prayed that it would be just and equitable to wind up the company and appoint an administrator to take charge of the assets and the books of accounts of the company during the pendency of litigation.
3. On being noticed, the opposite party-company entered appearance in this case and filed its counter-affidavit denying all the allegations in the application for winding up of the company. It has been stated that it is wholly misconceived to suggest that the company was originally a partnership firm as alleged. It has been pleaded that the company is a legal entity, completely separate and distinct from a partnership concern and came into existence from the date of its incorporation. The partnership firm having been dissolved, there can be no link between the two. It has further been stated that the shareholding of the individual in a company is strictly on the basis of shares allotted in the company in favour of the individual and, therefore, the inter se relationship of partners in the erstwhile partnership firm has absolutely no relevance to the company and are, therefore, matters wholly extraneous for the purpose of this winding up application. According to the said counter-affidavit, the 11 equity shares were not sold, but were allotted in favour of the persons as follows:
(a)Mrs. Phuladevi Dixit2(b)Mrs. Ratnaprava Sharma2(c)Mrs. Shanti Routray2(d)Sri Beatahari Nayak1(e)Sri Ananda Prasad Routray1(f)Mrs. Bhawatidevi Routray1(g)Sri Kulamani Routray1(h)Sri Gourimohan Routray1
Total11
4. They became shareholders only by virtue of the allotment of shares in their favour and not for their connection, if any, with the partnership firm.
5. It has been alleged that the petitioner himself was in charge of the company and managing the same till June, 1981, as Sri Sachikant Routray had to be away on business of the company during which time the petitioner has signed most of the receipts, vouchers, books of accounts and all other papers pertaining to the day-to-day business and management of the company. It has been further alleged that the petitioner offered his resignation voluntarily when gross irregularities and to some extent misappropriation by him were noticed by the other directors. It was on that account that the petitioner's wife agreed to advance an interest-free loan of Rs. 80,000 till such time as the company would need the same. The allegations of misappropriation and misconduct are vague and far from the truth. To avoid the petitioner's apprehension as to the risk of his shareholding in the company, it has been suggested that the other shareholders/directors of the company are ready and willing to purchase the petitioner's shareholding at the book value of the share, as, may be determined by the auditors of the company or on such terms and conditions as the court may direct. The loans said to have been incurred by the company are genuine and they were necessary for raising capital to carry on the business which, according to the opposite party, is a very normal phenomenon in running the company and therefore, cannot be taken exception to. The loans incurred by the company have been duly reflected in the books of accounts of the company as well as in the income-tax returns of the persons who had advanced the same. As regards the initiation of the Company Act Case No. 11 of 1982, it has been stated that payment of interest was never stipulated and the wife of the petitioner was offered a cheque for Rs. 80,000 which learned counsel appearing for her refused to accept. All other allegations oi fraud, mismanagement, manipulation, etc., have been categorically denied and it has been asserted that the company is being run and managed as efficiently and fairly as it is reasonably possible in the circumstances. The allegation that no meeting of the directors of the company is being convened has been refuted in the counter-affidavit. It has been stated that the Companies Act provides for calling upon the managing director to convene a meeting at the instance of a shareholder or a group or class of shareholders and in default thereof, appropriate proceedings can be initiated with the Registrar of Companies. That having not been done, the allegations in that behalf are unfounded, mischievous and wild. Regarding the allegation that the managing director of the company is purchasing shares in any other company for acquiring any property or interest in his individual capacity, it has been stated that there is no law preventing the same.
6. In the facts and circumstances as stated in the counter-affidavit, the opposite party has urged that none of the prayers made in the petition is tenable and that the proceeding is misconceived, based on false and frivolous allegations with the designed intention of maligning the management.
7. Rejoinder was filed by the petitioner to the counter-affidavit of the opposite party and an additional reply to the rejoinder affidavit was also filed by the opposite parties. Each of them gave further details in their subsequent affidavits, mostly elaborating the facts originally stated.
