Case: Majestic Infracon Private Limited Vs. Etisalat Mauritius Limited, Republic of Mauritius &amp; Others

orders along with these applications which are the subject matter of the appeals and by an ex parte interim order made on July 13, 1981, the learned company court judge appointed a Commissioner and that was questioned in the appeal. One of the objections of the appellants was that the learned judge had no jurisdiction to pass an interim order under section 443(1)(c) at the stage of admission of the winding-up petition and that only at the time of the hearing of the winding-up petition the company court can make interim orders. While rejecting this contention, the Bench has observed (at page 233)."In our judgment, the investiture of the court with the winding up jurisdiction, as of other powers, must be interpreted as adding to the gamut of the courts existing jurisdiction. It would be a mistake to interpret the statute as stripping the court of all his powers first, and then conferring on it only such powers as are permitted, say by section 443(1) and other related provisions. We are satisfied that having regard to the scheme of the Companies Act, we cannot read any provision in the statute which relates to jurisdiction of courts, as being in derogation of the full plenitude of the courts powers under the common law, unless we can find in it a clearly expressed or equally clearly implicit, bar of restriction of the courts jurisdiction."176. In our view, the power of the company court to pass interim orders commences from the time the petition for winding-up is presented / lodged / filed. There are cases where it is necessary to pass urgent interim orders the moment the petition is filed. This would be so irrespective of whether the petition for winding up is on the ground that the company is unable to pay its dues or on the ground that it is just and equitable to do so.177. We, however, wish to make it clear that we do not approve of the observations of the Division Bench of the Madras High Court which follow the extracts quoted above. These observations were quoted by the Division Bench from an earlier judgment in a case between the same parties reported in (1983) II MLJ 227. For instance we, with respect, do not agree with the observation that there was a folly on the part of the draftsman of section 443. Nor do we agree that section 443(1)(b) is an insane provision or that the draftsman there was dense.178. This judgment was followed by a learned single Judge of the Karnataka High Court in Smt. Usha R. Shetty & Ors. v. Radeesh Rubber Pvt. Ltd. & Anr. 1995 84 Com. Cases 602. The learned Judge held as under :"Learned counsel, referring to section 536(2) of the Companies Act, has submitted that no transfer of the assets during the pendency of the winding up petition should be effected. As per section 536(2) in the case of winding up by or subject to the supervision of the court, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall, unless the court otherwise orders, be void. Thus, it clearly indicates that the court has power to order transfer or to sell the assets of the company when the winding up petition is pending. There is no inherent indication in the section so as to warrant the conclusion that this power can be exercised only after the winding up order is made. It is difficult to spell out the limits on the jurisdiction of the courts from the opening words in the section, viz., "in the case of winding up" so as to mean "only if the company is ordered to be wound up". It would be reading more than what the Legislature intended in the said wording. I am of the view that the court can exercise jurisdiction under section 536(2) of the Act even before the winding up order is made. The fact that the order becomes otiose, if the application for winding up is ultimately rejected, does not take away the jurisdiction. Therefore, even before the winding up order is made, the jurisdiction of the court can be invoked under section 536(2) of the Act for permission for disposal of the assets of the company. The contention of Mr. Jayaram, learned counsel appearing for the second respondent, in view of the decision of the Supreme Court as well as the decision of the High Court referred to above, is unsustainable.I am also of the view that, at the stage of entertaining the winding up petition or admitting the winding up petition and on further hearing of the respondent after deciding to entertain the winding up petition, the court has inherent power to do that which is necessary to advance the cause of justice or make such orders which are necessary to meet the ends of justice. This inherent power of the court is not taken away or in any way restricted by section 443(1) of the Companies Act."We are in respectful agreement with the learned Judge. We, however, express no opinion on the observation that an order of sale would be otiose if the application for winding up is rejected.179. The judgment of the Division Bench of the Punjab & Haryana High Court in Altos India Ltd. v. Bharati Telecom Ltd. (2001) 103 Com. Cases 6, does support Mr. Madons submission. In that case, the learned company Judge had ordered the sale of the properties of the company even before the company was actually wound up on the ground that the company was heavily indebted to various financial institutions and that the sale of the machinery even before the final order of winding up would benefit all the parties concerned, including the company by reducing its liability to the maximum extent. The issue of law, however, was not discussed in detail.