Suresh Kumar Bansal vs U. P. Mineral Products Ltd.
1993 Latest Caselaw 471 Del

JUDGMENT

Ms. Usha Mehra, J.

1. Suresh Kumar Bansal and others, the petitioners, herein have sought winding up against U. P. Mineral Products Ltd. (hereinafter called "the company") under section 433(f) of the Companies Act, (hereinafter called "the Act"). The relief has been sought primarily on the ground that Mr. Manvir Singh (respondent No. 2 herein) contrary to the agreement signed with U.P. State Mineral Corporation (respondent No. 3 herein), which disabled its nominees from disposing of its shares in the company, contrary to the articles of association which prevented the reduction in the share capital and also in gross violation of the provisions of sections 100 to 105 of the Act, the second respondent sought to reduce the share capital of the company by refunding the monies against shares which had already been allotted in favor of the petitioners. Therefore, it is alleged that the company has no authority in law to reduce its share capital by refunding monies against shares which stood allotted without following the procedure as laid down in the Act. The reduction of share capital can only be done if the articles of the company so provide and that too after passing special resolution in that regard and further such approval of the majority shareholdings has to be approved and sanctioned by the appropriate court. But in this case this procedure has not been followed, and, therefore, the ousting of petitioners Nos. 1 and 2 from the management of the company and from the board of directors is not only mala fide but an illegal act in itself. Hence the petition for winding up. It has further been brought on record that the company was having over invoicing at the time of import of plant and machinery. That the advertisement given in the newspaper that the original promoters, namely, Mr. S. K. Bansal and Mr. V. K. Thakur, were replace because they could not bring their contribution was against the record and an illegal act. Therefore, in these circumstances the company be wound up for just and equitable cause.

2. I have heard learned counsel for the petitioner and perused the record. Admittedly, the grounds taken by the petitioners are not covered under section 433(f) of the Act. The only grounds on which winding up has been sought are that the company has reduced the share capital without approval of the shareholders and sanction of the court, and that of the removal of petitioners Nos. 1 and 2 from the management of the company and from the board of directors. For these grounds of oppression and mismanagement, alternative remedy is available. Resorting to this extreme remedy of winding up, to my mind, is not necessary. It is only when there is no practical possibility of remedying the mismanagement that it becomes a proper case for winding up on the just and equitable ground. Doing of an unauthorised business and entering into ultra vires transactions will not furnish a just and equitable ground for an order of winding up. Reference can be had to the decision of the Supreme Court in the case of Seth Mohan Lal v. Grain Chambers Ltd. [1968] 38 Comp Case 543 as well as to the judgment of the Division Bench of this court in Bhaskar Stoneware Pipes Pvt. Ltd. v. Rajinder Nath Bhaskar [1988] 63 Comp Case 184. On the ground of reduction of the share capital, mismanagement and oppression, the petitioners can invoke the jurisdiction of the Company Law Board under section 397 and can file civil suit for seeking relief. To my mind, the remedy of winding up is not the answer, and, therefore, the petition as such is not maintainable under section 433(f) of the Act.

3. Company Petition No. 35 of 1993 stands dismissed.