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directors for acts of omission and commission in which the respondent himself is party, the stay
of winding up in such circumstance may be granted.3
Aircraft Co.5, the company was ordered to be wound up when its substratum was gone. The
company was incorporated to acquire the English portion of the aircraft of the business of M.
Bleriot, but he refused to perform the contract. Similarly, in the other case, the company was
formed with the object of manufacturing coffee from dates under patent to be obtained from the
German Government and other product. The German Government did not grant the said patent.
The company acquired a Swedish patent for the same purpose. On a petition for winding up of
the company, it was held that the company should be wound up, for the substratum of the
company has failed.
In Madhusudan Goverdhandas vs Madhu Wollen Industries6 case, the Supreme Court in dealing
with the question whether or not the substratum of the company has gone, observed that, the
mere fact that the company has suffered trading losses will not destroy its substratum unless
there is no reasonable prospect of it even making a profit in the future and the court is reluctant
to hold that it has not such prospect.
In Kumarapuran Gopalkrishnan vs Burdwan-Cutwa Rly ltd7, it was held by examining the
principles enunciated in the subtrantum cases that the question whether or not the company
substratum has gone in a case would primarily depend on the true construction of the
memorandum of the company in so far as its objects are concerned.
Where there is a deadlock on the Management
If on the facts of a case it appears that there is a deadlock in the management of the company, the
Tribunal will order winding-up on the just and equitable ground. In Yenidje Tobacco Co ltd8,
there was a complete deadlock in the management due to bitter hostility between two directors of
5 (1882) 20 Ch D 1109.
6 (19720 Comp Cas 125.
7 (1978( 48 Comp Cas 211.
8 (1916) 2 Ch 426 (CA).
the company. In spite of large profits of the company, it was ordered to be wound up. Similarly,
in Davis and Collet ltd9, rivalry between directors was held to be a good ground to wind up the
company. But the Clcutta HC held the view that the winding-up of a company should not be
ordered merely on the grounds of friction and disputed between the directors.10 It seems that not
scramble for power between two rival groups of directors is sufficient ground to wind up the
company.11
company, is not to be considered a just and equitable ground to wind up the company. The only
condition is that an isolated fraud to enrich the company.14
In Hind Overseas Pvt Ltd Vs Raghunath Prasad15, it was held that it is now well established
that the sixth clause, namely, 'just and equitable' is not to be read as being ejusdem generis with
the preceding five clauses. While the five earlier clauses prescribe definite conditions to be
fulfilled for the one or the other to be attracted in a given case, the just and equitable clause
leaves the entire matter to the wide and wise judicial discretion of the court. The only limitations
are the force and content of the words themselves, 'just and equitable.