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]4. The petitioner contended that it is just and equitable to wind up the company,on the ground that the substratum of the company has almost completely been eroded, that there is a deadlock in the management of the company and on the Board of Directors of the company and that there is a complete lack of uberrimafides between the main shareholders of the company viz., the petitioner and the appellant, which is a glorifiedpartnership.We have found each of these submissions to be wellappellant firstly denied the aforesaid contentions although they were unable to deny the main facts viz. the cancellation of the 2G licences, the extent of the indebtedness of the company and the existence of a deadlock. Inthe alternative, it was contended that even assuming that the petitioners case is held to be well founded, the petition ought to be dismissed in view of the conduct of the petitioner, both before and after the petition wasfiled. We have found no substance in the alternate submissions either.The petitioner has made out more than just a strong prima facie case that the substratum of the company is completely eroded and that there is almost no hope of reviving the company; that there is a complete loss of faith between the main shareholders of the company viz. the petitioner and the appellant and that there is a complete deadlock in the management and on the Board of Directors of the company.The order admitting the petition must be sustained on these three grounds which we have held require further consideration at the final hearing of the petition.30(A)(i) We referred earlier to the public interest litigations and the judgment of the Supreme Court in respect of the allocation of the 2G spectrum. The Supreme Court, by its judgment dated 2nd February, 2012 in Writ Petition (Civil) No.423 of 2010 Centre for Public Interest LitigationOrs. v. Union of IndiaOrs., quashed all the 2G licences, including those allotted to theWe must clarify here that it is not necessary for the purpose of these proceedings to express any opinion about the conduct of any particular individual. The same is the subject matter of investigation by the authorities.et dated 22nd October, 2011, has also been filed,against the said Balwa and Goenka in the Court of Special Judge, CBI in what is now referred to as theSpectrum case. The same alleges various illegalities and criminal acts on their part. Criminal conspiracy on their part along with others has also been alleged. The result of the case is not material. Theh various others factors, including the judgment of the Supreme Court, prima facie, at least, is sufficient ground for the company court coming to the conclusion that the petition for winding up the company on the just and equitable ground warrantsthe case before us, the facts leading to the cancellation of the licence by the Supreme Court are relevant while deciding whether or not the company ought to be wound up on the just and equitable ground. In the present case, this fact, added to the other facts that we have referred to already, makes the case, atleast for the admission of the petition, that muchpercent of the equity shares of the petitioner is controlled by the Government of U.A.E. The Supreme Court of India having made the said observations and the regulatory authorities having taken action against the persons connected with the company would justify a Government of another country being reluctant to continue with a venture which, prima facie, at least, is tainted in respect of a predominant part of its commercial activities. The justification is greater as the petitioner joined the venture on the basis of this very activity to be undertaken on the basis of the 2G licences cancelled by the Supreme Court.34. The learned Judge rightly came to the conclusion that with the cancellation of the thirteen 2G licences, the company was left without a commercial enterprise. The 2G licences were the most valuable asset of the company. The commercial existence of the company depended on these licences. They were undoubtedly the basis on which the petitioner was pursuaded to invest a sum of over Rs.3500 crores in the company.35. The appellants denial of the company having lost its substratum is based essentially on the fact that the company still has three telephone licences viz. International Long Distance, National Long Distance and Internet Service Provider licences. It is contended that the company can carry on business utilizing these three licences.36. The appellant was unable to indicate how on the basis of the three subsisting licences the company would be able to carry on business profitably even in the distant future. Although these are business decisions which the company is entitled to assess, it is incumbent especially in such cases for the party to establish even prima facie that the company is at least likely in future to be a commercially and financially viable undertaking. Our attention has not been brought to any material which even remotely indicates the same. Nothing except a purported schemeand we use the term "purported" advisedlywhich we will refer to shortly. The petitioners investment in the company was almost entirely if not only in view of the 2G licences held by the company. It was not on the basis of the three subsisting licences. As noted by the learned Judge there has never been a proposal or plan to operate a business using these three subsisting licences. Nor is there a technical or a business plan indicating the resources required and the manner of conducting the business based on the three subsisting licences.37. An indication of the relative values of the 2G licences and the three subsisting licences is the cost of acquisition of the licences. The thirteen 2G licences were acquired