BHALCHANDRA DHARMAJEE MAKAJI Vs. ALCOCK ASHDOWN AND CO LTD

JUDGEMENT

(1.) THESE are two judges' summonses, one taken out in Company Petition No. 86 of 1971 for appointment of official liquidator as provisional liquidator of Alcock Ashdown and Co. Ltd. (hereinafter referred to as "the company") pending the hearing and final disposal of the main petition which is a petition for winding up the company. The other is taken out in Company Petition No. 114 of 1971 for appointment of an administrator or special officer with all powers of the board of directors of the company pending the hearing and final disposal of the main petition, which is for reliefs under sections 397 and 398 of the Companies Act, 1956.

(2.) A few facts about the company may be mentioned. These facts are not in dispute. The company was incorporated in India in 1884 and has its registered office in Bombay. It has workshops at Bombay and Bhavnagar. The company carries on business of manufacture and supply of heavy and light structurals, transmission line towers, railways points and crossings, grey-iron castings, marine diesel engines and the business of ship-repairs and boat building, etc. It has a paid up share capital of Rs. 83,49,000. Both at Bombay and Bhavnagar it has an aggregate of about 1,200 employees. Prior to 31st December, 1964, the company was managed by Turner Morrison and Co. Ltd. as its managing agents. One Haridas Mundhra held majority of shares in Turner Morrison and Co. Ltd. , who, in turn, held 35% of the issued share capital of the company. From about February, 1971, the activities of the company have come to a standstill for paucity of working capital. The workers employed by the company are experienced and skilled workers in ship building and ship repair. The Government of India have issued an order under section 15 of the Industries (Development and Regulation) Act, 1951, appointing a committee for the purpose of making a full and complete investigation into the substantial fall in the volume of production in respect of articles manufactured by the company ? Company Petition Nos. 86 of 1971 has been filed by Gleitlager (India) Pvt. Ltd. who allege to be the creditors of the company in the sum of Rs. 14,686. 63. The company has failed to pay the said amount even after the statutory notice and the petitioners contend that the company is unable to pay its debts. The petitioners have, therefore, asked that the company be wound up. This petition has been admitted and has also been advertised and is fixed for hearing on 9th August, 1971. In the judge's summons the petitioners ask for appointment of a provisional liquidator.

(3.) COMPANY Petition No. 114 of 1971 has been filed by three shareholders of the company in their own right and as person authorised to present the petition by more than 100 members of the company. They allege that Haridas Mundhra, the respondent No. 2, is a de facto director of the company within the meaning of section 303 (1), Explanation 1, of the Companies Act. It is not in dispute that his son-in-law, K. Tapurish, was a de jure director up to 25th March, 1971. Respondents Nos. 4,5 and 6 have been purported to be appointed directors of the company in a meeting alleged to have been held at Calcutta on 18th March, 1971. It is alleged by the petitioners that all the shares in the respondent No. 7, Turner Morrison and Co. Ltd, who were the managing agents of the company, were held by Haridas Mundhra and his nominees. The petitioners allege that the board of directors as now constituted acts in accordance with the wishes, directions and instructions of Haridas Mundhra. It is alleged that Haridas Mundhra has appointed one K. C. Lakhotia in charge of overall supervision of the affairs of the company without remuneration and Mundhra has instructed the executives of the company to act on the oral instructions of the said Lakhotia in all matters pertaining to the company. The petitioners allege that after the assumption of the charge of the affairs of the company by Haridas Mundhra and the said K. C. Lakhotia, these two persons have mismanaged the affairs of the company for their own personal gain and misappropriated the funds of the company in various ways described in the petition. The petitioners contend that as the company employs experienced and skilled workmen in ship building and ship repairing industry, if the company is wound up its expertise will be lost and it would also throw these 1,200 experienced and skilled workmen out of employment. It is also alleged that the Government of India for ship repairs and fabrication of boats and therefore it will not be proper to wind up the company. The petitioners therefore seek a appropriate orders of this court under sections 397, 398 and 402 of the Companies Act, including appointment of an administrator or special officer to manage the affairs of the company, removal of the present directors, investigation into the affairs of the company and other reliefs. In the judge's summons the petitioners seek an interim order appointing an administrator or special officer.