It depends upon the facts of each case. The tribunal may order winding up under the just and equitable clause in the following cases.
(1) When the substratum of a company is gone. The substratum of a company can be said to have disappeared only when the object for which it was incorporated has substantially failed, or when it is impossible to carry on the business of the company except at a loss, or the existing and possible assets are insufficient to meet the existing liabilities.
The substratum of a company disappears :
(i) When the very basis for the survival of the company is gone
(ii) When the main object of the company has substantially failed or become impracticable. Where a company’s main object fails, its substratum is gone and it may be wound up even though it is carrying on its business in pursuit of a subsidiary objects.
(iii) When the company is carrying on its business at a loss and there is no reasonable hope that the object of trading at a profit can be attained. However, where the majority shareholders are against it, the tribunal will not order a company to be wound up merely because it is making a loss.
(iv) When the existing and probable assets of the
company are insufficient to meet its existing liabilities. Where a company is totally unable to pay off creditors and there is ever- increasing burden of interest and deteriorating state of management and control of business owing to sharp differences between shareholders. The tribunal will order winding up.
(1) When the substratum of a company is gone. The substratum of a company can be said to have disappeared only when the object for which it was incorporated has substantially failed, or when it is impossible to carry on the business of the company except at a loss, or the existing and possible assets are insufficient to meet the existing liabilities.
The substratum of a company disappears :
(i) When the very basis for the survival of the company is gone
(ii) When the main object of the company has substantially failed or become impracticable. Where a company’s main object fails, its substratum is gone and it may be wound up even though it is carrying on its business in pursuit of a subsidiary objects.
(iii) When the company is carrying on its business at a loss and there is no reasonable hope that the object of trading at a profit can be attained. However, where the majority shareholders are against it, the tribunal will not order a company to be wound up merely because it is making a loss.
(iv) When the existing and probable assets of the
company are insufficient to meet its existing liabilities. Where a company is totally unable to pay off creditors and there is ever- increasing burden of interest and deteriorating state of management and control of business owing to sharp differences between shareholders. The tribunal will order winding up.
What is ‘just and Equitable’ Clause ?
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