1995 (12) TMI 275 - HC - Companies Law

Summary

Issues:
Application for dissolution of a company under section 481 of the Companies Act, 1956 due to unavailability of company records and inability to proceed with liquidation process.

Analysis:
The judgment pertains to an application filed by the official liquidator for the dissolution of a company (in liquidation) under section 481 of the Companies Act, 1956. The company, Faizabad Roofing Company Ltd., was promoted as a joint sector enterprise but failed to operate successfully, leading to a winding-up petition filed by U.P. Small Industries Corporation (U.P.S.I.C.) in 1987. The official liquidator was appointed, and notices were sent to all directors for filing statements of affairs. However, only one director submitted an incomplete statement, citing lack of access to company records. Subsequently, the official liquidator filed an application for default against the directors, leading to a series of counter-affidavits from the directors, claiming lack of involvement or access to records.

During the proceedings, efforts were made to retrieve company records, including appointing a chartered accountant, but to no avail. The official liquidator sought dissolution of the company citing that the U.P. Financial Corporation (U.P.F.C.) had taken possession of company assets and sold them in 1989, leaving no funds for realization. After considering the submissions and circumstances, the court agreed that continuing the matter was futile due to the unavailability of records and lack of progress over eight years. The conflicting claims regarding the whereabouts of company records and the sale of assets further supported the decision to dissolve the company under section 481 of the Act.

Consequently, the court allowed the official liquidator's application for dissolution, resulting in the dissolution of Faizabad Roofing Company Ltd. (in liquidation) from the date of the order. The Company Application and Petition related to the matter were disposed of accordingly, bringing an end to the liquidation process due to the impracticability of proceeding without essential company records and the sale of assets.