1999 (10) TMI 659 - HC - Companies Law

Summary

Issues:
1. Opinion of the Board of Industrial and Financial Reconstruction (BIFR) on winding up Varsha Spinning Mills Ltd.
2. Confirmation of the opinion by BIFR regarding the viability of the company.
3. Appeal filed against BIFR's order before the Appellate Authority for Industrial & Financial Reconstruction.
4. Submission and evaluation of the rehabilitation scheme by Varsha Spinning Mills Ltd.
5. Failure to deposit the required amount for rehabilitation.
6. Lack of concrete proposals for rehabilitation and non-compliance with directives.
7. Adjournments and lack of settlement leading to the upholding of the winding-up order.
8. Court's decision based on the company's inability to discharge financial debts.
9. Directions for the Official Liquidator to take over the company's assets and records post winding up.

Analysis:
1. The BIFR conducted an enquiry under the Sick Industrial Companies (Special Provisions) Act, 1985, and opined that Varsha Spinning Mills Ltd. should be wound up, leading to a referral to the High Court for further action. The BIFR found the promoters lacking in seriousness and resources for rehabilitation despite opportunities given.
2. BIFR confirmed its opinion that the company was not likely to become viable in the future and thus recommended winding up in the public interest due to financial constraints.
3. An appeal was filed against BIFR's order before the Appellate Authority, citing the possibility of settlement with financial institutions, but no concrete proposal was presented, leading to the upholding of the winding-up order.
4. Varsha Spinning Mills Ltd. submitted a rehabilitation scheme based on optimistic assumptions, but the required funds were not deposited as directed, resulting in a lack of viable proposals for rehabilitation.
5. Despite multiple directives and opportunities, the company failed to deposit the necessary amount for rehabilitation, leading to the conclusion that the company was not likely to recover financially.
6. Lack of compliance with directives and failure to present worthwhile proposals for rehabilitation resulted in the upholding of the winding-up order by the Appellate Authority.
7. Adjournments and lack of settlement attempts further supported the decision to uphold the winding-up order due to the company's inability to discharge its financial debts.
8. The High Court upheld the orders of BIFR and the Appellate Authority based on the company's financial incapacity, leading to the winding up of Varsha Spinning Mills Ltd.
9. Following the winding up, the Official Liquidator was directed to take over the company's assets and records promptly, concluding the disposal of the company petition.