at a cost of Rs.1600 crores whereas the three subsisting licences were acquired for a mere Rs.5.20 crores. The value of the three subsisting licences is merely 0.325% of the value of the 2G licences. The petitioners submission that even if the company were to commence business utilising the three subsisting licences, the costs involved in setting up the same would only generate further liabilities and the earnings in any event, would be insufficient to service the existing debts is, therefore, well founded. In the facts and circumstances of this case, the learned Judge justifiably held that it would not be in the interest of the company to even attempt to commence such business.Mr. Madon stated that only two companies had been held to be guilty of a fraud and that in the other companies which continue to function the Indian shareholders had exited.Even ignoring Mr. Madons contentions it would make no difference. The factors relevant to the financial and commercial viability of the companies are not the same. Each company has its own strengths and weaknesses. The appellant has not even attempted to indicate any similarities between the companies that continue to function despite the cancellation of the 2G licences allotted to them and the company in this case. The mere cancellation of the 2G licences is not the only factor that determines the commercial viability of an enterprise. Our attention was not invited to any material that would justify a comparison between those companies and the company before us.40. The indebtedness of the company is, as on date, over Rs. 4,500 crores. Mr.Kamdar stated that the Reliance group of companies is opposing the winding up. However, the Reliance companies have also sought repayment of amounts in excess of Rs.1700 crores.They have not given up their claim. In fact, the attempt on the part of Balwa and Goenka was to ensure repayment to the Reliance companies in priority to the other creditors. Clause 4(b)(ii) of the minutes of the meeting of the Board of Directors of the company held on 19th December, 2011, records that Balwa pointed out that the company must confirm to Reliance an undisputed amount owed to it and "make immediate payment of it". That probably is why Reliance is opposing the winding up petition. The two major creditorsStandard Chartered Bank and Citibank, to whom an amount of over Rs.2,000 crores is due, have not only not waived their claims, but have adopted proceedings to recover the same and have even sought for and obtained orders from the DRT appointing a Receiver in respect of the assets of the company. The order for Receiver has merely been suspended and that too only in view of the fact that the Authorized Person has been appointed by the company Judge. If, therefore, the appointment of the Authorized Person is revoked, the Receiver would take possession of the assets of the company in any event. It is difficult to see how in that event the company would at all be able to function. Moreover, even assuming that the company continues to function under the Receiver, there is nothing to indicate that the revenues would, even in the distant future, be sufficient to pay the dues of the company.41. The appellant had sought permission from the company Judge to bid at the fresh auction after the judgment of the Supreme Court. The learned company Judge rejected the application. The order was upheld in appeal. There is, therefore, no question of the company conducting any business on the basis of the 2G licences as the same stand cancelled. We will deal with Mr. Kamdars submissions that the company ought not to be wound up on the application of the petitioner as it had opposed the application to bid at the fresh auction later. Suffice it to state at this stage that we have rejected the contention.42. The appellant did not deny the averment in the petition that a minimum of USD 18 million was required to continue the operations by the company. It merely stated that the petitioner had made contrary submissions as in paragraph 17B of the petition the petitioner alleged that the company incurs an expense of USD 38.9 million per month. However, it is also stated that this expenditure had reduced considerably to USD 6.5 million in the month of February, 2012. This would stand further reduced considerably on account of the fact that the services of several employees have been terminated even thereafter. What is important to note is that the appellant does not even indicate the amount that would be required to continue the operations on the basis of the three subsistingMr. Kamdar relied on the following observations in InRe: Cine Industriesg Company Limited (1941) 44 BLR 387 :"Therefore on the authorities the position seems to be that the substratum of the company is deemed to be gone when (a) theof the company is gone, or (b) the object for which it was incorporated has substantially failed, or (c) it is impossible to carry on the business of the company except at a loss which has been construed by the Privy Council to mean that there is no reasonable hope that the object of trading at a profit can be attained, or (d) the existing and probable assets are insufficient to meet the existing liabilities. None of these four tests can apply to the facts of the presentThe judgment is of no assistance to the appellant.