Holding

A winding‑up petition filed by Severn Trent as a contributory is not maintainable because the statutory phrase ‘devolved on him through the death of the former holder’ applies only to natural persons, not to juristic persons.

Summary

Severn Trent Water Purification Inc., a U.S. corporation, held 50% of the equity of a joint venture, Capital Controls (India) Private Ltd., with the Indian partner Chloro Controls (India) Pvt. Ltd. A deadlock in management led Severn Trent to terminate the joint‑venture agreement and file a winding‑up petition under Section 433(f) of the Companies Act, 1956. The Company Judge admitted the petition, but the Bombay High Court set it aside on the ground that Severn Trent, not being entered as a member in the company’s register, could not sue as a contributory; the High Court remitted the matter to consider maintainability as a creditor. The Supreme Court examined the language of Section 439(4) and held that the phrase “devolved on him through the death of the former holder” applies only to natural persons, not to corporate entities, so Severn Trent could not invoke the contributory route. Consequently, the petition is maintainable only, if at all, in the capacity of a creditor, and the Court dismissed Severn Trent’s appeal while disposing of the cross‑appeal. The Court also left the question of premature advertisement for determination by the Company Judge.

Issues considered

Whether a winding‑up petition filed by a foreign company is maintainable in the capacity of a contributory under Section 439(4) of the Companies Act.
Whether the same petition is maintainable in the capacity of a creditor.
Whether the petition should be dismissed at the threshold for premature advertisement without a court order.

Subjects

winding upcontributorycreditorCompanies ActSection 439foreign companyjoint venturedeadlockpremature advertisementmergershare registration

Judgment

[2008] 2 S.C.R. 1127

~ SEVERN TRENT WATER PURIFICATION, INC. A
II.
CHLORO CONTROLS (INDIA) PRIVATE LTD. & ANR.
(Civil Appeal No. 1351 of 2008)
FEBRUARY 18, 2008
B
(C.K. THAKKER AND TARUN CHATTERJEE, JJ.)
'r
Companies Act, 1996; Ss.425, 430, 431, 432, 433(1) and
439:
Winding up petition - A foreign company and an Indian c.
company setting up a Joint Venture company - Joint Venture
Agreement - Indian company filing a suit against the foreign
company circumventing dispute resolution provision in the
agreement - Dead Jock in management of Joint Venture -
Termination of agreement and filing of winding up petition by D
> ,.. appellant-foreign company - Allowed by Company Judge
holding it to be maintainable - Filing of appeals by constituent
company-Partly allowedby Division Bench of the High Court
as not maintainable as 'contributory' but remitting the matter
to Company Judge on question of maintainability of the E
petition on ground of-capacity of appellant company as creditor
-Appeal.and cross appeal- Held: S.439 of the Act couched
in positive as· well as negative words - Sub-section (1) of
Section 439 permitting all the persons, as enlisted, to file
~~
petition for winding up of the company- However, sub-section F
(4) of Section 439 declares that a contributory cannot file such
petition unless shares in respect of which he is contributing
have been originally allotted to him or held by him and
registered in his name or devolved on him through former
~ holder after his death - Since appellant-foreign company did
G
not put forth its claim under provisions of clause (a) of s. 439(4),
>- it could only make such claim in terms of clause (b) of s.439(4)
- Since appellant company not registered in the Register of
the company, it is not entitled to file the winding up petition -
1127 H
1128 SUPREME COURT REPORTS [2008] 2 S.C.R.

A Division Bench of the High Court rightly held that the phrase :f
"have devolved on him through the death of the holder' in part
(iii) of section 439(4) would apply to natural person and not to
juristic person where death normally refers to seizing a life of
natural person -Provision uls.439(4) exhaustive in nature and
B its sweep cannot be extended by judicial interpretation -
Hence, winding up petition by appellant-company in its
capacity as contributory not maintainable. y'

Maintainability of the winding up petition in the capacity
of the appellant as Creditor - Held: In terms of the decision of
c Division Bench of. the High Court, appellant could raise
contention before the Company Judge as to maintainability
of the petition in the capacity as a creditor and also on the
ground of premature advertisement.
Words and Phrases:
D
'Have devolved on him' and 'death' - Meaning of in the .., .
context of s.439 (4) of the Companies Act, 1956.
Appellant, formerly known as Capital Control
(Delaware) Company, was organized and existing under
E the, laws of the State of Pennsylvania, USA. Later, it
acquired another company, namely, Capital Controls
Company, Inc. Both the companies amalgamated.
Appellant-company alleged that it is entitled to the rights
and benefits of both the companies, so amalgamated and
F also to file and maintain the company petition against y
respondents. Respondent No.1 is an Indian company
controlled by one 'K' and Capital Controls (Delaware)
Company, Inc. is one of the constituent companies of the
appellant. They set up a joint venture company with
G Capital Controls India Private Limited with the object of
manufacturing in India and distributing within the ~
geographical boundaries of India and neighboring
countries certain gas chlorination water treatment
systems and a single product line of brine electro
H chlorination system from component parts supplied by
t
SEVERN TRENT WATER PURI., INC. v. CHLORO 1129
CONTROLS (I) P. LTD. & ANR.

the appellant company. In pursuance thereof, a Joint A
Venture Agreement was executed by the parties. Appellant
company holds 50% equity shares of the equity share
capital of the joint company, remaining 50% of the shares
were held by respondent No.1. Respondent-company filed
a suit against the appellant-company with the sole object B
of circumventing the dispute resolution provisions in the
Joint Venture Agreement entered into between the parties.
Due to wrongful stand and intransigence of the
respondent-company, there was total deadlock on the
management of joint venture. Appellant-company c
terminated the Joint Venture Agreement and th•:m filed a
petition for winding up under Section 433(f) of the
Companies Act, 1956. The Company Judge admitted the
petition. Aggrieved thereby, an appeal was filed by
respondent No.1 on the ground that it has 50% 0
shareholding in the company and the other appeal was
filed by the Capital Controls (India) Ltd. before the High
Court. The Division Bench of the High Court set aside the
order of the Company Judge, holding that the appellant-
company is not eligible to file a petition for winding up of E
the Joint Venture Company as a contributory, as it was
not registered as a member in the register maintained by
the company. It, however, remitted the matter to the
Company Judge on the question of maintainability in its
capacity as a Creditor. Hence the present appeal and the
cross appeal. F
The questions which arose for consideration by this
Court in the present appeals were as to whether a winding
up petition filed by the appellant, a foreign company, is
maintainable in the capacity as a contributory/creditor; G
and as to whether a winding up petition filed by the
appellant was liable to be dismissed at the threshold on
the ground of premature advertisement by the appellant
company without an order of the Court as required by
law.
H
j

1130 SUPREME COURT REPORTS [2008) 2 S.C.R.

A Dismissing Civil Appeal No.1351 of 2008 and i ~
disposing of Civil Appeal No.1353 of 2008, the Court
HELD: 1.1 Section 439 of the Companies Act permits
presentation of petition for winding up. It is an important
provision. Bare reading of the section makes it clear that
B it is couched in positive as well as negative words.
Whereas sub-section (1) of the said section permits the
presentation of application for winding up of a
-r
Company by any person enlisted therein, it clarifies that
the said provision is 'subject to the provision' of the
c section and, hence, the entire section has to be read with
a view to consider the right of a P.erson presenting a
petition for winding up of a Company. (Paras - 17 & 19)
[1145-G; 1146-0, E]
1.2 Sub-section (4) of Section 439 of the Act is in
D
negative form. It declares that a contributory shall not be
entitled to present a petition unless it is covered either by -.r-
clause (a) or by clause (b) of the said provision. As regards
shares held by the contributory, clause (b) enacts that a >--
'
contributory shall not be entitled to present a petition for l

E winding up of a company unless the shares in respect of l.-
which he is a contributory have been; (i) originally allotted
to him; or (ii) held by him and registered in his name for at
least six months during the eighteen months immediately
before the commencement of the winding up; or (iii)
F devolved on him through the death of the former holder. )--·-
(Para - 20) [1148-F, G]
1.3 A contributory's right to present a winding up
petition must be one either under clause (a). or under
clause (b) of sub-section (4) of Section 439 of the
G Company's Act. It is nobody's case that clause (a) of
Section 439(4) of the Act is attracted in the instant case. ...
Hence, the appellant - a 'foreign company, can only ~laim
the right to present a winding up petition under clause (b)
of sub-section (4) of Section 439 of the Act. (Para - 24)
H [1150-A, BJ
SEVERN TRENT WATER PURI., INC. v. CHLORO 1131
CONTROLS (I) P. LTD. & ANR.