8. When the case was taken up for hearing, no issues were settled which came to my notice after the hearing was concluded. On being mentioned, the matter was further heard as to what issues are necessary to be settled. Both parties agreed that though the issues were not formally settled, all relevant questions of fact and law have been dealt with by them in the course of the argument. Both parties have filed separate issues and on the date when the same came up for consideration, a common set of issues was submitted under the signature of counsel for both parties which was accepted by the court on September 11, 1987. Counsel for each of the parties declined to advance any further evidence or arguments with regard to the issues so settled saying that they have already addressed the court on each of those issues. The issues so settled are as follows :
1. Is the petition for winding up maintainable ?
2. Is the company, Utkal Flour Mills (P.) Ltd., in substance and reality, a partnership with an outer corporate veil ?
3. Is the petitioner a victim of oppression or fraud of the majority of shareholders of the said company And has the board of directors representing the majority of shareholders, namely, (Routray Group and Sharma Group) acted fradulently and improperly in forming a partnership of Utkal Roller Flour Mills with the assets of the company as a device to drain out the funds of the company for their own benefit ?
4. Is the formation of the partnership as aforesaid legal and justified and the transactions done in the name of the said partnership valid in law and binding on the company ?
5. Is the petition for winding up bona fide and is the petitioner entitled to invoke the jurisdiction for winding up under the just and equitable clause having regard to the provisions of Section 443(2) of the Companies Act ?
6. Has the board of directors, representing the majority of shareholders, acted fraudulently in managing the affairs of the company in a manner destroying the probity and mutual trust and confidence of the shareholders ?
7. Whether the extraordinary general meeting dated February 2, 1982 was legally convened and whether the resolutions adopted therein are valid and binding in law ?
8. Is the company liable to be wound up ?
9. To what reliefs
9. Issue No. 2 : Out of the aforesaid issues, learned counsel for the petitioner has submitted regarding issue No. 2 that the company in question is in substance a partnership concern and, therefore, the principles applicable to dissolution of a partnership as provided under Section 44(5) of the Indian Partnership Act are applicable for winding up of the company. Admittedly, though there was previously partnership firm, the same was dissolved and a company came into existence. But the mere fact that a pre-existing partnership firm has been converted into a private limited company does not by itself mean that the company retains its character of a partnership. Nothing has been placed to show that the rights and obligations of the parties, while they were continuing as partners in the partnership firm, remained the same after the firm was converted into a limited liability company. The articles of association of the company which now govern the rights and obligations of the parties do not provide that the rights .of the partners of the pre-existing partnership firm as regards the management of the affairs, shares of profits, etc., were unaltered and preserved. Learned counsel appearing for the petitioner had relied on the decision in Hind Overseas Private Ltd. v. Raghunath Prasad Jhunjhunwalla, [1976] 46 Comp Cas 91; AIR 1976 SC 565 which was followed in Needle Industries (India] Ltd. v. Needle Industries Newey (India) Holdings Ltd., [1981] 51 Comp Cas 743; AIR 1981 SC 1298 and Life Insurance Corporation of India v. Escorts Ltd,, [1986] 59 Comp Cas 548; AIR 1986 SC 1370, in support of his contention that the principles applicable for dissolution of a partnership would be applicable for winding up of the company as the company is, in pith and substance, a partnership firm under a corporate veil. The decisions in the aforesaid cases do not oppose the established principle that a company is an independent and legal personality distinct from the individuals who are its members and it is not a partnership.
