STATE Vs. MAYURBHANJ SPINNING AND WEAVING MILLS

JUDGEMENT

(1.) THIS is an application by the State of Orissa as share-holder of the Mayurbhanj spinning and Weaving Mills Ltd. (hereinafter referred to as the Company) for winding up of the said company under Section 433 (c) and (f) of the Indian Companies Act, 1956, on the grounds that the Company has not commenced its business within a year from its incorporation and that it is just and equitable that the Company should be wound up, in the circumstances hereinafter stated:

(2.) THE ex-State of Mayurbhanj (since merged in the State of Orissa) had a scheme for the establishment of a cotton and textile Mill with capacity of 25,000 spindles and 500 looms in the State, and they appointed Indo-Swiss Trading Co. Ltd. Calcutta as promoters of the proposed cotton mill. The company was incorporated as the Public Limited Company in May 1947. There was also an agreement with the Indo Swiss Trading Co. Ltd. that they would be the managing agents of the new mill company. On June 14, 1947 the Maharaja, for and on behalf of the State of Mayurbhanj, agreed to purchase Rs. 2 lakhs worth of preferential shares and rs. 12 lakhs worth of ordinary shares. On June 19, 1947 a certificate of commencement of business was obtained by the Company from the Registrar of companies, declaring that the company is entitled to commence its business. The state of Mayurbhanj also settled vast areas of land with the Company and it is said the company was promised more lands as and when necessary.

(3.) THE financial structure of the Company at the time of incorporation was this: the authorised capital of the company was Rs. 75 lakhs divided into 25,000 redeemable cumulative preference shares of Rs. 100/ each and 500,000 ordinary shares of Rs. 10/- each; out of this amount only Rs. 50 lakhs was Issued, Rs. 17,15,250/- was subscribed and Rs. 13,92,725/-was paid up. The State of Mayurbhanj promised to subscribe shares worth Rs. 15 lakhs in the Company comprising Rs. 3 lakhs as preference shares at Rs. 100/- each and Rs. 12 lakhs as ordinary shares at Rs. 10/each; out of this a sum of Rs. 12 lakhs was pard by the State of mayurbhanj, Rs. 3 lakhs having been towards preferential shares and Rs. 9 lakhs towards ordinary shares.