(i) As we observed earlier, the subject matter of the company is gone. Condition (a) that the subject matter of the company is gone does not imply that it must have gone entirely. It is sufficient if the court comes to the conclusion that it has substantially or almost entirely gone. It can hardly be suggested that what was meant was that even if a minuscule part of the subject matter of the company remains it cannot be said that the substratum of the company has gone. In the case before us, the thirteen 2G licences have been cancelled leaving the company with the three subsisting licence. The monetary value of the three subsisting licences is only 0.325% of the value of thirteen 2G licences. The monetary values are at least an indication of the extent of the erosion of the substratum of the company.(ii) Condition (b) refers to the object for which the company was incorporated. This condition does not apply only to the initial object for which the company was incorporated. The applicability of this principle would indeed depend upon the facts of each case. We would extend this principle to cases where an investor joins a glorified partnership in view of the main business carried on at the time of his joining. It would be necessary to establish that the main or predominant business at the time and on the basis of which the investor joined the company has substantially failed. Applying this principle to the present case it can hardly be doubted that the petitioner invested an amount of about Rs.3500 crores almost entirely if not entirely on the basis and in view of the thirteen 2G licences. The licences having been cancelled, the object for which the company was incorporated and in any event the object on the basis of which the petitioner invested over Rs.3500 crores has not merely substantially, but entirely failed.(iii) In view of what we have held regarding the financial position of the company and the lack of any prospect of revival conditions (c) and (d) are also met. That the existing and probable assets are insufficient to meet the existing liabilities is, if not admitted, established beyond doubt. The only fact relied upon by the appellant to indicate the future business prospects of the company is the purported scheme which, as we have held later, inspires no confidence.(C) The judgment, far from supporting the appellant, in fact, supports the petitioner.45.Mr. Kamdars reliance upon the judgment of the Supreme Court in MadhusudanGordhandas v. Madhu Woolen Industries Pvt. Ltd., (1971) 3 SCC 532, paragraph29 is also unfounded.Mr. Madon relied upon the judgment of a Division Bench of the Gujarat High Court in InRe: Kermeen Foods Pvt. Ltd. 1985 58, Company Cases, 156. Mr. Madon relied upon the judgment as, according to him, the facts were similar to the facts in the present case.That, however, does not carry the matter any further on the question of law.Mr. Madon relied upon the judgment of a learned single Judge of the Calcutta High Court in InRe: Darjeeling Bank Limited, AIR 1948 Cal. 335   and 1977 Company Cases, 15, in support of his submission that the absence of a statutory notice under section 434(1) (a) would not make a difference as that would only disentitle a petitioner to avail of the deeming provision under section 434(1)(a) that the company is unable to pay its debts.The judgment is irrelevant as the point before us is quite different. What Mr.Kamdar submitted was that as this is not a petition under section 433(e) i.e. an application for winding up on the ground that the company is unable to pay its debts, the financial position of the company is irrelevant.The question, therefore, is whetherthe financial position of a company is an irrelevant consideration in a petition for winding up a company on the just and equitable ground under section433(f). The submission in a matter such as this is not well founded. The petitioner does not seek to have the company wound up on the ground that it is unable to pay the debts of the petitioner. One of the grounds in support of the petition for winding up the company on the just and equitable ground is that the substratum of the company has gone. This is not, therefore, a matter where only a particular debt is in question. The matter involves the very substratum of the company. The substratum of a company having gone is a relevant ground while considering a petition for winging up a company on the just and equitable ground. The just and equitable ground may be invoked in a case where the substratum has gone, where there is a deadlock and there is a justifiable loss of confidence between the major shareholders.This brings us to the purported scheme upon which the appellant relies to contend that the company is capable of carrying on business and ought to be afforded an opportunity to do so.54. It is necessary to note the circumstances in which the scheme was prepared and placed before the learned Judge. They are set out in paragraph 3 of the judgment. In paragraph 3.6 the learned Judge noted that during the hearing on 30th October, 2012, counsel on behalf of the appellant submitted that the appellant was in a position to place a revival scheme before the Court even without receiving the funds due to the company which were held up with the Telecom authorities and/or banks. The learned Judge, even at that stage, afforded the appellant, albeit without prejudice to the contentions of the parties, an opportunity to place the revival scheme before the Court within one month i.e. by 30th November, 2012. The scheme was circulated on 5th December, 2012.55. The learned Judge rightly held that the scheme did not take the appellants case any further. It was impossible for him to have accepted it. The scheme inspires little, if any confidence. It is vague and without any material particulars.The doubt, if any, about the sheer inefficacy of the scheme is put to rest by a fundamental and an even more important fact. The scheme was only tendered in Court. It was not annexed to any affidavit. Nor is any affidavit filed by or on behalf of the appellant deposing to