10. In the decision reported as Bacha F. Guzdar v. CIT, AIR 1955 SC 74; [1955] 25 Comp Cas 1 (SC), their Lordships did not accept the argument that the position of the shareholders in a company is analogous to that of partners ' inter se ' in a partnership firm. The distinction between the two as pointed out by their Lordships is that a partnership is merely an association of partners for carrying on the business of the partnership and in law the firm name is a compendious method of describing the partners, which is not so in the case of a company which stands as a separate juristic entity distinct from the shareholders. A further distinction has been pointed out by their Lordships ia the said decision that in the case of a company, a shareholder acquires a right to participate in the profits of the company, but acquires no interest in the assets of the company. It has been laid down that on buying a share in a company, an investor becomes entitled to participate in the profits of the company in which he holds the share if and when the company declares, subject to the articles of association, that the profits or any portion thereof should be distributed by way of dividends among the shareholders. He has undoubtedly a further right to participate in the assets of the company which would be left over after winding up, but not in the assets as a whole. Their Lordships in Hind Overseas Private Ltd. v. Ragunath Prasad Jhunjhunwalla [1976] 46 Comp Cas 91 (SC) dealt with the scope of Section 433(f) of the Companies Act which provides 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. Their Lordships further analysed the scope of the words ' just and equitable' and observed that the same is not to be read as being ejusdem generis with the preceding five clauses. From the facts and circumstances of the case, I do not find any justification for holding that the company in question, in substance, is a partnership firm as contended by learned counsel for the petitioner. Issue No. 2 is accordingly answered against the petitioner.
11. Issues Nos. 3 to 7.--All the issues are taken up together as they are interconnected. This is essentially an application under Section 433(f) of the Companies Act, 1956, which permits the court to direct winding up of a company where it is just and equitable. The petitioner had made several allegations for the purpose of establishing that the affairs of the company have reached such a stage that it is no more reparable and the same should be wound up in the interest of its shareholders. Before dealing with the various grounds urged by the petitioner, I would like to deal with the scope of Section 433 of the Companies Act with specific reference to Clause (f) thereof. Their Lordships of the Supreme Court in Hind Overseas Private Ltd. v. Raghunath Prasad Jhunjhunwalla [1976] 46 Comp Cas 91, indicated the principles of the 'just and equitable' clause occurring in Section 433 of the Companies Act with specific reference to Clause (f) thereof. Their Lordships of the Supreme Court in Hind Overseas Private Ltd, v. Raghnnath Prasad Jhunjhunwalla. [1976] 46 Comp Cas 91 (SC), indicated that the principles of the 'just and equitable' clause occurring in Section 433 of the Companies Act baffle a precise definition. It must rest with the judicial discretion of the court depending upon the facts and circumstances of each case. These are necessarily equitable considerations and may, in a given case, be superimposed on law. Whether it would be so done in a particular case cannot be put in strait-jacket of an inflexible formula. Their Lordships furthre 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. The interest of the applicant alone is not of predominant consideration. The interest of the shareholders of the company as a whole, apart from 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.
12. The relief under Section 433(f) of the Act is discretionary and the court may refuse to make an order for winding up if it is of the opinion that some other remedy is available to the petitioner and that he is acting unreasonably in seeking to have the company wound up instead of pursuing those, other remedies. This is because of the provisions contained in Section 443(2) of the Act. It is fairly established in law that the relief under Section 433(f) based on the just and equitable clause is in the nature of a last resort when other remedies are not efficacious enough to protect the general interests of the company.
13. Whereas the petitioner has strenuously argued that various grounds exist in favour of winding up of the company on the ground that it is just and equitable, learned counsel appearing for the company has submitted that no prima facie case has been made out in the application far less any evidence to satisfy the distinct requirements of law. The first ground urged by the petitioner in this connection is the formation of Utkal Roller Flour Mills in 1979 and the same was not made known to the petitioner amounting to deliberate concealment of fact. It has been alleged that the board of directors, being motivated by personal animosity towards the petitioner or to make wrongful gain to themselves at the cost of the company, acted in bad faith by making clandestine deals in forming the Utkal Roller Flour Mills and carrying on business in the name of the said partnership firm. The said allegations have been denied by the company. On a reading of the petition, I find that the allegations with .regard to the diversion of the funds by the present director to a partnership concern as alleged is devoid of material particulars and is, therefore, vague. On the basis of such bald allegations, it is not desirable for the court to exercise the discretion vested in it under Section 433(f) of the Act. The 'just and equitable' principle cannot be used as an instrument to wind up a company on mere allegations. It has been pointed out in some decided cases that the term has virtually lost its technical meaning and has acquired a more purposeful and pragmatic one. Unless the court is compelled by circumstances, an order for winding up of a company on ' just and equitable ' grounds should not be made.