1.4 A winding up petition can be presented by a A
contributory in the event of happening of three
eventualities, viz. (i) shares must have been originally
allotted to him; or (ii) shares must have been held by him
and registered in his name for at least six months during
the eighteen months immediately before the B
commencement of the winding up proceedings; or (iii)
shares must have devolved on him through the death of
former shareholder. Admittedly, appellant is not the
original shareholder. Eventuality (i), therefore, has no
application in the present case. Regarding eventuality (ii), c
it is an admitted fact that the name of the appellant-
company has not been registered in the Register of the
Company. In the circumstances, it was contended by the
counsel for the Company before the Company Judge,
Division Bench of the High Court as well as before this
0
Court that appellant-company was not entitled to institute
a petition for winding up of the Company. (Paras- 24 & 25)
[1150-A, B, C, D, E]
1.5 The provisions of the Companies Act must be
complied with before presenting a winding up petition E
under Section 439(4)(b) of the Act. If a person intends to
present a petition for winding up of a company as a
contributory, he/it has to satisfy the Company Court that
his/its case is covered by one of the eventualities
contemplated by clause (b) of sub-section (4) of Section F
439 of the Act. (Para - 36) [1154-B, C]
Bayswater Trading Co. Ltd., Re, (1970) 1 All ER 608 and
National Bank of Greece & Athens, South Asia v. Metliss,
(1957) 3 All ER 608 : (1957) 3 WLR 1056 : 1958 AC 509 -
distinguished. t3
A Company, in Re, (1894) 2 Ch 394; H.L. Bolton
Engineering Co. Ltd. Re., (1956) 1 All ER 799: (1956) 2 WLR
844: 1956 Ch 577; Gattopardo, Ltd. Re, (1969) 2 All ER 344:
(1969) 1 WLR 619 and J.N. 2 Ltd., Re, (1978) 1 WLR 183: H
1132 SUPREME COURT REPORTS [2008] 2 S.C.R.

A (1977) 3 All ER 1104 - referred to.
Company Law by Palmer, 24th Edn., Vol. I, p.1377 and
Buckley on the Companies Act, 14th Edn., Vol. I, p. 537 -
referred to.
B 1.6 In the instant case, despite merger and
amalgamation of a foreign Company, no step has been
taken by the appellant-company for rectification of the
register and registration of shares in its name. Hence, the
Division Bench of the High Court is right in observing that
c it cannot be contended by the appellant-company that in
view of dispute between appellant-company and Kochas,
the Company would not have registered shares in the r--
name of appellant-company. Had the appellant-company
applied and rejected the prayer, an appropriate action
0 could have been taken in accordance with law. (Para -
46) [1157-E, F]
t
1.7 Sub-section (4) of Section 439 of the Act is a 'self-
-.r-- t
f-
contained Code' as to presentation of petition by a
contributory. A person claiming to be a contributory and
E presenting a petition for winding up of a Company in that
l
capacity must fulfill the conditions laid down in the said i
section. Moreover, if there is omission, default or illegal 'of!
action on the part of the Company in not registering the .
name of the contributory even though he/it can be said to
F be a contributory by holding the shares as required by y-'
clause (b) of sub-section (4) of Section 439, the law ).c
/.
provides a remedy. In the instant case, however, no such
course has been adopted by the appellant-company. In
the circumstances, it cannot be said that the Division I
G Bench of the High Court was in error in holding that
appellant-company could not be said to be a contributory
to present a winding up petition. (Para - 48) [1159-A, B, C]
,. l
..__
1.8 If the view of the counsel for the appellant, that r
the use of expression 'he', 'his' or 'him' would apply only to
H natural persons and not to corporate personalities, is r
~
SEVERN TRENT WATER PURI., INC. v. CHLORO 1133
CONTROLS (I) P. LTD. & ANR.

.... •) accepted, winding up petition can never be filed by a A
successor Company even if it holds shares earlier held
by the 'former holder'. The said argument weighed with
the Single Judge of the High Court who observed that
though the appellant was not the person who was'
originally allotted shares nor its name was registered in B
the register of the Company but the expression 'or have ,
devolved on him through the death of former holder' would
get attracted inasmuch as upon merger/amalgamation of,
the foreign company in the appellant-company, the former
Company i.e. former holder can be said to have been met ,C
with 'death' and the shares held by the said Company
could be said to have devolved on the appellant-company.
If it is so, obviously, a petition filed by the appellant- '
company as a 'contributory' was maintainable. (Paras -
49 & 50) [1160-A, B, C, D, E]
D
~).·
1.9 The Division Bench of the High Court was right
in holding that the phrase "or have devolved on him '
through the death of former holder" would apply to
natural persons who are holding shares in their individual ,
capacity and not to juristic entities. The word 'death' E
mentioned in a statute normally refers to the seizing of life
of a natural person. (Paras - 53 & 56) [1161-C; 1162-B]

"
..i.

-·~
Stewart v. Brown, 35 SLR 828 - referred to .
Stroud's Judicial Dictionary of Words and Phrases, (Vol. I,
6th Edn. P.610) - referred to.
F

1.10 In the context of Company Law, winding up of a ,
body corporate is not the same thing as or equivalent to
death of a member. An individual and a body corporate
expressly have been treated separately which is clear from G
~ Sections 430, 431 and 432 of the Act. Under the scheme
of the Act, every creditor may present a petition for winding
' up of a company, but every contributory cannot. A
I"
\ contributory to be eligible and qualified to present a
winding up petition must be covered by sub-section (4) H
1134 SUPREME COURT REPORTS [2008) 2 S.C.R.

A of Section 439 of the Act and the Legislature, in its wisdom,
--(~ ..
excluded certain categories of persons from being entitled
to present a petition for winding up as contributory. The
provision is exhaustive in nature and its sweep cannot .
be extended by judicial interpretation. Upholding of
B argument of the appellant and conceding the right to
present a petition for winding up of a Company though it
cannot be said to be a contributory would result in re-
writing of the provision. A Court of law cannot adopt a
construction which would result in amendment of a
c statute. Hence, question No.1 is answered in the negative
holding that a winding up petition filed by the appelalnt in
the capacity as a contributory is not maintainable. (Paras
- 59 & 63) [1162-G; 1163-A, B, C, G] "
Mis. World Wide Agencies Pvt. Ltd. & Anr. v. Margaratt.
D Desor & Ors. (1990) 1 SCC 536; Saraswati Industrial
Syndicate Ltd. v. Commissioner of Income Tax, 1990 Supp ~-
SCC 675; Dr. Saibaba v. Bar Council of India & Anr., (2003) 6
SCC 186 and Union of India v. Rajiv Kumar, (2003) 6 SCC
516 - held inapplicable.
E 2.1 According to the Company Judge, appellant-
company could be said to be a 'contributory' within the i

meaning of Section 439 (4)(b) of the Act and a petition ~
presented by it in that capacity was tenable. The order ·,..
passed by the Company Judge was challenged by the
F Company before the Division Bench of the High Court
and the Division Bench upheld the objection of the
"'·-
Company and reached a conclusion that the Company
Judge was wrong in treating it as 'contributory' and
granting it locus to present a petition for winding up of
G Company, that an alternative argument was raised on
behalf of the appellant-company that it was also a Creditor -'
of the Company and in that capacity i.e. in the capacity of j,
~

a Creditor, the petition for winding up of the Company was
maintainable. (Para - 64) [1164-B, C, D]
H
SEVERN TRENT WATER PURI., INC. v. CHLORO 1135
CONTROLS (I) P. LTD. & ANR.

2.2 It cannot be said that the Division Bench of the A
I

High Court was in error in passing the impugned order
and remitting the matter to the Company Judge to
consider the question as to maintainability of company
petition filed by the appellant-company as a Creditor of
the Company. (Para - 67) [1165-E] s
2.3 Though the case put forward by the appellant-
c om pa ny in the winding up petition was as a
'contributory', the factum of the Company being Debtor
and appellant-company being Creditor and in spite of
dues being admitted by the Company, there was non C
payment on the part of the Company had bee~ mentioned
in the petition. The counsel for the appellant appears to
be right in arguing that in view of the finding by the
Company Judge that the petition instituted by the
appellant-company as a 'contributory' was maintainable, D
it was no more necessary for the Company Judge to
consider the question whether the compahy petition filed
by the appellant-company was maintainable in the
capacity as a Creditor. However, this Court hastens to add
that it may not be understood to have recorded a finding E
that the petition presented by the appellant-company is
maintainable. It is clarified that as and when the matter
will be taken up by the Company Judge, it will be open to
the Company to raise a contention that no such petition
as presented is maintainable in the capacity as a Creditor. F
(Paras - 68 & 69) [1166-C, D, E, G; 1167-A]
3. So far as third question is concerned, neither the
Company Judge nor the Division Bench of the High Court
has decided it. Since the Division Bench of the High Court
has remitted the matter to the Company Judge and granted G
liberty to the Company to oppose admission of the
Company petition on all available grounds including the
ground of 'premature advertisement', no opinion on the
issue has been expressed one way or the other. Before
the Company Judge, it will be open to the Company or' H
)_
1136 SUPREME COURT REPORTS [2008] 2 S.C.R.

