IN RE: GREAT EASTERN HOTEL LTD. Vs. ABC

JUDGEMENT

(1.) This is an application for winding up. This petition has been presented by two creditors namely Sri Pasupati Nath Roy and Sri Basanta Kumar Roy. Sri Basanta Kumar Roy was at all material times and at the time of the loan and at the time of presenting the petition for winding up a director of the company. Sri P. N. Roy is the son. The amount alleged to be due from the company is about Rs. 29,000.00. The company on the other hand states that the sum of Rs. 4,000.00 was deposited as the security for food and drinks and there are claims against two firms in which Sri Basanta Kumar Roy is interested and the total of these claims come to about Rs. 8,000.00. Therefore, out of this claim of Rs. 29,000/ - there is a dispute to the extent of about Rs. 12,000.00, So far as the balance of the loan is concerned the loan is admitted but it is contended on behalf of the respondent that Sri Basanta Kumar Roy was instrumental in introducing a loan scheme and pursuant to that he had advanced these loans and had also procured loans from his friends and relations and as he was no longer in the active management of the company he had caused this winding up petition to be presented on his behalf as well as induced others to present winding up petitions in order to coerce the company. It is true that Sri Basanta Kumar Roy is a director of the company. But he has all the rights of a creditor and a creditor has a right to present a winding up petition as an equitable form of execution. At the same time I am of the opinion that a director of a company holds his position in a fiduciary capacity and has to discharge certain obligations towards the company. Winding up of a company prima, fade will not be to the benefit of the share-holders, at least no materials have been placed before me to indicate that it is so. A part of the claim as I mentioned hereinbefore has been disputed and it has also to be borne in mind that several other persons who were either relations or friends of Sri Basanta Kumar Roy have also presented winding up petitions more or less simultaneously through the same Solicitor.

(2.) Counsel for the petitioner drew my attention to a passage in Palmer's Company Precedent, 17th Edn. Winding up Volume at page 25 which reads as follows :

(3.) The aforesaid passage was quoted with approval by the Supreme Court in the case of Harinagar Sugar Mills Co-Ltd. Vs. Court Receiver, H. C. Bombay, reported in A.I.R. 1966 S.C. page 1707 . It is true that winding up petition is a perfectly proper remedy for enforcement payment of a just debt but as was observed by the Supreme Court it is a form of equitable execution and in a case where a person who is in a fiduciary relationship with the company it has to be seep whether his action is in conflict with his interest as a creditor. Prima facie, as I said, there is no evidence that winding up in this case will be just and equitable for the shareholders. In the background of the facts of this case, I, therefore, in exercise of my discretion refuse to admit this petition and relagate the parties to the ordinary remedy of a suit. The application is, therefore, dismissed. If any suit is filed, the costs of this application will be costs in that suit. Application rejected.