14. The petitioner is the sole witness examined in this case on his behalf. In his evidence, he has not stated anything about the diversion of the funds of the company to the firm Utkal Roller Flour Mills. All that he has stated touching on this point is that he did not know as to how and when the company ' M/s. Utkal Flour Mills Pvt. Ltd.' became a partner of Utkal Roller Flour Mills and that all the work in the name of Utkal Roller Flour Mills are being done in the premises of the company with the aid of its machinery. Thus, the materials placed by the petitioner on record are not sufficient to record a finding that the partnership firm in the name and style of 'Utkal Roller Flour Mills' was formed with the assets of the company or that the funds of the company were drained out in that process. There is no evidence whatsoever to prove the allegation of the petitioner as to what transactions were made by the partnership firm and how the said transactions are connected with the assets of the company. The petitioner, having alleged that the formation of the partnership ' Utkal Roller Flour Mills' was fraudulent and illegal, he was obliged under law to spell out the details of the fraud as well as the facts necessary to show that the constitution of the partnership and the transactions entered into by it were illegal or prejudicial to the interests of the company both in the writ petition and in the evidence. In the absence of pleading and proof, issues Nos. 3 and 4 are bound to be answered against the petitioner.
15. The next grievance of the petitioner is that the board of directors representing the majority of the shareholders acted fraudulently in managing the affairs of the company in a manner destroying the probity and mutual trust and confidence of the shareholders which, according to the petitioner, is a just and equitable cause for winding up the company, I have already indicated that the prayer for winding up a company under Section 433(f) must be judged from the facts of each case. The allegations in this case are general mismanagement and oppression of minority shareholders. It is often said that the words ' just and equitable' are a recognition of the fact that a limited company is more than a mere judicial entity with a personality in law of its own. The company law recognises the fact that individual shareholders do possess the rights, expectations and obligations inter se which are hot necessarily submerged in the company structure. The ' just and equitable ' provision embodied in the company law enables the court to subject the exercise of legal rights to equitable consideration. It is also well-established in law that in making an order for winding up on the ground that it is just and equitable, the court will consider the interests of the shareholders as a whole and not that of the petitioner alone. Learned counsel for the petitioner, in his application for winding up the company, has alleged that the production of the company as reilected in the balance-sheet (exhibits 20 to 23) was reducing from year to year and the secured loan and the interest charged thereon were mounting up. The loss incurred by the partnership firm was debited to the accounts of the company which would be evident from the balance-sheet. In this context, it was urged that the directors have abused their power and are also guilty of breach of trust which, according to learned counsel for the petitioner, are sufficient to bring the case within the clause 'just and equitable '. The mere fact that a company incurred loss or that the unsecured loans of the company have increased is no ground for winding up the company. There is no evidence that the petitioner had ever raised any protest against the accounts maintained in the company. The court may issue necessary directions for the smooth running of the company instead of passing an order of winding up if the company can be saved from being ruined as a consequence of indiscreet management by the directors. In the absence of anything more, the mere fact that the funds of the company have been misused or even misappropriated would not afford a just and equitable cause for its winding up and as such an order as prayed for is likely to operate harshly on the rights of other shareholders. The general allegations that the company is not running in accordance with law and that its affairs are being managed in a fraudulent manner do not deserve any consideration in the absence of material particulars and proof thereof. The petitioner, in his evidence, merely pleads ignorance about the affairs of the company and its running after 1979. Admittedly, he was continuing as a director of the company till the month of July, 1981. No objection appears to have been raised by him regarding the alleged mismanagement of the affairs of the company till the year 1981 when the petitioner was still continuing as a director. The evidence adduced in this case is too meagre to come to a conclusion that the other directors of the company are guilty of misappropriation. The present application was presented by the petitioner two years after his resignation from the directorship. The aforesaid allegation cannot, therefore, constitute a just and sufficient cause for winding up the company.