A contesting respondent to oppose the admission on all 1~
grounds available. (Para - 71) [1167-C, F, G]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1351
of 2008.

B From the common Judgment and Order dated 20-21/02/
2006 of the High Court of Judicature at Bombay in Appeal Nos.
449 and 450/2005 in C.P. No. 857/2004.
WITH

c Civil Appeal No. 1353 of 2008.
Harish Salve, Dhruv Mehta, Harshvardhan Jha, Yashraj
Singh Deora, Kamini Ahuja, Kamaldeep Dayal, Gayatri
.....- ..•

Goswami, Abhinav Sang hi, Chetna Rai and Ajit Anekar (for M/
S. K.L. Mehta & Co.), for the Appellant.
D F.S. Nariman, Jay Munim, Naval, Ruby Singh Ahuja, Manu
Aggarwal, Jai Singh Barar and Manik Karanjawala for the --f'~

Respondents.
The Judgment of the Court was delivered by
E C.K. THAKKER, J. 1. Leave granted.
2. Both these appeals have been instituted against
common judgment and order passed by the Division Bench of
the High Court of Judicature at Bombay (Original Side) dated
February 20/21, 2006 in Appeal Nos. 449-450 of 2005 in
F Company Petition No. 857 of 2004. First appeal has been filed .,... -
by Severn Trent Water Purification Inc. while the second appeal
is filed by Chiaro Controls (India) Pvt. Ltd.
3. The facts giving rise to the present appeals, in brief as
noted by the Division Bench of the High Court are as follows.
G
4. Severn Trent Water Purification Inc., USA (hereinafter
--<
referred to as "Severn Trent") filed a petition for winding up the
Capital Controls (India) Private Limited (hereinafter referred to
as 'the Company') on just and equitable grounds under Section
H 433(f) of the Companies Act, 1956 (hereinafter refer~d to as
SEVERN TRENT WATER PURI., INC. v. CHLORO 1137
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]
;- .,_ 'the Act'). The learned Company Judge by his order dated 21st A
April 2005 admitted the company petition. Aggrieved thereby
two appeals came to be filed. One appeal (Appeal No. 449 of
2005) was filed by Chloro Controls (India) Private Limited, which
........ has 50% shareholding in the company and the other appeal
(Appeal No. 450 of 2005) was filed by the Company. As both'. B
the appeals arose out of one and the same order passed by'
the Company Court, the appeals were heard together and'
decided by a common judgment.
5. The petitioner set up the case in the petition for winding
up of the Company thus: c
(i) Severn Trent is a Corporation organized and existing
under the laws of the State of Pennsylvania, USA
having its office and place of business at 3000 ·
Advance Lane, Colmar, Pennsylvania 18915, USA.
D
(ii) Severn Trent was formerly known as Capital Controls
~-t-
(Delaware) Company, Inc.
(iii) In or about 1990, Severn Trent's group acquired
Capital Controls Company, Inc. and subsequently the
name of Capital Controls Company, Inc. was changed E
to Severn Trent Water Purification, Inc. with effect
from 1st April, 2002.
,;.

(iv) On March 31, 2003, Capital Controls (Delaware)
Company Inc. amalgamated with and merged into F
-·-..f
Severn Trent and pursuant to the merger agreement,
Capital Controls (Delaware) Company, Inc. went out
of existence.
(v) Reference to Severn Trent includes reference to the
Capital Controls Company, Inc. as well as Capital G
Controls (Delaware) Company, Inc. and, therefore,
Severn Trent in its present name is entitled to the
rights and benefits of the Capital Controls (Delaware)
Company, Inc. and Capital Controls Company, Inc.
and to file and maintain the company petition. H
1138 SUPREME COURT REPORTS [2008] 2 S.C.R.

A (vi) Chloro Controls (India) Private Limited, a company
controlled by Mr. M.B. Kocha and Capital Controls
i .-4 .•
(Delaware) Company, Inc. set up joint venture \
f
company - Capital Controls India Private Limited (the
company) in Mumbai with the object of manufacturing ~

B (in India) and distributing within the geographical
boundaries of India, Nepal, Bhutan and Afghanistan
certain gas chlorination water treatment systems and
a single product line of brine electro chlorination
system from component parts supplied by Severn

·.--
c Trent. For the said purpose, a Joint Venture
Agreement was executed by the parties on
November 16, 1995.
(vii) Authorised capital of the company is Rs.75,00,000
(Rupees seventy five lakhs) divided into 7,50,000
D equity shares of Rs.10/- each. Severn Trent holds
3, 75,000 equity shares being 50% of the equity share
-t,-,
capital of the company. The other 50% of the
shareholding of the company is held by Chloro
Controls (India) Private Limited.
E (viii) Chiaro Controls (India) Private Limited filed Suit
No.233 of 2004 against Severn Trent with the sole
object of circumventing the dispute resolution
'
provisions in the Joint Venture Agreement entered
into between the parties.
""
F
(ix) Due to wrongful stand and intransigence of Chloro -y--
Controls (India) Private Limited, there was total
deadlock on joint venture and management. Despite
several meetings between the parties and exchange
of ideas aimed at resolving differences, relations
G
between the parties became more and more strain.
(x) Severn Trent, therefore, terminated the Joint Venture
Agreement vide its letter dated July 21, 2004 due to
breaches committed by Chiaro Controls (India)
H Private Limited and Mr. Kocha. In the termination
SEVERN TRENT WATER PURI., INC. v. CHLORO 1139
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]
notice, Severn Trent called upon Mr. Kocha to take A
steps for winding up of the company.
(xi) Severn Trent had alleged that if Mr. Kocha would be
allowed to continue to run the company, the basic
substratum of the company would be eroded and the
company could be saddled with liabilities leading to B
depletion of net worth.
(xii) The company had been incorporated in the nature of
partnership/quasi-partnership and both parties had
equal share in the company. The parties were c
severely deadlocked on several issues, there was
total break down and Severn Trent had lost
confidence in Kochas. Severn Trent felt that the
company would not return to the normalcy or could
run the business profitability and it was just and
0
equitable to wind up the company.
6. Severn Trent, in Company Petition No. 857 of 2004,
filed on September 22, 2004 in the High Court of Judicature at
Bombay under Section 433 (f) of the Act sought the following
reliefs; E
(a) That the Company viz., Capital Controls India Private
Limited, be wound up under the just and equitable
grounds by and pursuant to the orders and directions
of the Hon'ble Court;
F
(b) That the Official Liquidator of this Hon'ble Court be
appointed as Liquidator of all the assets, properties
and affairs of the Company with all powers and
authorities under the provisions of the Companies
Act, 1956;
G
(c) That pending the hearing and final disposal of the
petition, the Official Liquidator of this Hon'ble Court
be appointed as Provisional Liquidator of all the
assets, properties and affairs of the Company with
all powers and authorities under the provisions of H
l
1140 SUPREME COURT REPORTS [2008] 2 S.C.R.

A the Companies Act 1 of 1956; i ;\
(d) That till such time that a Provisional Liquidator is,
appointed by the Court, an interim injunction be
granted restraining the Company and/or the Kochas
from doing the following:
B
1. conducting the affairs of the Company, except
by way of resolutions passed at meetings of y-
the Board of Directors of the Company with the
affirmative vote of at least one direction
c nominated by Severn Trent;
2. operating the Company's bank accounts, except
as may be jointly operated with the authorized
signatory nominated by Severn Trent;
3. dealing with any other assets, movable or
D
immovable of the Company and be directed to
preserve the machinery, equipments, etc. _, ___,.

installed;
4. entering into fresh contracts in the name of the
E Company and for as representatives of the
Company;
5. making any further purchases and payments
without the consent of Severn Trent or without
approval of the Board of Directors;
F r-- ..
6. borrowing monies or drawing on existing credit
facilities;
7. paying Chiaro Controls directors or their family
members monies allegedly owed by the
G Company;
8. running the website of the Company. ...
(e) Till the time of appointment of the Provisional
Liquidator, Mr. Kocha may be removed from the post
H of Managing Director and committees appointed by
SEVERN TRENT WATER PURI., INC. v. CHLORO 1141
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

