If the Company is
unable to pay its debts.
[See below for the circumstances under which a company isdeemed unable to pay its debts.]
The just and 'equitable clause
If the Court is of opinion that
it is just and equitable
that the Company should be wound up.The interpretation of `just and equitable' clause depends on the facts of each case. The court may order winding up of a company(1) when the object for which it was incorporated hassubstantially failed or it is impossible to carry on the, business of the company except at a .loss or theexisting and probable assets are inadequate to meet the liabilities,(2) when the majority of the shareholders are using their powers unfairly or (3) where there is a deadlock in the management of the company or (4) where public interest is likely to be prejudiced,(5) when the company was fanned to carry out fraudulent or illegal business,(6) when the company is a mere bubble and does not carry on any business.
The Court may refuse to order winding up under this clause if it is of opinion that some other remedy isavailable to the petitioners and they arc acting unreasonably in asking for winding up, instead of pursuingthe other remedies."There must be materials to show when `just and equitable' clause is invoked, that it is just and equitable notonly to the persons applying for winding up but also to the company and to all its shareholders.
case has to be made out before the court can take any action in the matter. Even admission of a petition wlticl.
lead to advertisement of the winding up proceedings is likely to cause immense injuryto the company if ultimately the petition has to be dismissed. The interest of the petitioner alone is not of predominant considerationThis clause gives a wide discretion to the Court and empowers the Court to order winding up in cases notcoming within tile previous five clauses.The following examples will show how the "just and equitable" clause has been used.
may be ordered where
a Company is
carrying on its business at :-t
and where it
make any profits.
(ii)Loss of substratum of the company :
of the Company "is gone, a Winding up order
issued. The substratum of a Company means its subject matter of the objects for which it wasincorporated. A company had no title to the mine and had no prospect of obtaining possession of it.
In re Haven Gold Mining Co
A Company was formed for working a German patent. The German patent was notgranted but the company purchased a Swedish patent. It was held that the substratum of that company failed.
company' lost its business through nationalization.
Re Eastern 7eley+uhh: Co Ltd.