16. It has been further alleged that the petitioner was ousted from the management of the company and thus there has been lack of confidence in the conduct and management of the company's affairs. This, according to learned counsel for the petitioner, is a sufficient cause for ordering the winding up of the company. Mr. Mukherjee, learned counsel appearing for the company has argued that at no point of time the petitioner was ousted from the management of the affairs of the company, but his was a case of resignation. Ouster evidently signifies forcible or wrongful dispossession or exclusion from the enjoyment whereas resignation implies a voluntary act relinquishing an office or the like. It has been alleged in the application that regular meetings of the company were not held and the company failed to comply with the statutory provisions inspite of repeated requests made by the petitioner. Being apprehensive of further penal consequences on account of gross irregularity or illegality committed by the directors Sharma and Routray, and having been threatened with physical assault, the petitioner was compelled to resign on September 22, 1981, Thus, in the application itself, no case of ouster has been made out and therefore, I would proceed to examine whether the resignation of the petitioner from the office of the directorship was a voluntary one or was a result of the coercion or pressure put on him by the other group of directors. As already stated, one of the reasons assigned for the resignation in the application itself is that the petitioner did not like to continue further as a director, being apprehensive of further penal consequences on account of the illegalities committed by the other directors. If that be one of the causes of his resignation, it would, on the one hand, not be consistent with the other cause assigned for his resignation, namely, that he was threatened to be assaulted. On the other hand, it means that the petitioner himself used his discretion to dissociate himself from the management of the company to avoid the penal consequence which would follow on account of the alleged illegalities committed by others. On the factual side, nothing has been shown to infer that the petitioner was about to suffer the penal consequences for the fault on his part. Even though he was continuing as a director of th'e company till September, 1981, he pleads ignorance about the management of the company from the year 1979. As regards the threat of assault, there is no evidence at all on record in proof of the said allegation. All that he has said in his evidence was as director of the company till July, 1981, when he resigned, being threatened to be assaulted physically by Sachikanta Routray and some of his relations. Except the aforesaid uncorroborated statement, there is no other evidence in support of the case of the petitioner. In his cross-examination, the petitioner admitted that he was looking after the day-to-day business transactions of the company like a manager and participating in the management affairs till June, 1981, during which period he was continuing as a director. He further admits that there is nothing in writing to establish that he was ousted from the company as a director. His further admission goes to the extent that he did not lodge any information either before the police nor made any protest in the company that he has been so threatened by other directors. In the aforesaid circumstances, the inference is irresistible that the resignation tendered by him in September, 1981, was a voluntary act on the part of the petitioner.
17. The petitioner has next alleged that he has never been served with any notice of meetings of the board of directors or the shareholders either as a director or as a shareholder after the year 1979. He further complains that the affairs of the company were concealed from the petitioner and the said action, in the facts and circumstances of the case, must be termed as ' mala fide ' justifying a winding up, though the petitioner alleges that he had not received any notice for the annual general body meeting during the year 1979-80 and 1981. There is no evidence whatsoever that he had raised any objection at any point of time till he tendered his resignation in September, 1981. As already stated, the petitioner has submitted that he had been participating in the day-to-day management of the company as a manager, and therefore, it is hard to believe that he was not aware of the annual general body meeting held during those years. Section 166 of the Companies Act requires that every company must hold in each year, in addition to several meetings, a general meeting as its annual general body meeting and the gap between two such meetings shall not be more than 15 months. Section 167 of the Act provides that if default is made in holding an annual general body meeting in accordance with Section 166, the Central Government may, notwithstanding anything in this Act or in the article of the company, on the application of any member of the company, call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the Central Government thinks expedient in relation to the calling and conducting of the meeting. It further provides that a general meeting so held shall be deemed to be an annual general meeting of the company. Admittedly, the petitioner has not taken any steps in this behalf. Learned counsel for the petitioner has pointedly attacked the meeting held on February 2, 