, .~ ~ the Board may manage the affairs of the Company; A
(f) For ad-interim reliefs in terms of prayer (c), (d) and
(e) above;
(h) For such further and other reliefs as the nature and
circumstances of the case may require; B
(i) For the costs of the petition and the order to be
made thereon.
7. The Company as well as Chiaro Controls (India) Private
Limited opposed the admission of the Company Petition. The G
Company objected to the maintainability of the petition for
winding up on several grounds. It was, inter alia, contended that
(i) Severn Trent was not a shareholder on the company's register
and, therefore, had no standing to maintain the petition for
winding up; (ii) Capital Control (Delaware) Corporation was the D
registered holder of 50% of the equity share capital of the
Company. Merger of Capital Controls (Delaware) Company Inc.
into and with Severn Trent was not intimated to the company
prior to the filing of Arbitration Petition No.121 of 2004 by Severn
Trent under Section 9 of the Arbitration and Conciliation Act, E
1996; (iii) at no point of time, any application for transfer of share
certificates and/or substitution of the name of Severn Trent had
been made; (iv) the assignment of shares by the Capital Controls
(Delaware) Company, Inc. to Severn Trent without the consent
of Chiaro Controls (India) Private Limited or for that matter of F
M.B. Kocha was contrary to the Shareholders Agreement and
could not be given effect to.
8. Severn Trent filed a rejoinder explaining its position
regarding the merger. Severn Trent annexed certain documents
which in its opinion were in the nature of merger documents G
and submitted that the company as well as Kochas had all along
accepted Severn Trent as shareholder and that there was no
'assignment' as contemplated under Clause 24 of the
Shareholders agreement and, therefore, consent of Chloro
Controls (India) Private Limited or of Mr. Kocha was not required. H
1142 SUPREME COURT REPORTS [2008] 2 S.C.R.

A Severn Trent also asserted that it has stepped into the shoes of -{ {
Capital Controls (Delaware) Company Inc. and was entitled to
maintain a petition for winding up of the Company.
9. This stand of Severn Trent was countered by the
Respondents by filing sur-rejoinder wherein it was denied that
B Severn Trent had stepped into the shoes of Capital Controls
(Delaware) Inc. The Company also questioned legality and
veracity of merger documents that were relied upon by Severn ~
Trent. They contended that the petition ought to be dismissed
as there was 'abuse of process of law' by Severn Trent in
c publishing premature advertisement of company petition.
10. The learned Company Judge by an order dated April
21, 2005, admitted the Company Petition indicating prima facie,
the following grounds,
D 1. The shareholding of Capital Controls (Delaware) Inc.
has vested in Severn Trent in the light of the
amalgamation/merger; -+A
2. There was no breach of shareholders agreement
since the agreement did not prevent the merger of
E
two companies;
3. The· provisions of Section 439(4)(b) of the
Companies Act pertaining to devolution through death
of a former holder were applicable in the present
F case, and
)r.. A
4. There was complete deadlock in the functioning of
the business of the company because there were
only two shareholders and both the shareholders
were holding 50% equity capital. Unless both the
G shareholders concur in conducting the business of
the company the business could not be proceeded ~-
with and/or carried on and the company could not be
allowed to function and run in that way.

H 11. The learned Company Judge in the light of the above
}
SEVERN TRENT WATER PURI., INC. v. CHLORO 1143
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]
.... ; 't
findings admitted the Company Petition on April 21, 2005 and A
issued the following directions;
(i) Petition to be admitted and returnable on 19.8.2005.
Respondent waives service.
(ii) Petition to be advertised in Free Press Journal, B
Janmabhoomi and Maharashtra Government
~
Gazette. The petitioner to deposit a sum of Rs.2,000/
- in the office of the Prothonotary and Senior Master,
High Court, Bombay for utilization thereof to issue
the advertisement if the petitioner fails to issue the c
advertisement.
12. Aggrieved by the decision of the learned Company
Judge, Chiaro Controls preferred Appeal No. 449 of 2005 while
the Company filed Appeal No. 450 of 2005. Both the appeals
were heard by a Division Bench of the High Court of Bombay D
' t- and disposed of by a common judgment and order dated 20th/
21st February, 2006. The Division Bench set aside the order of
the Company Judge, holding that Severn Trent is not entitled to
file a petition for winding up as a contributory, unless it is
registered as a member in the register maintained by the E
company. It, however, remitted the matter on the question of
maintainability in its capacity as a Creditor of the Company to
/ the Company Judge for consideration. The Bench also observed
that it would be open to the respondents to oppose the admission
~"' of the petition on all grounds, including that of premature F
advertisement by Severn Trent.
'
13. Severn Trent being dissatisfied with order in appeal,
filed Special Leave Petition (Civil) No. 6161 of2006 in this Court.
Notice was issued on April 13, 2006 and accepted on Caveat
by the respondents. Another Special Leave Petition (Civil) No. G
-).
9530 of 2006 was filed by Chloro Controls (India) against that
part of Division Bench order which left open the issue whether
Severn Trent could file winding up petition as a Creditor and
remitted it for consideration to the learned Company Judge. It
H
1144 SUPREME COURT REPORTS [2008] 2 S.C.R.

I
A is also aggrieved by the order passed by the Division Bench -<( ...
not dismissing the petition though Severn Trent had advertised
the Company Petition without the order of the Company Court
as required by law. In that Special Leave Petition, notice was
issued on Aug, 22 2006 and accepted by the other side.
B 14. The matters appeared on Board from time to time.
The Registry was directed to place them for final hearing and ~
that is how, both the matters have' been placed before us.
15. We have heard the learned counsel appearing on both
c the sides at considerable length. We have also given most
anxious and thoughtful consideration to the rival submissions.
Primarily, three questions arise for our consideration;
.1. Whether a winding up petition filed by Severn Trent
is maintainable in the capacity as a contributory?
D
2. Whether a winding up petition filed by Severn Trent
is maintainable in the capacity as a creditor? -+ ..
3. Whether a winding up petition filed by Severn Trent
is liable to be dismissed at the threshold on the
E ground of premature advertisement by Severn Trent
without an order of the Court as required by law?
1. Whether a winding up petition filed by Severn Trent
I

is maintainable in the capacity as a contributory? '
F 16. Before adverting to the above question, it is necessary .,..,.
to keep in mind the relevant provisions of the Act at the time
company petition was presented. Part VII of theAct relates to
'Winding up proceedings'. Whereas Section 425 of the Act lays
down 'Modes of winding up', Section 433 enumerates
G 'Circumstances in which a Company may be wound up by
Court'. The said section reads thus: -{-
433. Circumstances in which company may be
wound up by Tribunal

H A company may be wound up by the Tribunal,-
}
SEVERN TRENT WATER PURI., INC. v. CHLORO 1145
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

~ t ). (a) if the company has, by special resolution, resolved that A
the company be wound up by the Tribunal;
(b) if default is made in delivering the statutory report to
the Registrar or in holding the statutory meeting;
(c) if the company does not commence its business within 8
a year from its incorporation, or suspends its business for
a whole year;
(d) if the number of members is reduced, in the case of a
public company, below seven, and in the case of a private
company, below two; c
(e) if the company is unable to pay its debts;
(f) if the Tribunal is of the opinion that it is just and equitable
that the company should be wound up;
D
(g) if the company has made a default in filing with the
" t- Registrar its balance sheet and profit and loss account or
annual return for any five consecutive financial years;
(h) if the company has acted against the interests of the
sovereignty and integrity of India, the security of the State, E
friendly relations with foreign States, public order, decency
or morality;

(i) if the Tribunal is of the opinion that the company sho~ld
be wound up under the circumstances specified in section
F
)- ~ 424G:

Provided that the Tribunal shall make an order for winding
up of a company under clause (h) on application made by
the Central Government or a State Government.
17. Section 439 of the Act permits presentation of petition G
-> for winding up. It is also an equally important provision and may
be quoted in extenso;
==="<

439. (1) An application to the Court for the winding up of
a company shall be by petition presented, subject to the H
{
1146 SUPREME COURT REPORTS (2008] 2 S.C.R.

A provisions of this section,- ..,, ~·

(a) by the company; or
(b) by any creditor or creditors, including any contingent or
prospective creditor or creditors; or
B (c) by any contributory or contributories; or
(d) by all or any of the parties specified in clauses (a), (b). 1"'
and (c), whether together or separately; or
(e) by the Registrar; or
c
(f} in a case falling under section 243, by any person
authorised by the Central Government in that behalf.
(2) A secured creditor, the holder of any debentures
(including debenture stock) whether or not any trustee or
D trustees have been appointed in respect of such and other
like debentures, and ·the trustee for the holders of -t . .
debentures, shall be deemed to be creditors within the
meaning of clause (b) of sub-section (1).
(3) A contributory shall be entitled to present a petition for
E
winding up a company, notwithstanding that he may be
the holder of fully paid-up shares, or that the company may
have no assets at all, or may have no surplus assets left
for distribution among the shareholders after the
satisfaction of its liabilities.
F 'r "!
(4) A contributory shall not be entitled to present a petition
·for winding up a company unless-
(a) either the number of members is reduced, in the case
of a public company, below seven, and, in the case of a !'-
G private company, below two; or
~--
(b) the shares in respect of which he is a contributory, or
some of them, either were originally allotted to him or F
have been held by him, and registered in his name, for at
H least six months during the eighteen months immediately
1148 SUPREME COURT REPORTS [2008] 2 S.C.R.

