ABC Limited doing business of limestone quarrying

ABC Limited doing business of limestone quarrying, being unable to arrange necessary funds, passes a resolution for voluntary winding up. As a result, a

liquidator is appointed, who paid out all the liabilities of the company, but could not complete the formalities required under the Companies Act for dissolution. In the meantime at an extraordinary general meeting, shareholders assembled unanimously, resolved to revive the company and to obtain injunction against the ‘dissolution’. Certain shareholders, who were in a minority and did not attend the extraordinary general meeting, object to the decision taken by the vast majority of shareholders, on the ground that once the winding up had commenced, the majority had no right to restrain the company from being dissolved. Decide giving reasons:

(i) Whether the resolutionpassed at the extraordinary general meeting is valid and the majority shareholders would succeed in restraining the company from being dissolved?

(ii) Whether the objection of the majority would be tenable?

[May, 1992]

16.

(a) When is a company deemed to be ‘unable to pay its debts’?

(b) Explain the term ‘contributory’? Who may be held liable as a contributory under the Companies Act, 1956? [November, 19911