1982. The resolution passed in the said meeting being exhibit 17 in this case, one of the agendas fixed to be discussed in the said meeting was the approval of the contract entered into by the company to enter into partnership with Utkal Roller Flour Mills in which the directors are interested to enter and it was resolved in the said meeting that the agreement of the partnership dated April 3, 1980, entered into between the company and M/s. Utkal Roller Flour Mills which was approved by the board of directors in their meeting held on October 14, 1979, against the disclosure of interest by the directors in their meeting held on August 13, 1979, was approved with retrospective effect from the date of agreement. The petitioner was continuing as a director on August 13, 1979, as well as on October 14, 1979. The approval of the decisions taken on those days cannot be taken exception to by the petitioner to which he himself was a party. The petitioner feels satisfied by alleging that no notice of any meeting was ever served on him from the year 1979 up to date. He further alleges that in the circumstances, the burden of proof of due notice was on the company, which disputed the aforesaid allegation. It has been alleged that the company having failed to produce the documents to establish service of notice, adverse inference is liable to be drawn against the company and it should be inferred that the petitioner had no notice of any of the meetings. Mr. Mukherjee, learned counsel appearing for the company denies the aforesaid position by making a reference to the order dated February 13, 1984, passed in this case in which the company had undertaken to keep the documents ready for production at the time of hearing, if necessary. He submits that no attempt whatsoever has been made by the petitioner to utilise the said documents in his favour which would rather go to show that the documents would prove the contrary. In the circumstances, the decision in Gopal Krishnji Ketkar v. Mohamed Haji Latif, AIR 1968 SC 1413 relied on by the petitioner has no application and no adverse inference can be drawn for non-production of the documents in possession of the company.
18. Mr. Mukherjee, appearing for the company, next argued that assuming that there are some lapses, winding up of the company is not to be allowed if an alternative remedy is available to the petitioner. Reliance has been placed on Section 443(2) of the Act which says that where the petition for winding up is presented on the ground that it is just and equitable that the company should be wound up, the court has a discretion to ask the petitioner to pursue the alternative remedy available to him. I have already indicated that the grounds on the basis of which winding up has been prayed for are themselves not clear and the material particulars have neither been pleaded nor proved. In exercising the powers under Section 433(f), the court has to be guided by the rules of equity and do what justice demands, keeping in view the facts and circumstance of the case. On the aforesaid analysis of the facts and circumstances of the case, I have no hesitation to conclude that this is not a case where it would be just and equitable for closure of a company and to pass an order of winding up of the company. So, from the allegations made in the petition and the evidence adduced by the petitioner, no attempt appears to have been made to sort out the disputes and the controversies amongst the different groups of shareholders which also persuades me to hold that the same does notcome within the scope of Section 433(f) of the Act. Before concluding, I may refer to another aspect which is also relevant in this connection. During the course of cross-examination, the petitioner was asked the following questions :
Question.--Why have you filed this application
Is it on account of personal vendetta ?
In answer to the said question, the petitioner replied as follows:
Answer.--It is, I was the founder of the company and its promoter. Whatever has happened to the company, it was on account of me and my efforts. If I have been thrown out and threatened, why should the company run
19. If this is the purpose, the prayer for winding up can never be allowed to dismantle an established organisation to the prejudice of the company itself and its shareholders.
20. Mr. Mukherjee, appearing for the company, made an offer to purchase 30% of the share of the petitioners' group saying that the court is competent to pass such an order under Section 443(1)(d) of the Act. The power of the court in this connection is not disputed, but learned counsel for the petitioner objects to such a prayer being allowed mainly on the ground that that will prejudice the interest of the shareholders in minority and such a course would give premium to the illegal acts which the other directors of the company have been perpetuating. Mr. Mukherjee has referred to some decisions which mainly deal with the powers of the court, but the discretion for directing sale of the shares of the minority group would not be a solution to the problem which has arisen in this case.
21. In the result, I would refuse to pass an order of winding up of the company on the ground that it would be just and equitable, but it will be open to the petitioner to seek redress against the company in accordance with law on proof of the injury alleged to have been caused to him. In the facts and circumstances of the case, there will be no order as to costs.