Therefore!

if there is no wa thro+(h whi%h a %o)&an %an a%hie3e ito'/e%ti3es

and it is i)&ra%ti%a',e to do so! it wo+,d ser3e as a /+st ande>+ita',e (ro+nd to
wind +& the %o)&an-0-

AILURE

OF

INANCIAL

UBSTRATUM

Fai,+re of finan%ia, s+'strat+) %an 'e of two 4inds< those in whi%h the%o)&an
has 'een finan%ia,, disa',ed fro) attainin( its o'/e%ts! and those inwhi%h it was
a,,e(ed to 'e in%a&a',e of )a4in( &rofits-

La%4 of s+ffi%ient f+nds is a %o))on o%%+rren%e in )an %or&orations- This

%reates a )a/or o'sta%,e in a%hie3in( the %o)&an s o'/e%ti3es- In the instan%eof
a %o)&an ,a%4in( s+ffi%ient finan%e to f+nd its o'/e%ti3es! the 1o+rt %anorder
for the windin( of the %o)&an- An e*a)&,e for this %an 'e the %ase of

!irie v. Ste"art

#$

wherein a %o)&an dea,in( with the shi&&in( '+siness ,ost itson, 3esse, and had
no &ros&e%t of o'tainin( f+rther f+nds to %ontin+e tore)ain in '+siness- The 1o+rt
ordered for the windin( +& of the %o)&an onthe (ro+nd of finan%ia, disa'i,it -
There )i(ht a,so arise a sit+ation wherein the %o)&an is +na',e to (enerate &rofits-
In s+%h an instan%e too! the 1o+rt %an order for the windin( +& of the%o)&an -
In the %ase of

Re Suburban %otel Co.

##
a %o)&an was for)ed for the &+r&ose of esta',ishin( hote,s in the nei(h'o+rhood of
London- owe3er!the hote,s )ade &rofit for a ear and then ran into ,osses for three
ears in arow- In s+%h a %ir%+)stan%e a windin( +& &etition was fi,ed 'efore the
%o+rt-owe3er! it was dis%o3ered that the %o)&an had a s+'stantia, a)o+nt of
+n%a,,ed share %a&ita,- As a %onse>+en%e! the &etition was dis)issed- adthere
'een no +n%a,,ed share %a&ita,! the %o)&an %o+,d ha3e 'een wo+nd +&d+e to
ina'i,it to (enerate &rofits-.8

HE

BUSINESS

WAS

PRIMARILY

ILLEGAL

In the e3ent of a %o)&an 'ein( in%or&orated for and i,,e(a, &+r&ose! it ser3es as
a /+st and e>+ita',e (ro+nd for windin( +& the %o)&an - This was he,d in

Re &' (rismead and Sons.

#)

B C%Pherson!

*ust and '+uitable Ground,

.; C

OD

- L- R

- 7$:958 .:2
9

Supra

note at .:$-

10

7$:258 9 F- 5;

11

7$9;8 L-R- . 1h- A&&- ;0;

08

EADLOCK

IN

THE

MANAGEMENT

OF

THE

COMPANY

Dead,o%4 is stated ' )ostte*twriters to 'e a (ro+nd +&on whi%h the %o+rt wi,,
order a %o)&an to 'e wo+nd +&-

$0
In the e3ent of a dead,o%4 within the %o)&an ! whereinthere is no &ossi'i,it of
%arrin( on a '+siness! the 1o+rt %an order for the windin(+& of the %o)&an - In

Re enidge &obacco Co. -td

there were two e>+a,shareho,ders and dire%tors- The AoA &ro3ided for referen%e
to ar'itration in the e3entof an dis&+te- owe3er! the re,ationshi& deteriorated to
s+%h an e*tent that the wereno )ore on s&ea4in( ter)s- F+rther! there was no
&ros&e%t of %ontin+in( '+sinessto(ether- Therefore! the 1o+rt ordered for the
windin( +& of the %o)&an- A si)i,ar sit+ation a,so &re3ai,ed in

Ramesh G (hatia v. Gopala Gases ! -td

$@

58

THE

COMPANY

IS

BUBBLE

COMPANY

A '+'',e %o)&an is one whi%h has no rea, '+siness of its own- An e*a)&,e is
Re -ondon / County Coal Co.

#0

In this %ase the %o)&an was a %ontri3an%e ' thedire%tors to ro' the &+',i% )
one and &+t it in their &o%4et-

$;

In ,i(ht of the e3ents! the1o+rt ordered for the windin( +& of the %o)&an -@8

PPRESSION

OF

MINORITY

O&&ression of )inorit shareho,ders wi,, 'e a /+st and e>+ita',e (ro+nd where
thosewho %ontro, a %o)&an e*%eed or a'+se their &ower to s+%h an e*tent as
to serio+s, &re/+di%e the interests of )inorit shareho,ders-

In s+%h an instan%e! the 1o+rt wi,, 'e /+stified in orderin( the windin( +& of the
%o)&an- An e*a)&,e for this is the %aseof

Re 1nglo2Continental !roduce Co -td.

#3

12

7$:;8 $ 1h- 529

13

Supra

note at .:0

14

7$:$98 . 1h 5.9

15 (1994) 3 Comp LJ 435 (Del)16 (1866) LR 2 Eq 1.17

Supra

note 6 459118

Supra

note 6 459019 (1939) 1 All ER 99