VEERAMACHINENI SEETHIAH Vs. BODE VENKATASUBBIAH

JUDGEMENT

(1.) This is an appeal against the judgment of Clark, J., dismissing an application by three share-holders of a private limited company known by the name of Sri Gopalakrishna Motor Transport Co., Ltd., for the winding up of that Company. The appellant was the first petitioner on the original side and he claimed to be the managing director of the motor transport company from 1 July, 1946. The other two petitioners, who are respectively respondents 12 and 13 in this appeal, were a shareholder and a director of the same company. This joint stock company carried on business as a bus operator in and around Bezwada. The application before the learned Judge was under Clause (vi) of Section 162 of the Indian Companies Act on the ground that it is just and equitable that the company should be wound up by Court. Various reasons are alleged in the statutory affidavit filed in support of the application, which in essence, come to this, that the directors, far from working in harmonious co-operation, are at loggerheads with the result that the business is at a standstill on account of the deadlock. The gravamen of the charge is mainly against the first respondent as as well as the second respondent. In answer to the application, the respondents filed separate affidavits denying the charges levelled against them and further stated that the company is carrying on business properly and that substantial profits have been earned in addition to acquiring valuable good- will. It is further alleged that the appellant, during the time he was managing director, had misappropriated large sums of money belonging to the company and committed acts of misfeasance as a result of which the shareholders had to convene a special meeting wherein the second respondent was elected as the managing director. The affidavits on either side disclose charges and countercharges and it is incumbent therefore on the Court to find out how far there is justification for any of them.

(2.) Before we concern ourselves with the merits of the application on which the learned trial Judge has bestowed considerable attention, it is necessary to advert to a matter of procedure in which, according to the learned Counsel for the appellant, the trial Judge has erred and therefore the learned Counsel urges, if we take a view different from that of the trial Court on that matter of procedure, it would be necessary to remand the application for further hearing and disposal afresh.

(3.) The point arises this way. The application for winding up was filed on 29 August, 1947, and the hearing date was fixed as the 27 October, 1947. It was taken up the next day, i.e., 28 October, 1947, and on that date respondents 1 to 9 in the appeal appeared by counsel and requested that time may be granted to them for filing counter-affidavits. This request was acceded to and the learned Judge directed that counter-affidavits should be filed within ten days and thereafter the petition should be posted for hearing on 10 November, 1947. The intention of the learned Judge, was, as is clear from his judgment, that if the applicants wanted to file any reply affidavit they could do so before 10 November, 1947. There is no complaint that the appellant and the other two petitioners on the orignal side did not have sufficient time to prepare or file their reply affidavit. In "fact the reply affidavit was actually filed by the appellant on the 10 November, itself. The respondents filed their counter- affidavits earlier than the time allowed, viz., on 5 November, 1947 and the case came into the daily cause list on Monday the 10 November, 1947. On account of other work, it was not reached that day and as the next day (Tuesday, nth November) was a holiday, the case was taken up for hearing, and that too just before the Court rose for the day, on Wednesday, the 12 November. At that time the applicants counsel asked for an adjournment on the ground that the documents on which he relied to prove the case had not been typed. The respondents opposed the application for adjournment, whereupon the learned Judge ruled that the hearing should proceed but that the difficulty, if any, to be experienced on account of the absence of typed copies of the documents would be alleviated by probably looking into the manuscripts themselves. The hearing was resumed on Thursday, the 13 November, with the petitioners counsel reading the petition, the affidavit, the counter-affidavits, and the reply affidavit. In this Court, the respondents counsel stated that on 13 November, 1947, the applicants counsel requested the Court for a further adjournment for the reason that the documents were not only not typed but that most of them had not even been translated into English. This was a reason quite different from what was given the previous day in support of the application for adjournment. Since the learned Judge does not make any mention about this request, we do not intend to rely upon this circumstance at all. As is seen from the judgment of the learned Judge, after having read the petition, the affidavit, the counter-affidavits and the reply affidavit, the applicants counsel proceeded to make his submissions on the facts set forth in those pleadings and also argued questions of law. Thereafter, towards the close of the working day on 13 November, 1947, the applicants counsel proceeded to call oral evidence in support of the application by putting the appellant into the box to give oral evidence. Thereupon the learned Counsel for the respondents objected to the procedure mainly on the ground that at that stage no oral evidence should be allowed to be let in-Then ensued arguments regarding the legal position as to what the practice is, or should be, about adducing oral evidence in winding up proceedings, on which the learned Judge was of opinion that it was contrary to the settled practice of the Court, in disposing of applications for compulsory winding up, to allow oral evidence to be let in. He also held that in the circumstances of the case, it was improper to exercise it at that late stage. On this ruling by the learned Judge, the applicants counsel prayed that he might be allowed to cross-examine the respondents on the averments contained in their counter-affidavits but this application had to be refused because no notice of it had been given to the respondents counsel in order to enable him to see that his clients were present in Court for the purpose of being cross- examined. It was also represented to this Court that the respondents were not present in Court. The learned Judge refused this request also, because it was made at a belated stage and not even before the proceedings commenced earlier. He was of opinion that if the request had been made on the day when the case first came into the cause list, i.e., on 10th November, 1947, the requested adjournment would have been granted. The applicants counsel had perforce to proceed with the materials contained in the affidavit, the counter- affidavits and the reply affidavit and supplement the facts therein by arguing legal questions.