HIND OVERSEAS PRIVATE LIMITED versus RAGHUNATH PRASAD JHUNJHUNWALLA AND ANR.

Citation: [1976] 2 S.C.R. 226 · Decided: 10-10-1975 · Supreme Court of India · Bench: A. ALAGIRISWAMI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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226 
HIND OVERSEAS PRIVATE LIMITED 
v. 
RAGHUNATH PRASAD JHUNJHUNWALLA AND ANR. 
October 10, 1975 
[A. ALAGm1swAM1, P. K. GosWAMI AND N. L. UN1.'WALIA, JJ.] 
Practice-Company cases-Winding up petitions-Duty of the 
company 
Co'urt . . 
English decisions--Usefulness of-Applicability to cases under the Com-
panies Act. 
Winding up of companies-The C.ompanies Act (Act l), 1956-Sec. 433 (f) 
-Scope of vis-a-vis s. 44(g) of the Partnership Act. 
·C 
''Just and equitable c/ause"-App/icability in case of par//lership firms in 
• the guise of a private company. 
D 
E 
F 
G 
H 
Under s. 433 (f) of the Companies Act, 1956, a company may be wound 
up by the Court, if the Court is of opinion that it i~ just and equitable that 
the company should be wound up. Section 44(g) of the Partnership• Act also 
speaks of the "just and equitable clause". 
One RPJ agreed with VDJ and MPJ who are carrying on the business 
under the name and style of "Chimanram Motilal" to start a new business of 
iron and steel in co-partnership and for that purpose, an account was opened 
in the name of "Raghunath Prasad Jhunjhunwalla Ka Sir Khata" in the books 
of "Chimanram Motilal". It was agreed that RPJ should have 3/8th ~hare 
and VDJ with MPJ should h'ave 5 /8th share of the proposed business. 
Before 
the said proposed business could be started, at the suggestion of VDJ, actually 
a limited company was formed in August, 1956 under the Companies Act with 
the understanding that (i) VDJ with MPJ should finance the entire business. 
(ii) the share in the company should be held by RPJ, VDJ and MPJ and the 
members of their respective families in the proportion of 3/Sth and 5/8th as 
agreed to before and (iii) that RPJ and his group would generally look after 
the day-to-day business of the company under the general control and super-
vision of VDJ. The nominal capital of !he company was Rs. 5 lacs divided 
into 2500 equity shares of Rs. JOO/- each. 
RPJ and another ACD, an em-
ployee and nominee of VDJ, became the subscribers to. the Memorandum of 
A~ociation of the co111pany and also became its first directors. 
On 23-8-1956, 
VDJ and MPJ were appointed ~s directors of the company. 
On 23-11-1957, 
ACD resigned and PCJ (son of RPJ) was opted in 
his place. 
RPJ 
was 
appointed a director-in-charge of the company and both RPJ and PCJ were 
paid monthly remunerations. 
Following a family partition between VDJ and 
MPJ in the year 1958, the shares of MPJ were transferred in the name of the 
wife of VDJ and MPJ resigned from the Board of Directors on 21-1-1959. 
Since that date till October, 1965, the Board of Directors were RPJ. PCJ and 
VDJ, when VDJ got his son VKJ appointed as Technical Director of the 
company. Though the business of the company was managed by RPJ and 
PCJ, the business policy, the appointment of staff, general supervision of the 
work of the business etc., were in the hands of VDJ. From 1959 onwards the 
factory commenced its regular production and substantial profits were made 
between 1%0 and 1965 except in the year 1961 when there was some lo~. 
Finding that there has been a mismanagement of affairs of RPJ and PCJ to 
the tm1e of Rs. 8 lacs_ the VDJ group wh.o were holding the major 
shares 
numbering 3125, in order to safeguard their interest and the business, called. 
the Board's meeting on 27-5-1966 and the Board countermanded all the pre-
vious· resolutions and thus took away a[] the powers of RPJ. The extraordi· 
nary general meeting called on 28-5-1966- resolved to remove RPJ and PCJ 
as directors of the company and to appoint persons belonging to VDJ's group 
as directors. This led to the filing of an application for winding up nnder 
s. 433 (f) of the Companies Act by RPJ ~before the company Judge of the 
Calcutta High Court contending that the company was in the naluFe of a 
' 
HIND \WERSEAS V. R. P. JHUNJHUNWALU 
·I i'tf 
227 
partnership and is liable lo be wound up in view of the Ios~ of confidence bet-
ween the two groups/members and on the alleged ouster of RPJ group. The 
petition for winding up was dismissed by the company Judge inasmuch as 
(i) the substratum of the company was not gone; (ii) the deadlock courd .be 
resolved by th.c articles: (iii) there were alternative remedies OJ?en: and (!v) 
lack of probity did not result in prejudice to the company's busmess affectmg 
petitioner's fights as share-holder, but only affected his right as director. 
The 
appellate Bench, however, allowed the appeal of t
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