2001 (9) TMI 1048 - HC - Companies Law

Summary

Issues:
1. Company petition filed by RBI for winding up of a non-banking financial company.
2. Appointment of provisional liquidator without notice to the respondent-company.

Analysis:
1. The RBI filed a company petition under section 45MC of the RBI Act, read with section 450 of the Companies Act, 1956, seeking the winding up of the respondent-company, a non-banking financial company. The petitioner-bank alleged that the respondent failed to maintain financial health as per regulatory requirements, violating various provisions and directions. The company was found to be insolvent, with high non-performing assets and concentration norms violations. The petitioner-bank issued a show-cause notice, rejected the registration application, and restrained the company from accepting deposits. Numerous complaints from depositors further indicated the company's inability to pay debts, leading to the winding-up petition.

2. The petitioner sought the appointment of a provisional liquidator without notice to the respondent-company to safeguard the interests of depositors and prevent injustice. The court, after considering the circumstances and the petitioner's contentions, found that appointing a provisional liquidator was necessary to protect and preserve the company's assets in the larger public interest, especially for the majority of depositors. Citing section 450 of the Companies Act, the court approved the appointment of the official liquidator as the provisional liquidator of the respondent-company, directing immediate takeover of the company's assets, accounts, and documents to ensure their protection.

This judgment highlights the regulatory compliance issues faced by the respondent-company, leading to insolvency concerns and the necessity of appointing a provisional liquidator to safeguard the interests of depositors and preserve the company's assets pending the winding-up process.