2001 (11) TMI 950 - HC - Companies Law

Issues Involved:
1. Winding up petition under sections 433, 434, and 439 of the Companies Act, 1956.
2. Compliance with section 434(1)(a) of the Companies Act, 1956.
3. Impact of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on the winding up petition.
4. Validity of notice for winding up.
5. Jurisdiction and maintainability of the winding up petition.
6. Examination of the opinion of the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).

Detailed Analysis:

1. Winding up petition under sections 433, 434, and 439 of the Companies Act, 1956:
The petitioner sought the winding up of Him Ispat Limited under sections 433, 434, and 439 of the Companies Act, 1956, alleging the company's inability to pay its debts. Despite notices, the respondent failed to pay the outstanding amount of Rs. 510.15 lakhs with interest at 24.5%. The respondent's reply was vague and did not specifically dispute the liability.

2. Compliance with section 434(1)(a) of the Companies Act, 1956:
Section 434(1)(a) requires a notice to be delivered at the registered office of the company. The notice in this case was addressed to the managing director and not to the company's registered office. This non-compliance rendered the petition under section 433 not maintainable, as highlighted by several precedents from the Bombay and Madras High Courts.

3. Impact of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on the winding up petition:
The respondent argued that the proceedings under the SICA barred the winding up petition under section 22(1) of the SICA. The inquiry under section 16 of the SICA was pending when the petition was filed, and no consent from the BIFR was obtained, making the petition void ab initio.

4. Validity of notice for winding up:
The notice for winding up was invalid as it was not served at the registered office of the company, violating section 434(1)(a). This defect was critical and could not be overlooked, as strict compliance with the statutory requirements is mandatory.

5. Jurisdiction and maintainability of the winding up petition:
The court emphasized that the jurisdiction and maintainability of the petition must be determined based on the circumstances at the time of filing. Since the petition was filed during the pendency of the BIFR proceedings and without its consent, it was not maintainable.

6. Examination of the opinion of the BIFR and the AAIFR:
The BIFR and AAIFR concluded that the respondent company was not viable and recommended its winding up. The court considered these expert opinions but also emphasized its own role in determining the correctness of such recommendations. The court found no material in opposition to the winding up petition and upheld the recommendations of the BIFR and AAIFR.

Conclusion:
Company Petition No. 1 of 1998 was rejected due to non-compliance with section 434(1)(a) and the bar under section 22(1) of the SICA. Company Petition No. 7 of 2001 was allowed, and Him Ispat Ltd. was ordered to be wound up. The official liquidator attached to the court was appointed to take further action as per law.

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