the scheme. This was despite the fact that the petitioner rightly insisted upon the scheme being put on affidavit. The scheme, therefore, cannot even be looked at.57. The learned Judge also rightly noted that the consent of the petitioner would be required for any such venture. This is clear from the terms of the shareholders agreement and theagreement. The petitioners refusal to agree to the same cannot be termed as unreasonable. The learned Judge recorded the petitioners statement that it did not intend pursing the suggested enterprise as it posed additional risks and liabilities for the company which would only worsen its financial position as well as its ability to repay the debts due to creditors. Considering the facts and circumstances of the case, the petitioners stand is understandable and justified.58. As we noted earlier, the company was indebted to various creditors and is liable for various other dues aggregating to about Rs.4500 crores. The scheme does not even indicate how the company can turn the corner and become a viable enterprise.59. It is not necessary in this case, therefore, to consider whether the court can compel the petitioner, who invested such a large amount in the company on the basis of the 2G licences to continue to deploy his funds on a different venture. It would have been necessary to consider this question had there been a possibility of the company undertaking another business venture in a commercially viable manner.60. Moreover, the leaned Judge has clarified that a genuine comprehensive scheme which is in the interest of the company, its shareholders and creditors can always be placed before the Court for its consideration even after the admission of the company petition. No such attempt has been made to date.61. In the circumstances, we are entirely in agreement with the learned Judge that the company has lost its substratum and that the appellants contention that the company is capable of being revised is unrealistic.The petitioner further contended that there is a complete loss of faith and trust between the appellant and the petitioner.This, in turn, has resulted in a deadlock in the management of the company and on the Board of Directors. As a result thereof also it is just and equitable that the company be wound up.63. We referred to the judgment of the Supreme Court and the criminal proceedings. The same have resulted in the petitioner loosing faith in the appellant, its main partner. In view of these facts alone, it is not possible to hold that the petitioners loss of faith is not understandable.64.Mr. Kamdars first contention that the petitioner had not pleaded that there was a deadlock or even the possibility of adeadlock is incorrect. The pleadings are sufficient to contend that there is a deadlock and in any event a very high probability of a deadlock in the management of the company. The allegations andestablish that the two major shareholders viz. the petitioner and the appellant who hold about 45% each of the equity share capital of the company are not likely to agree to important policy decisions. We, in fact, need go no further than to note the purpose of this petition itself. The petitioner unequivocally refuses to continue any association or venture with the appellant and is against the company continuing to function. This is a clear indication by itself of abreakdown in themanagement of the company.The petitioner has, therefore, expressly pleaded that there is a complete lack of uberrimafides between the majority shareholders and that there is a deadlock in the management. The contention that the petitioner has not pleaded the same isIn view of the facts that have transpired, including those set out earlier, it is futile to presume or even imagine that the majority shareholders would cooperate with each other. There is nothing on record to suggest that the two minority shareholders who together hold about 10% shares are likely towith either the appellant or with the respondent. Even assuming that they agree toonly with the appellant, it would make little difference for two reasons. Firstly, in view of the petitioner holding 45% of the equity shares, there is no possibility of special resolutions being passed. This itself would hamper the smooth functioning of the company. Secondly, and more important is that even assuming that the minority shareholders agree to support only the appellant, it would make no difference in view of the provisions of the agreements between the parties and the Articles of Association of the company. Clauses 8, 16, 20 and 21 of the Articles of Association of the company make it virtually impossible for the company to function in any meaningful way without the cooperation of the appellant and the petitioner.Clause 21 merely provides that the parties "shall endeavour to resolve the deadlock". The parties are not bound to resolve the deadlock. There is nomechanism that provides a solution to a deadlock.Even absent provisions such as those contained in clauses 8, 16 and 20 of the Articles of Association, the submission is not well founded. Mr. Kamdar relied upon paragraph 33 of the judgment of the Supreme Court in Hind Overseas Pvt. Ltd. v. Raghunath Prasad Jhunjhunuwalla (1976) 3 SCC 259.   