SAW MILLS AND INDUSTRIES Vs. STATE OF KERALA

JUDGEMENT

(1.) This petition is for compulsory winding up of the Saw Mills & Industries, Ltd., Kokkalai, Trichur. The petition was originally filed by Shri Mannathazhath Raman Menon, a shareholder. The company was then being managed by the Udaya Agencies (Private) Ltd., Trichur as its Managing Agencies. Finding that the bankers suspended operation of their accounts with the company because of the presentation of this winding up petition, the Director-in charge of the Managing Agents moved this Court for appointment of a Receiver for carrying on the business of the company, which had large commitments then requiring immediate execution. That petition was allowed on 20-5-1960 and an Advocate Receiver was put in charge of the affairs of the company pending disposal of this petition. The Receiver assumed charge on 1-6-1960 and is carrying on business to the satisfaction of all concerned. The company is seen to make appreciable profits under his management. Encouraged apparently by the signs of prosperity to the company, the petitioner submitted before this Court on 1-12-1960 that he was not pressing this motion for a winding up. Thereupon, Shri. Pullat Sankaranarayana Menon, apparently supported by 37 other shareholders intervened to prosecute the petition for winding up. He was substituted in the place of the original petitioner and was allowed to amend the petition under R.102 of the Companies (Court) Rules, 1959. It is the petition as amended by him that now comes up for disposal before me in this proceeding.

(2.) The company has a nominal share capital of Rs. 10 lakhs divided into 6000 cumulative preference shares of Rs. 50/- each and 70000 ordinary shares of Rs.10/- each, of which 3200 preference shares and 34000 ordinary shares have been subscribed making up a paid-up capital of Rs. 5 lakhs for the company. Admittedly, for the last 10 years the company has not been declaring any dividend on ordinary shares and for 7 years no dividend was paid on the preference shares also On 19-12-1959 the Board of Directors issued a notice for an extraordinary General Body Meeting of the shareholders to consider the feasibility of effecting a sale of the entire mills and all its belongings by inviting tenders therefor. The reason for this move was stated in an explanatory note appended to the notice as the absence of prospects of clearing off the arrears of dividends on the preference shares and of declaring dividends on ordinary shares anywhere in the near future At the extraordinary meeting held on 19-1-1960 in pursuance of this notice the shareholders resolved to effect a sale of the company with all its belongings, except stock in trade and raw materials, by inviting tenders for their purchase, subject to an upset price of Rs.3,50,000 & adjourned the meeting to 19-2-1960 to consider the tenders received. On 19-2-1960 it was found that the highest tender did not even come upto the upset price but rose only up to Rs 3,16,000/-. The shareholders in meeting then resolved to call fresh tenders without fixing any upset price and adjourned the meeting to 18-3-1960 for consideration of the fresh tenders that may be received.

(3.) Before the much suspected meeting of 18-3-1960 came, Shri Mannathazhath Raman Menon, the original petitioner in this case, instituted an Original Suit (O.S. No. 204 of 1960) in the Munsiffs Court of Trichur, and secured an interim injunction prohibiting the meeting of shareholders to be held on 18-3-1960, averting thereby all possibilities of an auction that day as advertised by the Board of Directors. Having thus gained a breathing-space, he instituted this petition for compulsory winding up of the company on 25-3-1960. It was soon followed by another similar petition which was registered as C.P. No. 16/1960 by Shri K.I. Kunjunni, another shareholder of the company. When these two petitions came up for final hearing on 12-12-1960 the petitioners in both the petitions submitted in court that they were not pressing the motion for a compulsory winding up. As there was nobody to intervene in C.P. 16/1960 to prosecute the same further, that petition was dismissed on 12-12-1960; and Shri Pullat Sankaranarayana Menon having intervened in C.P. 7/1960, as already mentioned above, this petition remains to be disposed of now.