VIRENDRASINGH BHANDARI Vs. NANDLAL BHANDARI AND SONS P LTD

JUDGEMENT

(1.) THIS petition under Section 439 of the Companies Act, 1956 (hereinafter referred to as " the Act ") is primarily for a direction to wind up the company--" M/s. Nandlal Bhandari and Sons (Private) Ltd. " Indore, or in the alternative to make certain directions under Sections 397 and 398 of the Act to grant the other reliefs specified in the petition. The petition came up for admission before Oza J. and was admitted by him on September 22, 1972, while deferring the question of advertisement to a later date. Notice was issued to the company which has opposed advertisement of the petition and filed I. A. No. 2049 of 1975 on August 20, 1975, for not advertising the petition, revoking the order of admission and dismissing the petition for winding up. This order shall govern the disposal of this application and decide the question regarding advertisement of the petition.

(2.) THE company--" M/s. Nandlal Bhandari and Sons (Private) Ltd. " (hereinafter referred to as " the company "), has three directors, namely, Suganmal Nandlal Bhandari, Bhanwarsingh Motilal Bhandari and Virendrasingh Motilal Bhandari (Petitioner No. 1 ). These directors are closely related, Virendrasingh and Bhanwarsingh, brothers, and Suganmal being their uncle. Initially they constituted a joint Hindu family trading under the name and style " M/s. Nandlal Bhandari and Sons " and held 5,836 shares and one scrip of " M/s. Nandlal Bhandari Mills Ltd. " a public limited company incorporated on March 1, 1922 (hereinafter referred to as " the Mills Ltd. " ). In 1949 there was a partition in the joint Hindu family and the separated members formed "m/s. Nandlal Bhandari and Sons Ltd. " which was incorporated as a company limited by shares, and ultimately converted into a private limited company styled as " M/s. Nandlal Bhandari and Sons (Pvt.) Ltd. " (hereinafter referred to as " the company ") and incorporated as such under the Companies Act, 1956. By a division of the capital account which included shares, these shares which had increased to 11,772 shares and one scrip, were transferred to the company. Subsequently in the year 1969, the company purchased 6,327 shares of the Mills at Rs. 325 per share and thus the company held 17,099 shares and one scrip, i. e. , 85 per cent. of the share capital of the Mills Ltd. Consequently, the company held the sole selling agency of the Mills Ltd. , under a contract which was to continue till December 31, 1975. It is common ground that the sole selling agency has not been renewed thereafter so that it has come to an end on December 31, 1975.

(3.) THERE is no dispute that the main source of income of the company was the commission received by it for the sole selling agency of the Mills Ltd. which, according to the common estimate, was approximately between Rs. 4 and 5 lakhs per year from the year 1972 till the termination of the agency. The other incomes of the company were about Rs. 5,000 per month from Mills Ltd. , as guarantee commission and about Rs. 3,000 per month as rent from the properties owned by the company. It is not in dispute that the only surviving income now is the rental income, which amounts to about Rs. 40,000 per year, while the total actual salary bill of the existing employees of the company is about Rs. 84,000. The result is that the expenditure on account of the salary bill of the employees is a little over twice the existing income of the company since termination of the sole selling agency of the Mills Ltd.