Mr. Kamdars submission, in fact, militates against the judgment of the Supreme Court.If the Court is satisfied that a deadlock is likely to arise in future, it must entertain the petition for winding up on the just and equitable ground. There is nothing in the Companies Act that suggests otherwise. Indeed, it would be neither just nor equitable to compel a party to stand by and permit a catastrophe to occur and then entertain the petition only as a remedial measure. It is well within the jurisdiction of a company court to interfere even earlier. Mr. Kamdars submission is not supported by any authority. Nor do we find it well founded on principle.76. In any event, in the case before us, there is not merely a possibility but a high degree of probability that a deadlock in the management will arise. Indeed it has arisen.77. In the circumstance, the petition must be admitted on the ground that there is more than just a strongcase that the substratum of the company has gone with almost no hope of it being revived; there is a completebreakdown in thefaith and trust between the main partnersthe appellant and the petitioner and there is a total deadlock in the management of the company and on its Board of Directors.Mr. Madon stated that during the pendency of this appeal, the appellant exercised the Put Option.The appellants claim, therefore, now can only be for money. The parties had entered into a Put Option Agreement dated 17th December, 2008. The appellant and the petitioner are referred to as the Founding Shareholder and Strategic Investor respectively.The appellant, therefore, has opted to exit from the company. The appellant is entitled to adopt proceedings, including for specific performance of the Put Option Deed and/or for damages. The appellant would only be entitled to monetary relief in any proceedings to enforce the rights under the Put Option Deed. Having exercised this right, the appellant cannot have any interest in the company, irrespective of whether it continues or is wound up.That the appellant may withdraw the exercise of its right under the Put Option agreement would make no difference for, as on date, the appellant has not done so. It is unnecessary to consider at this stage the effect of the appellant withdrawing its action on the admissibility of the petition on this ground.83. Having said that, however, we do not at this stage express an opinion whether this fact by itself would justify the admission of a petition on the just and equitable ground. We leave this for further consideration at the hearing of the petition.Mr. Madon further submitted that the petitioner was not informed that the Reliance group of companies were also involved in the company. Had it been so informed, it would have never entered into the venture as Reliance are its competitors. The petitioner became aware of the involvement of Reliance in the company and the interest of Reliance in the said 2G license only from the PIL before the Supreme Court.This may at the highest be only one amongst several factors relevant for the purpose of admitting the winding up petition. If the petitioners contention is factually correct, it may well entitle the petitioner to exit on the terms and conditions to be fixed by the Court, but it would not necessarily by itself result in the company being wound up. This aspect would require further consideration at the final hearing of the petition.86.Mr. Madon also submitted that the appellant had itself admitted and agreed that this is a case for winding up on the just and equitable ground. He relies upon the fact that the petitioner had filed Company Petition No.55 of 2011 under sections 397 and 398 of the Companies Act before the Company Law Board. The appellant alleged in paragraph 75 of the petition that the petitioner, its nominees and group companies have mismanaged the affairs of the company and their conduct was oppressive, burdensome, harsh and wrongful and has caused and continues to cause irreparable grave prejudice, harm and injury to the appellant. The appellant further stated : The facts stated herein clearly establish that it is just and equitable to wind up the company. However, the petitioner submits that to wind up the company would unfairly prejudice and cause harm and injury to the petitioner, who is a minority shareholder.We are not inclined, at this stage, to consider the effect of these averments. They are made in the context of a petition under sections 397 and 398. That petition would have to be analyzed to see whether the averments therein militate against the appellants defence to this company petition. The grounds in support of the appellants averments in the petition before the CLB that the conduct of the petitioner herein warrants winding up on the just and equitable ground may be entirely different from the grounds upon which the petitioner herein seeks winding up of the company. This aspect must be left open for consideration, at the final hearing of the petition.Mr. Kamdar submitted that a winding up petition based on the just and equitable clause must be decided only on the basis of the facts as on the date of the petition. According to him, the facts subsequent to the filing of the petition are irrelevant and cannot be taken into consideration while deciding whether such a petition ought to be entertained. Thus, for instance, the judgment of the Supreme Court cancelling the 2G licenses, the further proceedings in the criminal cases, the reduction in the number of employees, the increased liabilities of the company after the petition was filed, are irrelevant, as these facts arose subsequent to the filing of the petition.The submission is not well founded either on authority or in principle. On principle there is no reason why the subsequent facts cannot be taken into consideration. The provisions of the Companies Act do not preclude the Court from taking into consideration the facts that transpire after the petition is filed. The powers of the Company Court ought not to be curtailed in this manner.Mr. Kamdars submission, if accepted, would be detrimental to the interest of a company and the other parties. As Mr. Madon rightly pointed