MALABAR IRON AND STEEL WORKS LIMITED Vs. STATE OF KERALA
HIGH COURT OF KERALA
MALABAR IRON AND STEEL WORKS LIMITED
STATE OF KERALA
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(1.)I need not repeat what I said in my winding up order of the 9th November 1962. That order was based on the finding that the company had not commenced business although very nearly two years had elapsed since its incorporation and that it was not in a position to lawfully commence business in the future. The company had issued a prospectus inviting the public to subscribe for its shares and the sum of Rs. 6 lakhs was specified therein as "the minimum subscription". No proof was adduced of any allotment of shares, but it was stated by counsel for the company that shares of the face value of Rs. 6 lakhs had been allotted and had been fully paid. Even accepting this statement, the subscription fell far short of the minimum subscription, and, there being not even a suggestion that the company would be able to secure the minimum subscription in the foresoeable future, I came to the conclusion that the company would never be in a position to lawfully commence business.
The company appealed against my order, and, in the course of the hearing of the appeal, it was represented on behalf of the company that the statement made by its counsel before me was wrong and that the company had; in fact, already secured the minimum subscription and was in a position to comply with the provisions of S.149(1) of the Companies Act and commence its business. The company prayed for an opportunity to file an affidavit stating these (acts as also the reasons for not commencing its business within a year of its incorporation. This opportunity was afforded, and, on an affidavit being filed by the promoter of the company, N. S. P. Iyer by name, to the effect that the company had allotted, subject to payment of the full value in cash, shares to the face value of Rs. 20 lakhs, within a year of its incorporation, the winding up order made by me was set aside and the case sent back to me for fresh disposal.
(2.)The appellate judgment does not show that this affidavit filed by N.S.P. Iyer was accepted as true. The entire matter is before me and what 'I have to decide is whether, in truth, the minimum, subscription has been secured and whether the company has good reasons for not having commenced business within a year of its incorporation so that it can be said that it will be in a position to commence business within a reasonable time.
(3.)in view of what was stated before roe at the original hearing, I was not prepared to accept N.S.P. Iyer's affidavit at its face value and I called for proof of the statements made in the affidavit and also directed the deponent, namely, N.S.P. Iyer, to appear in person for examination. Three further affidavits dated 8-8-1963, 8-10-1963 and 6-11-1963 were filed by N.S.P. Iyer and he was also examined as a witness. The evidence ha gave is on several material points at variance with the statements in his several affidavits which are themselves mutually contradictory. But it is hardly necessary to go into these contradictions since I am satisfied that, these contradictions apart, the evidence is on the face of it unacceptable and that even if accepted in entirety would not make out a compliance with S.149(1)(a) of the Companies Act which forbids a company from commencing any business which, of course, would include its own business, unless "shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription."
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