A (a) unless, in the opinion of the Court, there is a prima
facie case for winding up the company; and
(b) until such security for costs has been given as the
Court thinks reasonable.
B 18. Section 439 has to be read with Section 428 which
defines the term 'Contributory'. It reads thus:
428. Definitions of 'Contributory'.- The term
''contributory" means every person liable to contribute to
the assets of a company in the event of its being wound t
c up, and includes the holder of any shares which are fully
paid-up; and for the purposes of all proceedings for
determining, and all proceedings prior to the final
determination of the persons who are to be deemed

D
contributories, includes any person alleged to be a
I
t
contributory.
19. Bare reading of Section 439 makes it clear that it is +·-'1
couched in positive as well as negative words. Whereas sub-
section (1) of the said section permits the presentation of
E application for winding up of a Company by any person enlisted
therein, it clarifies that the said provision is 'subject to the
provision' of the said section and, hence, the entire section has
to be read with a view to consider the right of a person
presenting a petition for winding up of a Company. I·
F 20. Sub-section (4) of Section 439 is in negative form and
declares that a contributory shall not be entitled to present a
petition unless it is covered either by clause (a) or by clause (b)
of the said provision. As regards shares held by the contributory,
clause (b) enacts that a contributory shall not be entitled to
G present a petition for winding up of a company unless the shares
in respect of which he is a contributory have been; (i) originally
allotted to him; or (ii) held by him and registered in his name for ..
j
at least six months during the eighteen months immediately
before the commencement of the winding up; or (iii) devolved
H on him through the death of the former holder.
/;
r
* SEVERN TRENT WATER PURI., INC. v. CHLORO
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]
1149

' ~ )- 21. Section 41 of the Act defines 'Member' thus: A
41. Definition of "member".-(1) The subscribers of
the memorandum of a company shall be deemed to have
agreed to become members of the company, and on its
registration, shall be entered as members in its register of
B
. ,, members .
(2) Every other person who agrees in writing to become 1

a member of a company and whose name is entered in
its register of members, shall be a member of the company.
'

(3) Every person holding equity share capital or company c
and whose name is entered as beneficial owner in the
records of the depository shall be deemed to be a
members of the concerned company.
22. Sub-section (2) of Section 41 referred to above clarifies D
that a person who agrees in writing to become a Member of a
.. t
Company and whose name is entered in its register of
members, shall be a member of the company.
23. Section 108 provides that a Company shall not register
transfer of shares unless a proper instrument of transfer duly E
stamped and executed by or on behalf of the transferor and by
or on behalf of the transferee and specifying the name, address
and occupation, if any, of the transferee, has been delivered to
the company alongwith necessary certificate or letter of allotment.
.,. .... Section 109 deals with transfer of shares by legal representative F
of deceased Member of the Company. Section 109A relates to
nomination of shares while Section 1098 provides for
transmission of shares. Section 110 requires making of an
application for registration for transfer of shares (or other '
interest) of a Member in the Company either by transferor or by G
transferee. Section 111 provides legal remedy of an appeal in
-> case the Company refuses to register transfer of shares or
transmission of shares by operation of law.
24. From the above scheme of the Act, it is abundantly
H
1150 SUPREME COURT REPORTS [2008] 2 S.C.R.

-{ ~
A clear that a contributory's right to present a winding up petition
must be one either under clause (a) or under clause (b) of sub-
section (4) of Section 439. It is nobody's case that clause (a) of
Section 439(4) is attracted in the instant case. Hence, Severn
Trent can only claim the right to present a winding up petition
B under clause (b) of sub-section (4) of Section,439 of the Act. As
already seen· earlier, in the following three eventualities, a
winding up petition can be presented by a contributory;
..,..
. .
(i) shares must have been originally allotted to him; or

c (ii) shares must have been held by him and registered
in his name for at least six months during the eighteen
months immediately before the commencement of
the winding up proceeding; or
(iii) shares must have devolved on him through the death
D of former shareholder.
..... .
25. Admittedly, Severn Trent. is not the original shareholder.
Eventuality (i), therefore, has no application in the present case.
Regarding eventuality (ii), it is an admitted fact that the name of
Severn Trent has not been registered in the Register of the
E
Company. In the circumstances, it was contended by the learned
counsel for the Company before the learned Company Judge,
before the Division Bench of the High Court as well as before
us that Severn Trent was not entitled to institute a petition for
winding up of the Company.
F )'- ~

26. The counsel for the parties, in this connection, invited
our attention to numerous foreign decisions. Probably, this is
the first case before this Court of the type and, hence, there are
no precedents covering the controversy raised before us.
G 27. Before more than a century, a question came up for
consideration before an English Court of Chancery Division in ~-
A Company, in Re, (1894) 2 Ch 394. In that case, a petition j.

against the company was presented by X who was neither an
original allottee of shares nor shares were registered in his name
H
SEVERN TRENT WATER PURI., INC. v. CHLORO 1151
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

·for a particular period required by law. He thus could not have A .
f )-
presented the petition under Section 40 of the Companies Act,
1867 (similar to Section 439 of our Act). It was contended on
behalf of X that the Company allotted shares to wrong persons
who ought not to be allowed to avail themselves of Section 40
of the Act. It was submitted that in equity 'what ought to havE1 B
been done must be taken as hf:!ving been done', and X should
be treated as original allottee.
"'T
28. Negativing the contention and holding the petition not
maintainable, Vaughan Williams, J. stated;
c
"There is an express statutory provision as to the
qualification of a contributory to present a winding
(· up petition, and that cannot be modified by saying
that he ought to be in a position in which he is not.
The provisions of sect.40 are not complied with, and I se~
D
no reason why the company should not set up that defence.''
(emphasis supplied)
._ ....
29. In H.L. Bolton Engineering Co. Ltd. Re., (1956) 1 All
ER 799 : (1956) 2 WLR 844: 1956 Ch 577; the Chancer-Y Court
held that Section 224(1) of the Companies Act, 1948 was E
designed to provide an 'exhaustive list' of those who are entitled
to present a petition for compulsory winding-up. If the petitioner
is to qualify as a person entitled to present such a petition, it
. must be on the ground that he is a contributory at the time of
presentation of ·petition. F
..,. i 30. Relevant part of Section 224(1) reads thus;
"(1) An application to the court for the winding-up of a
company shall be by petition presented, subject to the
provisions of this section, either by the company or by any
G
creditor or creditors (including any contingent or
prospective creditor or creditors), contributory or
-> contributories, or by all or any of those parties, together or
separately:

Provided that- H
1152 SUPREME COURT REPORTS [2008] 2 S.C.R.

A (a) a contributory shall not be entitled to present a winding-
up petition unless-
(i) either the number of members is reduced, in the
case of a private Company, below two, or, in the
case of any other Company, below seven; or
B
(ii) the shares in respect of which he is a contributory, or
some of them, either were originally allotted to him
or have been held by him, and registered in his name,
for at least six months during the eighteen months
c before the commencement of the winding-up, or have
devolved on him through the death of a former
holder ... "
-~
31. Section 224(1) of Companies Act, 1948 is in pari
materia to sub-section (4) of Section 439 of our Act, quoted
J
D above.
32. Again, in Gattopardo, Ltd. Re, (1969) 2 All ER 344 :
(1969) 1 WLR 619, a similar question came up for consideration
before a Court of Appeal. Attention of the Court was invited to a
decision in A Company in Re, and the observations of Vaughan
E Williams, J. Quoting with approval the observations of Vaughan
Williams, Russel, L.J. stated;
"I am left with the plain language of the section, and I find
myself entirely able to agree with the remarks made in the
F course of argument by Vaughan Williams, J. .. I echo
those words."
(emphasis supplied)
33. In J.N. 2 Ltd., Re, (1978) 1WLR183: (1977) 3All ER
G 1104, the Court highlighted the extent and applicability of Section
224 (1) of the Companies Act, 1948. It observed;
"There seems to be no doubt that entry on the -+-
register is an essential qualification for a contributory
who desires to present a petition, if he is not the
H original allottee and if the shares have not devolved
SEVERN TRENT WATER PURI., INC. v. CHLORO 1153
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

on him through the death of a former holder; for if A
neither condition is satisfied, section 224(1 )(a)(ii) requires
that the shares must have been held by him and registered
in his name for at least six months during the preceding
18 months. Plainly, if a transferee is not and never has
been on the register, he cannot satisfy that condition. And s
it would not seem to be an answer that he ought to have
been on the register, unless, perhaps, the company has
been ordered to place him on the register and has
disobeyed that order.
(emphasis supplied) C
34. Reference was also made to leading commentaries
by well-known authors on the subject. In Palmer's Company
Law, (24th Edn., Vol. I, p.1377), the learned Author stated;
"No contributory of a company is capable of presenting a 1
o
petition unless-
1. either the number of members is reduced below two; or
2. the shares in respect of which he is a contributory or
some of them were E
(a) originally allotted to him, or
(b) have been held by him and registered in his nan:ie
for at least six months during the eighteen months
before the commencement of the winding up, or F
(c) have devolved upon him through the death of a former
holder [Insolvency Act, s. 124(2)].
The object of these provisions is to prevent a person buying
shares in order to qualify himself to wreck the Company. G
"Held" means standing in the name of th e 1

contributory petitioner. The provisions of section 124(2)
must be applied strictly, unless, perhaps, the company
itself is in default in allotting shares or registering a transfer''.
(emphasis supplied) H
1154 SUPREME COURT REPORTS [2008] 2 S.C.R.