out, even assuming that on the date the petition was filed, factors existed justifying its winding up, the Company Court may well refuse to winding up the company if on account of the subsequent events, the factors no longer exist. There may well be cases where the substratum of the company is gone on the date of the filing of the petition but at the time it reaches final hearing the financial health of the company has revived. It would be absurd then for the Company Court to find itself compelled to wind up the company merely because on the date on which the petition was filed, the factors for winding up the company existed. Such a view could not be in the interest of any party. It would be equally absurd in such cases to first wind up the company and then leave it to the parties to file an application for bringing the company out of liquidation.92. Nor do we find Mr. Kamdars submissions to be supported by any authority. The authorities are to the contrary.A learned single Judge of this Court in KhimjiM. Shah v. Ratilal Damodardas Modi 1988, Mh. L.J. 38, considered an application for amendment of a petition filed under sections 397 and 398 of the Companies Act. The respondent opposed the application,on the ground that the amendments dealt with the events subsequent to the filing of the petition. It was contended that the subsequent events cannot be gone into in deciding the petition under sections 397 and 398. Rejecting the contention, the learned Judge held in paragraph 8 as underUnder Rule 6 of the Companies (Court) Rules, 1959 the provisions of the Code of Civil Procedure, so far as applicable, shall apply to all proceedings under the Companies Act. The provisions relating to amendments of pleadings would, therefore, apply to amendment of pleadings under the Companies Act. There is no bar to an amendment which incorporates subsequent events if the amendment is otherwise necessary for proper determination of issue between the parties. In the case of Promode Kumar Mittal v. Southern Steel Ltd., reported in (1980)50 Comp. Cas. 555 the Calcutta High Court observed in a petition under sections 397 and 398 of the Companies Act that the Court can take notice of all subsequent events to grant reliefs finally after trial in a company matter and the interim orders passed from time to time by the Court in all applications, the meetings held under the Chairman appointed by the Court, and the resolutions passed by majority shareholders and directors present therein are all relevant. In the case of Inder Kumar Jain v. Osra Bottling Co. (P) Ltd., reported in (1977)47 Comp. Cas. 194, the Delhi High Court has held that on an analogy of Order VI, Rule 17 of the Code of Civil Procedure, the High court has power to grant leave or amend a pleading in a petition under section 397 to 398 of the Companies Act, 1956 for relief against mismanagement or oppression in the affairs of a company. In the case of Bastar Transport and Trading Co. v. Court of Wards, reported in A.I.R. 1955 Nagpur 78 the Court held that the provisions of the Code of Civil Procedure so far as applicable, would govern proceedings under the Companies Act also. There is thus no provision under the Companies Act which prohibits a Court from looking at subsequent events in a petition under sections 397 and 398 of the Companies Act."We entirely agree with the learned Judge. The ratio of the judgment would also apply to a petition for winding up under the just and equitable clausesection 433 (f). As we mentioned earlier, we see no reason on principle to ignore the subsequent facts.n support of this submission, he relied upon a judgment of the Supreme Court in SangramsinghP. Gaikwad vs. Shantidevi P. Gaikwad, (2005) 11 SCC 314.  Paragraph 200 reads as underIt is now well settled that a case for grant of relief under Sections 397 and 398 of the Companies Act must be made out in the petition itself and the defects contained therein cannot be cured nor the lacuna filled up by other evidence oral or documentary. (See Bengal Luxmi Cotton Mills Ltd., In re.)The reference in the judgment to the documentary evidence is not to pleadings. This question whether subsequent or even additional facts must be introduced by having the petition amended or whether they can be introduced on affidavits did not arise before the Supreme Court. Nor was it decided by the Supreme Court. The judgment merely requires the case to be pleaded. It requires the case to be supported by pleadings and not just by evidence, oral or documentary. The judgment, therefore, does not support Mr. Kamdars case.100. In the circumstances, it is held that the subsequent facts can be relied upon by the Company Court while considering a petition under sections 433(f) on the just and equitable ground. The subsequent events may be pleaded either by amending the petition or by filing further affidavits.101.Mr. Kamdar submitted that as only two creditors supported the winding up petition, and fourteen creditors opposed it, the petition ought to have been dismissed.The number of petitioners supporting or opposing a winding up is not relevant. What is relevant is that the two creditors, who support the petitioner, have an aggregate claim of over Rs.2003.00 crores, whereas the fourteen creditors, who opposed the petition have a claim of about Rs.1000.00 crores. The learned Judge can hardly be faulted for not dismissing the petition merely because fourteen creditors opposed it.103. In the result, circumstances certainly exist warranting an admission of the petition for winding up the company on the basis of the just and equitable clause.Mr. Kamdar submitted that the learned Judge had only set out the rival contentions and the facts and