2006 (5) TMI 200 - HC - Companies Law

Issues Involved:
1. Winding-up of the company under Section 433(a), (b), (e), and (f) read with Section 439(a) of the Companies Act, 1956.
2. Dissolution of the company under Section 481 of the Companies Act, 1956.
3. Realisability of assets and liabilities of the company.
4. Compliance with procedural requirements for winding-up and dissolution.

Detailed Analysis:

1. Winding-up of the Company:
The company petition was filed for winding-up under Section 433(a), (b), (e), and (f) read with Section 439(a) of the Companies Act, 1956. The court passed an order on August 16, 1998, stating, "In view of the resolution passed by the company that it may be wound-up and since no objection has been filed to the winding-up of the company under section 433(a) of the Companies Act, the Company is ordered to be wound-up." The Official Liquidator (OL) was instructed to take charge of all the properties and effects of the company immediately and to serve a sealed copy of the order on the company. Notices of the winding-up were published in the Extraordinary Gazette and in newspapers as required.

2. Dissolution of the Company:
The OL proposed the dissolution of the company and submitted a detailed report under Section 481 of the Companies Act, 1956, read with Rule 281 of the Company (Court) Rules, 1959. The OL's report highlighted that there were no realizable assets or secured creditors as of the winding-up date. The report also mentioned that the unsecured loan payable to the Rajasthan Financial Corporation had become time-barred under the Limitation Act. The OL did not seek any power under Section 457 of the Companies Act, 1956, due to the non-realisable assets of the company.

3. Realisability of Assets and Liabilities:
The Ex-Directors filed a statement of affairs under Section 454 of the Companies Act, 1956, showing no realizable assets and significant accumulated losses. The unaudited balance sheet as of the winding-up date indicated an accumulated loss of Rs. 50,82,253 against a paid-up capital of Rs. 19,00,070, showing complete erosion of the company's net worth. The OL's inspection revealed that the last audited balance sheet was as of March 31, 1997, with no trading or manufacturing activity during the years 1996-97 and 1995-96. The statement of affairs disclosed current assets such as bank balance, cash in hand, trade debtors, loans and advances, and stock in trade, all of which were deemed non-realisable by the Ex-Directors.

4. Compliance with Procedural Requirements:
The OL complied with procedural requirements by serving notices and publishing the winding-up order. The OL also informed the Comptroller and Auditor General of India about the non-availability of account books and records from the Ex-Directors. The statement of affairs revealed no secured creditors and listed the amounts payable to preferential and unsecured creditors. The Ex-Directors provided information about pending court cases and confirmed the absence of realizable assets or alive liabilities.

Conclusion:
The court, after carefully examining the OL's report and considering the lack of opposition from the parties, concluded that the OL could not proceed with the winding-up due to the absence of funds and assets. The court ordered the dissolution of the petitioner-company, stating, "It is just and reasonable in the facts and circumstances of the case that an order of dissolution of petitioner-company should be made." The balance in the hands of the OL was directed to be deposited in the Public Account of the Reserve Bank of India. A copy of the dissolution order was to be forwarded to the Registrar within 30 days for making a minute of the dissolution in the Registrar's books.

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