A 35. Another renowned author Buckley (Buckley on the
Companies Act, 14th Edn., Vol. I, p. 537) also considered the
scope of Section 224 of the Companies Act, 1948 and stated;
"This section is apparently exhaustive, so that a
person not within its ambit cannot petition, unless
B authorized to do so by some other enactment".
(emphasis supplied)
36. From the above discussion, it is clear that the
provisions of the Act must be complied with before presenting
C a winding up petition under Section 439(4)(b) of the Act. If a
person intends to present a petition for winding up of a company
as a contributory, he/it has to satisfy the Company Court that
his/its case is covered by one of the eventualities contemplated
by clause (b) of sub-section (4) of Section 439 of the Act.
D 37. Let us now consider some of the decisions referred to
by the learned counsel for Severn Trent..
38. In Bayswater Trading Co. Ltd., Re, (1970) 1 All ER
608, a petition was presented by an Administrator of a lady,
E who was a member of the Company and whose name was struck
off from the Register. The lady was a substantial shareholder.
She died in 1964. The petitioner was her 'personal
representative'. Considering the provisions of Section 224(1_)_
of the Companies Act, 1948, the Court held that 'personal
F representative' of a shareholder was entitled to present a petition
for the winding up of the Company, and the word 'contributory' t' ~
should be construed accordingly. It was held that by the Chancery
Court that on a true construction of sub-section (1) of Section
224, the words 'any member' must be so construed as to extend
to the 'personal representative' of a deceased member,
G although not on the register of shareholders.
39. In our considered opinion, the ratio in Bayswater
Trading Co. does not help Severn Trent. It was a case of 'natural
person' who was a shareholder of the Company, whose name
H had been struck off which was sought to be restored. It was not
SEVERN TRENT WATER PURI., INC. v. CHLORO 1155
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

a case of 'corporate entity' or 'juristic personality'. Obviously, A
therefore, in case of her death, 'personal representative' could
present a petition for winding up of the Company and such right
available under sub-section (1) of Section 224 could not be
denied.
40. This is clear form the observations of Buckley, J., who B
after reproducing sub-section (1) of Section 224, observed;
"There is nothing there t.o indicate that a person on whom
shares have devolved on the death of a former holder
must have been registered as the holder of those shares c
before he is entitled to present a petition under Section
224, and I think that those words in the proviso of the sub-
section clearly indicate that a personal representative of
a deceased shareholder is entitled to present a· petition
and that the word 'contributory' in this sub-section must
0
therefore be construed in a way so as to extend to such
a personal representative".
41. National Bank of Greece & Athens, South Asia v.
Metliss, (1957) 3 All ER 608: (1957) 3 WLR 1056: 1958 AC
509 is also distinguishable. There, the Greek Act governing E
amalgamation of Banking Companies provided that a new
Company absorbing another Company by amalgamation would
become 'universal successor' to the rights and liabilities in
general of the amalgamated Companies without any other
formality or act. It was, therefore, held that the 'universal F
successor' could institute an action or an action could be
continued against him.
"The persona of the deceased is recognized as continued
in the heir, or, as it is otherwise expressed, he is eadem
personal cum defuncto. He is no more to be regarded G
as a new party introduced into a contract than is an
executor or administrator of a dead man's estate in
English law".
(per Lord Keith)
(emphasis supplied) H
1156 SUPREME COURT REPORTS [2008] 2 S.C.R.

A 42. It is thus clear that the decision was based on the Greek
Law governing amalgamation of Companies. As already
adverted hereinabove, in the instant case, neither the foreign
law was pleaded nor such evidence has been produced to prove
merger/amalgamation. But even otherwise, in our considered
B opinion, Severn Trent cannot be treated as or said to be
'contributory' unless and until the requirements of law i.e. the
provisions of Section 439(4)(b) have been complied with. It is
not disputed that the name of Severn Trent has not been
registered in the Register of the Company and hence, it cannot
c present a petition for winding up of the Company in the capacity
of a contributory.
43. Toprak Enerji Sanayi A. S. v. Sale Tilney Technology
pie, (1994) 3 All ER 483 was a case of substitution of party as
plaintiff in the place of a foreign company ceasing to exist during
D the course of proceedings and was not a case of initiating
winding up proceedings. The case in our view, therefore, is not
relevant to the controversy in present appeals.
44. Strong reliance was placed by the learned counsel for
E Severn Trent on a decision in Patent Steam Engine Company,
in Re, 1878 Ch 464 in support of the contention that a petition
for winding up can be presented by a person who is holder of a
share in the Company although his name is not entered in the
Register at the time of presentation of petition. In that case, an
order was passed by a Court to allot forthwith to the petitioner,
F certain preferential shares of the Company and to register them '-·

as shareholders and to issue certificates. The order was not
complied with by the Company. When a winding up petition was
presented by the petitioner, a preliminary objection was raised
by the Company that since the petitioner could not be said to
G be shareholders as their names were not registered, they were
not entitled to institute a petition.
45. The contention was negatived and petition was held
maintainable by the Court. In a brief order, Bacon, V.C. said:
H
r
~ SEVERN TRENT WATER PURI., INC. v. CHLORO 1157
r
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]
r
"In my opinion the technical objection has no weight. A
" )-
The petitioner have been declared by the Court entitled to
be shareholders, and the company have been ordered to
allot them these shares, and to register them as
shareholders in respect of them. These orders the
company have failed to comply with, and it is only through • B
their default that the petitioners' names were not on the
... 'y' register upwards of six months ago".
(emphasis supplied)
46. In our opinion, the decision in Patent Steam Engine c
Company will also not help Severn Trent herein. Firstly, the fact-
situation in that case and in the case on hand is totally different.
There, the Court ordered the Company to allot to the petitioners,
certain specified preferential shares and to register them as
the holders of those shares. There was non- compliance of the D
order of the Court by the Company. Based on entitlement order,
; ,._ the petitioners presented a petition for winding up of the
Company which was held maintainable in view of the fact that
there was default in carrying out the direction of the Court by the
Company. In the instant case, despite merger and amalgamation
E
of Capital Controls (Delaware) Company Inc. into Severn Trent,
no step has been taken by Severn Trent for rectification of the
register and registration of shares in its name. In our opinion,
the Division Bench of the High Court is right in observing that it
cannot be contended by Severn Trent that in view of dispute
between Severn Trent and Kochas, the Company would not have F
-{
registered shares in the name of Severn Trent. Had Severn Trent
applied and the prayer rejected, an appropriate action could
have been taken in accordance with law. Secondly, we have
'some' reservation about the proposition of law laid down in
Patent Steam Engine Company. It is debatable whether a G
direction can be issued by a Court to allot shares or to register
-)-
name of a particular person as a share-holder. It is also doubtful
whether an objection as to maintainability of petition can be said
to be objection of a 'technical' nature. In fact, when Patent Steam
H
I