made the above observations. In other words, according to him, the judgment does not contain any reasons.The submission is incorrect for the learned Judge has set out the facts in considerable detail and the manner in which they have been set out support the conclusion.Mr. Kamdars submission that the petitioner ought not to be permitted to maintain this petition on the ground that it failed to meet the roll out obligation is rejected for the abovereasons. The allegations in this regard are, to say the least, vague and without material particulars. Mr. Kamdar himself faced difficulty in substantiating this submission which was evident from the fact that he essentially only read out paragraph 54.1 of the affidavit in reply dated 11th April, 2012 of one Adil Patel. Paragraph 54.1 of the affidavit itself contains bare allegations and is devoid of any particulars substantiating the same. The allegations,are that the competitors have gained a significant market share whereas the company has not because of the petitioners failure; the petitioner took unilateral/secret/illegal decisions; the petitioner failed to contribute its share of the capital call and failed to formulate and carry out a business plan as per the shareholders agreement and other agreements; the petitioner incurred unnecessary expenses for travel.In the affidavit in rejoinder, the petitioner rightly contended that the allegations were without anyassuming that there was a failure to roll out, the petitioner cannot be held solely responsible for the same. The appellant also participated in the management of the business. There are no mala fides alleged against the petitioner. It is not suggested that the petitioner deliberately failed to roll out the business. It is not suggested that the appellant made valuable suggestions which were not accepted by the petitioner and that had they been accepted, the company would have done well. There is nothing to indicate that the appellant took any steps or made any suggestions which were wrong or were rejected by the petitioner.Mr. Kamdar had considerable difficulty even indicating precisely what the roll out objectives were. At one stage, he indicated that the roll out obligation is as per the initial business plan set out in Schedule I to theagreement dated 23rd September, 2008. Even assuming that to be so, there are no particulars as to which part of it was not met by the petitioner. Nor are there any particulars as to how the petitioner failed to meet the obligations. Further, this aspect of the matter does not appear to have been taken before the learned single Judge. It is not difficult to see why this point was not taken by the learned Judge. The business plan does not appear to have been crystallized at any point of time. This is evident from the minutes of the meeting of the Board of Directors of the company held on 24th August, 2011. Paragraph 6(b) is titled "EDB Way forward". It is recorded that the Board directed the management "to prepare a business plan with targeted roll out" and barter deal with other operators which would be presented to the Board after the shareholders meeting. The allegations that the company did not achieve anyis incorrect. A document annexed to the affidavit dated 21st August, 2012, on behalf of the appellant belies the contention. It indicates that roll out did take place in about 16 places, including Mumbai, Chennai, Delhi, Lucknow, Bangalore and Hyderabad.Mr. Kamdar then submitted that the company had suffered losses due to the petitioner havingthree vendors.122. There is no substance in this allegation. The transactions with the three vendors took place in the year 2009. It is significant that the contracts had not been entered into between the petitioner with the vendors. The petitioner had merely obtained their offers and placed the same before the management. At a meeting of the Board of Directors held on 13th May, 2009, Balwa stated that the vendors proposals were higher than those of the other operators. In view of the assertion awas formed by the company to negotiate with the vendors. Thecomprised of the petitioners representatives as well as Balwa. Even during thethe prices did not differ substantially. In fact, the vendors stated that they could not offer better prices. The price was thereafter unanimously approved by the board.Mr. Kamdar submitted that the fact that the petitioner agreed to have the pricesf indicated mala fides.The submission is entirely unjustified. There was nothing surreptitious about the manner in which the petitioner went about the matter. The agreements were not even concluded with the vendors in the first instance. It is only after theentered into further negotiations with the vendors that the price was finalized. It is not unusual for organizations to negotiate right upto the last moment. The petition, therefore, cannot be dismissed on the basis of this allegation.Firstly, it is important to note that the petitioner did make an application to the FIPB, but the FIPB refused to grant the approval. It cannot, therefore, be said that the petitioner had failed to make an application to the FIPB for approval. Further, the appellant had filed a petition before the CLB under sections 397 and 398 of the Companies Act in which it raised this issue. The appellant thereafter withdrew the company petition.126. It is also important to see the appellants case on affidavit with regard to Mr. Kamdars contention that the failure to apply for the FIPB approval resulted in a financial crunch. As Mr. Madon rightly pointed out, assuming there was any failure on the part of the petitioner, as alleged in this regard, it affects the rights, if any, of the appellant and not of the