CENTRAL PAINTS LTD Vs. SHREE FARM CHEMICALS PVT LIMITED

JUDGEMENT

(1.) The common question that arises for consideration in these four company petitions is, whether the company, Shree Farm Chemicals Private Ltd. , should be ordered to be compulsorily wound up or whether sanction should be accorded for the compromise or arrangement proposed by the said company in Company Application No. 142/78. As common questions arise in all these four applications, they are heard together and disposed of by a common order.

(2.) The relevant facts are as follows : Shree Farm Chemical Private Ltd. (hereinafter called "sfc") was incorporated on 18/01/1975, under the Companies Act, 1956, with an authorised capital of Rs. 5,00,000. The paid up capital is Rs. 3,60,000 divided into 3,600 shares of Rs. 100 each and the shares are fully paid up. The main object of SFC is to manufacture and sell insecticides and pesticides. SFC commenced business of manufacturing and selling of insecticides and pesticides ever since its incorporation. It has set up three units in the States of Tamil Nadu, Karnataka and Andhra Pradesh. The unit in Karnataka State which is in Mysore City is running. The unit in Guntur in the State of Andhra Pradesh which has been taken on lease, has commenced manufacturing insecticides and pesticides. The necessary plant and machinery have been acquired for the unit in the Madras City in the State of Tamil Nadu, and the Karnataka Bank Ltd. has agreed to finance the said unit on the basis of hypothecation of land, structure and machinery. Owing to natural calamities in the State of Andhra Pradesh like severe cyclones, the recoveries were very poor and the out-standings due to SFC had increased. Another unit of SFC at Warangal was closed on account of unforeseen financial difficulties. It is stated that as the State of Andhra Pradesh is predominantly dependent on agriculture SFC has immense profit potentialities. SFC has to recover debts to the tune of Rs. 42,64,321. 48 as on 31/03/1978. 2. While so, M/s. Pesticides and Breweries Ltd. , Bombay, filed Company Petition, C. P. No. 6/78, stating that SFC was indebted to M/s. Pesticides and Breweries Ltd. , in a sum of Rs. 64,387. 84 with interest thereon at 15% per annum from 27/06/1976, and that SFC was unable to pay its debts and it was, therefore, just and equitable that SFC should be wound up. Another petition C. P. No. 7/78 was filed by Sri Baburao Tulsiram Sande carrying on business as sole proprietor under the name and style of Indo Advertising at Bombay stating that SFC became indebted to him in a sum of Rs. 65,945. 80 and that SFC was liable to be wound up for non-compliance with the statutory notice of demand under s. 439 of the Companies Act.

(3.) Notice was ordered on these two petitions to SFC. Both SFC and the Karnataka Bank filed counter-affidavits opposing the petitions for winding-up of SFC. At that stage, SFC filed company application, C. A. No. 142/78, under s. 391 (1) of the Companies Act, 1956, for the purpose of considering the approving with or without modification a scheme of compromise or arrangement proposed to be made between SFC and its creditors, and that directions should be issued for convening, holding and conducting meetings of the different classes of creditors.