1158 SUPREME COURT REPORTS [2008) 2 S.C.R.
~
A Engine Company was cited in Gattopardo Ltd., Russell, L.J.
said; "I reserve for a further occasion, consideration whether
the exception in the Patent Steam Engine case is one which is
to be supported". Thirdly, we have already held that to present
a petition for winding up of a Company in the capacity of a
B 'contributory', the person must be eligible under clause (b) of
sub-section (4) of Section 439 of the Act. If he does not fall in
any of the categories enumerated therein, he cannot present
such petition. We are, therefore, unable to persuade ourselves
that on the basis of the ratio laid down in Patent Steam Engine
c Company, Severn Trent must be held 'contributory' and granted
locus standito present a petition for winding up of the Company.
47. Severn Trent, no doubt, contended that 'purposive
construction' should be given to the provisions of Section 439
(4) of the Act and Severn Trent must be treated as 'contributory'.
D It was also submitted that Severn Trent fulfills all the requirements
of Section 439(4)(b) of the Act. On March 31, 2003, Delaware
Corporation was merged into Severn Trent. Delaware
Corporation was thus ceased to exist and the surviving
Corporation, i.e. Severn Trent came to be substituted. All assets
E and liabilities of Delaware Corporation became the assets and
liabilities of Severn Trent and Severn Trent became the
'contributory' within the meaning of Section 439 (4) (b) read with
Section 428 of the Act. Severn Trent, therefore, could present a
winding up petition. According to the learned counsel, if strict
F and literal interpretation as advanced by the Company is
accepted, a corporate entity or a juristic personality can never
become a contributory and consequently a share-holder. It was
submitted that there was total deadlock between the two groups.
It had not been engineered by Severn Trent, but was the result
G of illegal acts and wrongful deeds of the Company and Kochas.
It is, therefore, impossible that the Company would register the
name of Severn Trent in the Register of Company and extend
Severn Trent an opportunity to present a winding up petition
against the Company.
H
~
~
/ SEVERN TRENT WATER PURI., INC. v. CHLORO 1159
....,....
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.].
... ~ 48. We must express our inability to uphold the contention A
of learned counsel. In our judgment, sub-section (4) of Section
439 is a 'self-contained Code' as to presentation of petition by
a contributory. A person claiming to be a contributory and
presenting a petition for winding up of a Company in that
capacity must fulfill the conditions laid down in the said section. B

- "Y'
Moreover, as observed by us, if there is omission, default or
illegal action on the part of the Company in not registering the
name of the contributory even though he/it can be said to be a
contributory by holding the shares as required by clause (b) of
sub-section (4) of Section 439, the law provides a remedy. In c
the instant case, however, no such course has been adopted
by Severn Trent. In the circumstances, in our opinion, it cannot
be said that the Division Bench of the High Court was in error in
holding that Severn Trent could not be said to be a contributory
to present a winding up petition. D
> )r- 49. The learned counsel for Severn Trent finally relied upon
the last part of clause (b) of Section 439(4) contending that
shareholding of the original company (Delaware Company) had
devolved on Severn Trent through 'death' of that company which
was a former holder. It was also submitted that Section 430 of E
the Act enacts that if a contributory dies, his legal representatives
«
' will become contributories. Section 431 deals with contributories
in case of insolvency of a member. Section 432 relates to cases
of winding up of a body corporate which is a member. The
. . . -T counsel urged that the A~t does not provide for a situation where F
a corporate shareholder ceases to exist otherwise than by way
of winding up. It was also submitted that Section 394(1)(b)(iv)
of the Act speaks of dissolution of a company without winding
up. In such situations, it is evident that the successor-in-interest
will be the surviving entity and, as such, can be said to be G
_,_ contributory for the purpose of presenting a winding up petition.
It was, therefore, urged that Severn Trent must be held to be a
successor of the original allottee of shares, i.e. Delaware
Corporation and the party on whom the shares have devolved,
i.e. Severn Trent. The situation in the present case, according H
1160 SUPREME COURT REPORTS [2008] 2 S.C.R.

A to the learned counsel, is akin to 'civil death' of Delaware
Corporation. Since there is 'death' of former holder which
expression would include dissolution/winding up of a corporate
shareholder, the right to present a winding up petition must be
conceded to Severn Trent, successor of former holder. It was
s submitted that it would be incorrect to urge that the use of
expression 'he', 'his' or 'him' would apply only to natural persons
and not to corporate personalities. If the said view is accepted,
winding up petition can never be filed by a successo·r Company
even if it holds shares earlier held by the 'former holder'.
c 50. The above argument weighed with the learned Single
Judge and he observed that though Severn Trent was not the
person who was originally allotted shares nor its name was
registered in the register of the Company but the expression 'or
have devolved on him through the death of former holder' would
D get attracted inasmuch as upon merger/amalgamation of Capital
Controls (Delaware) Company, Inc. in Severn Trent, the former
Company i.e. former holder can be said to have been met with
'death' and the shares held by the said Company could be said
to have devolved on Severn Trent. If.it is so, obviously, a petition
E filed by Severn Trent as a 'contributory' was maintainable.
51. The learned Company Judge, after referring to Section
439(4)(d) observed as under:
"On considering the said section as quoted above there
F is no manner of doubt that a contributory is a shareholder
of the company. In fact in cases of amalgamation the
shareholding of erstwhile company stood automatically
transferred and vested from the transferor company to the
transferee company and thus the transferee company
G becomes the successive holder of the said shares by
operation of law".
52. The learned Judge proceeded to state;
"Otherwise also prima-facie in my opinion s.439(4)(b) does
not restrict the petitioner from filing the present petition
H
SEVERN TRENT WATER PURI., INC. v. CHLORO 1161
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

because it falls in the last category i.e. 'or have devolved A
on him through the death of a formal holder'. These words
under s.439(4)(b) prima-facie in my opinion takes into
account the situation as in the present case whether the
company has ceased to exist by virtue of amalgamation
of the said company with the petitioner company. The said B 1

original company has ceased to exist and thus there is a
... T
natural death in the eyes of law and in view thereof by
virtue of the aforesaid words contained under section ,
439(4)(b) prima-facie in my opinion the present petition is
maintainable and the same can be entertained". c
53. The Division Bench again considered the matter and '
observed that the analogy drawn by the learned Company Judge
was not well founded. According to the Division Bench, the
category, "or have devolved on him through the death of former
holder" would be applicable only to personal representative in D
his individual capacity and not to corporate entity or juristic
personality.
54. In paragraph 37 of the judgment, the Division Bench of
the High Court observed;
E
"37. We are afraid, the analogy drawn by the learned
company Judge is wholly fallacious. The category, "or have
devolved on him through the death of former holder'' is .
applicable only to personal representative of a person
holding shares in the company in his individual capacity. F
The said expression applies to devolution of rights on the
death of natural person and has no application to a
corporate entity or the juristic person. The submission of
Mr. Shyam Divan that these words could also be applied
to the company which has ceased to exist like the Courts G
have held that the corporate entity was liable to be contempt
jurisdiction of the Court does not appeal us. If we accept
the reasoning of the learned Company Judge and the
submission of the learned senior counsel for the petitioner,
it would be tampering with the plain language used in the H
~·
I

1162 SUPREME COURT REPORTS · ·[2008] 2 S.C.R.

A last category of clause (b) of subsection (4) of Section
439 which we cannot do".
~
-
55. In our opinion, the Division Bench of the High Court
was right in holding that the phrase "or have devolved on him
through the death of former holder" would apply to natural
B persons who are holding shares in their individual capacity and
not to juristic entities.
56. The word 'death' mentioned in a statute normally refers
to the seizing of life of a natural person. In Stroud's Judicial
1'
-
c Dictionary of Words and Phrases, (Vol. I, 5th Edn. P.610), it is
stated;
"Where 'death' is mentioned in a statute, the word generally
refers to the ceasing to live of a natural person; it will
. require a strong context to make the word include the
D dissolution of an artificial entity, e.g.· a partnership or a
Company".
~ -1:
57. In Stewart v. Brown, 35 SLR 828, the Court held that it
was invited to interpret the words 'deceased debtor' as being
equivalent to 'dissolved company' and the word 'death' as being
E •
equivalent to 'dissolution of partnership'. The Court further held i

that such interpretation could not be given.
58. Lord M'Laron said;
"I am not sure that. I understand the theory or principle of
F construction under which the suggested readings are r j

admissible; but I think it must be a theory in which
fancy takes the place of logic, and in which the t:c
question proposed is,· how the statute is to be made
to fit the case, and not whether the conditions of the ,r
G case fit the statute". (emphasis supplied)
59. In the context of Company Law, winding up of a body -<-
corporate is not the same thing as or equivalent to death of a
member. An individual and a body corporate expressly have
H been treated .separately which i·s clear from Sections 430, 431
:; +
SEVERN TRENT WATER PURI., INC. v. CHLORO 1163
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

- ~- and 432 of the Act. Under the scheme of the Act, every creditor A
may present a petition for winding up of a company, but every
contributory cannot. A contributory to be eligible and qualified
to present a winding up petition must be covered by sub-section
(4) of Section 439 of the Act and the Legislature, in its wisdom,
excluded certain categories of persons from being entitled to B
present a petition for winding up as contributory. As already held
by us earlier, the provision is exhaustive in nature and its sweep
cannot be extended by judicial interpretation. Upholding of
argument of Severn Trent and conceding the right to present a
petition for winding up of a Company though it cannot be said c
to be a contributory would, in our judgment, result in re-writing of
the provision. A Court of law cannot adopt a construction which
would result in amendment of a statute. The contention of the
learned counsel for Severn Trent, therefore, must be rejected.
60. A decision of this Court in Mis World Wide Agencies D
Pvt. Ltd. & Anr. v. Margaratt. Desor & Ors. (1990) 1 SCC 536
has no application to the facts of the case. It was not a case of
corporate personality, but of an individual shareholder and a
claim was based by a legal representative of the member.
61. Saraswati Industrial Syndicate Ltd. v. C~mmissioner' E
of Income Tax, 1990 Supp sec 675 also does not carry the
case of Severn Trent further. In that case, the question before
the Court did not relate to locus of the petitioner to present a 1

petition for winding up of a company as a contributory.
F
62. Dr. Saibaba v. Bar Council of India & Anr., (2003) 6
SCC 186 and Union of India v. Rajiv Kumar, (2003) 6 SCC '
516 lay down principles of interpretation of statutes. These
principles are well-known and the learned counsel for the
Company did not dispute them. They are, however, not G 1

applicable to the facts of the case.

