2009 (4) TMI 437 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up - Held that - As the payment of ₹ 7 lakhs which has been made by way of a demand draft drawn on 23-3-2001, being not in dispute, which amount has been admitted by the respondent as still remaining as unadjusted and unpaid, it is sufficient to hold that the respondent-company could not liquidate the debt due to the petitioner firm in spite of the conversion scheme put in place. Further, RW-1 has admitted that the respondent-company is due and payable to several persons and that the bank has also initiated recovery proceedings against it. Further, the mill of the respondent-company is closed down for the past several years. Thus the respondent-company is not able to pay and clear all its debts and, hence, it deserves to be wound up. Let the company, viz., M/s. The Rayalaseema Mills Ltd., Rayanagar at Adoni, Kurnool district, be wound up. The applicant to notify this fact by way of publication in the New Indian Express and Andhra Jyothi newspapers having circulation at Kurnool district. Company petition is allowed.

Summary

Issues Involved:
1. Whether the claim of the petitioner-firm is barred by limitation.
2. Whether the respondent-company is unable to pay up its debts requiring it to be wound up.

Issue-Wise Detailed Analysis:

1. Whether the claim of the petitioner-firm is barred by limitation:

The petitioner-firm sought the winding up of the respondent-company under sections 433(e), 434(1)(a), and 439(1)(b) of the Companies Act, 1956. The respondent-company contested the petition, claiming that any liability was time-barred. However, the court found that the respondent-company had acknowledged its debt to the petitioner-firm on several occasions, specifically through agreements dated 19-1-2000 and 21-3-2001. The court noted that these acknowledgements of debt reset the limitation period under Section 18 of the Limitation Act, 1963. Since the company petition was filed on 6-9-2002, within three years of the last acknowledgment, the claim was not barred by limitation.

2. Whether the respondent-company is unable to pay up its debts requiring it to be wound up:

The court examined the evidence, including letters and agreements between the parties. The petitioner-firm provided evidence of unpaid dues, including a sum of Rs. 7 lakhs paid towards electricity reconnection charges. The respondent-company admitted to owing money to several creditors and having ongoing recovery proceedings initiated by banks. The court found that the respondent-company had not repaid its debts to the petitioner-firm and was unable to clear its liabilities. The court rejected the respondent's defense that the debt was unascertained or unadjusted, noting that the respondent had acknowledged the debt multiple times.

Conclusion:

The court concluded that the respondent-company was unable to pay its debts and ordered its winding up. The petitioner was directed to notify the winding-up order by publication in specified newspapers and lodge a certified copy of the order with the Registrar of Companies within 30 days. The company petition was allowed, and no costs were awarded.