V.Bhargava, J. - (1.) These two connected Special Appeals are directed against one common judgment of the learned Company Judge by which he dismissed two petitions lor winding up of the same company presented by the same petitioners. The first petition was presented on the 22nd of February, 1950 on behalf of two persons appearing as petitioners. The first petitioner was Mohan Lal in his personal capacity. The second petitioner was Seth Mohan Lal and Co., which was a trade name under which Mohan Lal was himself carrying on the business, he being the sole proprietor of this firm. The first petition, which was registered as case No. 12 of 1950, was based on certain grounds, which according to the petitioners had come into existence by the 22nd of February, 1950. Subsequently, the petitioners made an application for amendment of this petition. The amendments sought not only included facts relating to incidents before the 22nd of February, 1930 but also certain facts which came into existence after that date, on the basis of which the petitioners wanted to add new grounds for seeking the winding up order. The amendment application was allowed only to the extent that it related to incidents before the 22nd of February, 1950 the rest of the amendment application for adding grounds which had come into existence after that date was rejected. In pursuance of this rejection, the petitioners moved the second petition on the 23rd of February, 1951 and based their request for winding up order on the ground which had come into existence subsequent to the 22nd of February, 1950. Since the two petitions were filed by the same petitioners and were directed against the same company, the learned Company Judge recorded evidence in only one proceeding and decided both the petitions on the basis of that evidence by one single judgment. In the circumstances it is convenient for us also to deal both the appeals in this one single judgment.
(2.) The company, which the petitioners desired should be wound up, is known as the Grain Chamber Limited Muzaifarnagar. The company was formed in the year 1931 with its share capital of Rs. l,00,000/- divided into one thousand snares of Rs. 100/- each. The actual paid up capital of the company is Rs. 97,845 / - representing the call money on 985 shares which were subscribed. The objects of the company, as set forth in the Memorandum of Association, are twenty in number which need not all be reproduced. The relevant objects to which reference would be necessary in the course of the Judgment, are as follows:- (a) To promote and protect the Trade, Commerce and Manufactures of India, and in particular the trade, Commerce and Manufactures of Grain, Cotton, Sugar, Jagree and Pulses; (b) To establish just and equitable principles in trade and to form a Code or Codes of practice, to simplify and facilitate transaction of business and keep the accounts between merchants dealing in grain, cotton seed etc., and of persons entering into those transactions with them; (c) To do Banking and money lending business; (d) To do all such other things as may be conducive to the extension of trade, commerce, or manufactures, or incidental to the attainment of the above objects or any of them; and (e) To deal in ready stock of grain and in khattis or other quantities and to carry on the business of forward sale or purchase of grain or other yege-tyblo products. About the years 1949 and 1950, when the events .giving rise to the dispute which led to these winding up petitions took place, the company was carrying on the business solely in future transactions relating to Gur and silver. The rules, under which these future transactions were going on, were not filed before the learned single Judge, though it appears from some documents on record that there was a set of general rules which governed all such transactions. In the circumstances, the learned single Judge obtained an agreed statement from the parties giving the modus operandi of this company relating to the future transactions entered into by the company. The learned single Judge has, in his judgment, reproduced the statement, which is as follows:- "If A wishes to enter into a future contract for the sale of one Bijak of gur, he has to meet a broker and to request him to find a purchaser. The broker finds a purchases in B. A and B who are thus brought together through the broker approach the company and get their contract registered. This contract is split up into two independent contracts, viz., a contract of sale by A to the company and another contract of sale by the company to B. There remains no longer a privity of contract between A and B. On the other hand, the company deals with A as principal to principal and similarly with B .as principal to principal. The Company buys from A and sells to B. From both of them the company receives a deposit of rupee one per maund as Sai and further deposit of annas eight per maund as chook. The price at which delivery shall be received and given is fixed. If there is a rise in the price, the company will call upon A to deposit further Chook so as to cover the difference in price. If A makes the deposit, the contrnct continues to stand. B will be entitled to withdraw from the company the profits which he is thus managing consequent on the rise in price. If A fails to make the deposit, the company has a right to enter into a reverse transaction by finding a purchaser according to the current rate of the day and thus to square up A's transaction of sale. But the company's liability to B to pay the profits consequent on the rise in price still remains. If A becomes insolvent or, for any other reason, becomes incapable of performing his obligations, B remains unaflected. The company may or may not be able to recover anything from A but it has to pay to B all the same. The company is therefore always on the alert to realise the Chook from the seller or from the buyer according to the rise or fall in price. If the person called upon to pay the Chook makes default, it is in the company's interest at once to square up his transaction. If on the date of delivery the parties-wish to settle their transactions by paying diiferences the company shall fix the rate at which transactions are to be settled. The necessity to fix the rate arises because sometimes rates fluctuate even during the course of the day. At the rate fixed by the company the accounts are settled, the parties send what is known as their "Dailies," bills are prepared and amounts are paid and received according to such rate." During the hearing of the appeals before us, we considered it advisable to try and discover whether there were any general rules, particularly because a reference was made to the general rules in a resolution of the company dated the 14th of March, 1949, under which resolution transactions took place which ultimately led the petitioners to move these petitions for the winding up order. Two printed hand books were produced before us but the parties were unable to agree that they were the general rules referred to in the resolution. In any case, on a perusal of these general rules, we discovered that they did not render any assistance at all to us in deciding these appeals and consequently we have decided not to refer to these hand books at all in the course of our judgment.
(3.) In the year 1949, the company had 11 directors. Two of these directors Lala Deep Chand and Lala Qabul Chand were not carrying on any business in forward or future transaction with the company whereas admittedly the remaining nine directors were carrying on such transactions. Since the question of the fact of directors carrying on business with the company has assumed considerable importance for the purpose of deciding these Special Appeals, we consider it useful to quote at this stage some of the Articles of Association of the company which have a bearing on this aspect. The most important rule is Rule 5 of the Articles of Association, which reads as follows:- "No person or firm will be entitled to remain as the member of the company who is found not to be doing any transaction or business through the company at Muzaffarnagar for continually six months. In such circumstances the company will give him a week's registered notice in writing asking thereby, why his name should not be struck off from the membership of the company and his share be put to sale." Rule 46(a) provides:- "Every member of the company who is owner of at least ten shares of the company in his own name or in the name of the firm of whom he is a proprietor or partner can be elected as a director of the company." Rule 47 Clause (b) runs as follows:- "Subject to as herein otherwise provided or to the terms of any subsisting agreement, the office of the Directors shall be vacated (a) ..... (b) if he is adjudged an insolvent or makes any agreement or composition with his creditors. If the cover money for transactions due from him is not paid in the office of the Company within the fixed time." It was under these conditions laid down in the Articles of Association that the company continued to function from 1931 onwards and even after the Companies Act had been amended in the year 1936.;