- ' 63. For the aforesaid reasons, we answer question No.1
in the negative and hold that a winding up petition filed by Severn
Trent in the capacity as a contributory is not maintainable.
H
1164 SUPREME COURT REPORTS [2008] 2 S.C.R.

l
A 2. Whether a winding up petition filed by Severn Trent ..j_ --·
is maintainable in the capacity as a creditor?
;-
64. So far as second question is concerned, reading of
the order passed by the learned Company Judge makes it clear
that no such argument was raised on behalf of Severn Trent
8 presumably because there was no occasion for such argument
inasmuch as according to the learned Company Judge, Severn
Trent could be said to be a 'contributory' within the meaning of
Section 439 (4)(b) of the Act and a petition presented by Severn
Trent in that capacity was tenable._ Since the order passed by
C the Company Judge was challenged by the Company before
the Division Bench and the Division Bench upheld the objection
of the Company and reached a conclusion that the learned
Company Judge was wrong in treating Severn Trent as
'contributory' and granting it locus to present a petition for
D winding up of Company, that an alternative argument was raised
on behalf of Severn Trent that Severn Trent was also a Creditor
of the Company and in that capacity i.e. in the capacity of a
Creditor, the petition for winding up of the Company was
maintainable.
E
65. The Division Bench considered the alternative
contention and in paragraph 54, observed;
..,.:.....
"54. This aspect was not canvassed by the petitioner
---->
before the learned Company Judge in response ·to the
L
F preliminary objection raised by the appellants that the
-,... -,,\'
company petition was not maintainable and, therefore,
not considered by the learned Company Judge_. We are
of the view that this aspect has to be considered by the t·
learned Company Judge before admitting the petition for
G winding up on the just and equitable grounds in the
capacity as creditor. In so far as the reasons that have
bee'n indicated by the learned Company judge for
admitting the petition are ooncerned, we find these reasons
unsustainable. As already held by us, the petition for •
I

H winding up order as a contributory under Section 433(f) r-
,.l
I
f
--\-
SEVERN TRENT WATER PURI., INC. v. CHLORO 1165
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]
... ~
read with Section 439(4)(b) of the Companies Act, 1956 A
is not maintainable. Until the petition is legally
maintainable, the issue of deadlock in the company pales
into insignificance".
66. It was contended on behalf of the Company that the
Division Bench has committed an error of law in observing that B
·'r the petition filed by Severn Trent was maintainable in the capacity
as a Creditor of the Company and in remitting the matter before
the Company Judge. It was submitted that looking to the company
petition in its entirety and also the grounds and prayers, it is
clear that the petition was not presented by Severn Trent as c
'Creditor' of the Company but as a 'Contributory'. The contention
as to 'Creditor' was raised belatedly for the first time in argument
before the Division Bench which was an afterthought. This is
apparent from the observations of the Division Bench in the
impugned order in para 54 extracted earlier. It was, therefore, D
~...,. submitted that no such argument could have been permitted
and to that extent, the order passed by the Division Bench of
the High Court deserves to be interfered with.
67. We have given anxious consideration to the above
E
submission. In our opinion, however, it cannot be said that the
\
Division Bench was in error in passing the impugned order and
~
remitting the matter to the learned Company Judge to consider
the question as to maintainability of company petition filed by
Severn Trent as a Creditor of the Company. In this connection,
' ~ our attention has been invited by the learned counsel for Severn F
Trent to the company petition. In para 16 of the petition, it was
stated by Severn Trent that it was also a Creditor of the Company
and 'admitted sums owed by the Company to Severn Trent' had
not been paid. It was further stated that the Board of Directors
of the Company and the Managing Director had acknowledged G
. . ~ >- the Company's liability to Severn Trent in various
communications and Board Meetings. It was further stated that
in the circumstances, Severn Trent was constrained to issue
legal notice on August 4, 2004 demanding payment of all
H
1166 . SUPREME COURT REPORTS [2008) 2 S.C.R.

.... ""'
A outstanding dues. A copy of ·the demand notice was also
annexed to the company petition. According. to Severn Trent,
total amount due and payable by the Company to Severn Trent
as on July 31, 2004 came to US $ 575113.29. In ground (i)
also, it was the case of the Company that there was intentional
B refusal by Mr. Kocha to allow the Company to pay its admitted
debts to Severn Trent. In paragraph 41, it was stated by Severn 1'
..
Trent that it was just, equitable, necessary and in the interest of
justice and 'in order to secure the dues of the petitioner that
Provisic;mal Liquidator should be appointed'.
c 68. It is thus clear that though the case put forward by
Severn Trent in the winding up petition was as a 'contributory',
the factum of the Company being Debtor and Severn Trent being
Creditor and in spite of dues being admitted by the Company,
there was non payment on the part of the Company had been
D mentioned in the petition. The learned counsel for Severn Trent
""( ~

appears to be right that in view of the finding by the learned
Company Judge that the petition instituted by Severn Trent as a
'contributory' was maintainable, it was no more necessary for
the learned Company Judge to consider the question whether
E the company petition filed by Severn Trent was maintainable in
the capacity as a Creditor.
69. It was then contended by the learned counsel for the
Company that the ground for winding up of Company under
clause {f) of Section 433 was not available to Severn Trent in r .,.
F case it had presented a petition as a Creditor of the Company.
In this connection, our attention was invited to certain decisions.
In our opinion, it would not be appropriate to express any opinion
one way or the other since we are of the view that the Division
Bench of the High Court was not wrong in allowing Severn Trent
G to argue that point before the learned Company Judge as that -<(---. . .
point did not arise before him earlier. We may, however, hasten
to add that we may not be understood to have recorded a finding
that the petition presented by Severn Trent is maintainable. We
clarify that as and when the matter Will be taken up by the learned
H
SEVERN TRENT WATER PURI., INC. v. CHLORO 1167
CONTROLS (I) P. LTD. & ANR. [C.K. THAKKER, J.]

Company Judge, it will be open to the Company to raise a A
contention that no such petition as presented is maintainable in
the capacity as a Creditor.
70. Question No. 2 is answered accordingly.
3. Whether a winding up petition filed by Severn Trent B
is liable to be dismissed at the threshold on the '
ground of premature advertisement by ~evern Trent
without the order of the Court as required by law?
71. So far as the third question is concerned, neither the
learned Company Judge, nor the Division Bench has decided C
it. Before the learned Company Judge, no such contention
appears to have been advanced by the Company. Before the
Division Bench, it was argued that since there was premature
advertisement by the Severn Trent without any order from the
Company Court, there was 'abuse of process of the Court' by D
Severn Trent and the petition was, liable to be dismissed only
on that ground. Before us also, the above contention was
reiterated by the learned counsel for the Company and in support
thereof, case-law has been cited. The learned counsel for the
Severn Trent, however, submitted that the advertisement was ,E
qualified, carefully worded and the facts stated therein were
accurate. It was essentially a notice to creditors, contributories
and other persons intimating about presenting of winding up '
petition and there was no ma/a fide intention or oblique motive
in issuing the advertisement. We may only state that since the .F
Division Bench of the High Court has remitted the matter to the
learned Company Judge and granted liberty to the Company to
oppose admission of the Company petition on all available
grounds including the ground of 'premature advertisement', we
need not express any opinion one way or the other. As observed G
by the Division Bench of the High Court, at the time the company
petition will be taken up by the Company Judge for admission,
it will be open to the Company or contesting respondent to
oppose the admission on all grounds available.

72. Question No. 3 is answered accordingly. H
1168 SUPREME COURT REPORTS [2008] 2 S.C.R.

A 73. For the aforesaid reasons, the appeal filed by Seven
Trent Water Purification lnc.-petitioner of the company petition,
deserves to be dismissed and is hereby dismissed. So far as
the appeal filed by the Chloro Controls (India) is concerned, it is
disposed of in the light of the observations made in the judgment.
B 74. On the facts and in the circumstances of the case, all
the parties are directed to bear their own costs.
S.K.S. Civil Appeal No. 1351 of 2008 dismissed and
Civil Appeal No. 1353 of 2008 disposed of.