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2010 (8) TMI 175 - HC - Companies LawWinding up - Circumstances in which a company may be wound up - Held that - Petitions are hereby allowed.The respondent-company is ordered to be wound up. Petitioners are directed to deposit a sum of 25, 000 with the Official Liquidator to meet the initial expenses of winding up proceedings. Petitioners are directed to take out paper publication in the English daily newspaper The Hindu within fourteen days from the date of receipt of copy of this order. The petitioners are directed to serve a copy of this order on the Registrar of Companies within 30 days.
Issues:
Petition filed for winding up under section 433(e) of the Companies Act, 1956 due to non-payment of debts by the respondent-company. Objections raised by secured creditors opposing the winding up. Analysis: The petitioners filed a petition under section 433(e) of the Companies Act, 1956 seeking the winding up of the respondent-company due to non-payment of debts. The respondent-company, a Public Limited Company engaged in manufacturing and selling refrigeration equipment, admitted to owing certain dues to the petitioners. The court allowed newspaper publication, leading to objections from secured creditors opposing the winding up. The respondent-company, while acknowledging the debts, expressed inability to pay, which the court considered as a valid ground for winding up. The Objector-Secured creditors raised concerns that invoking the SARFAESI Act might conflict with the winding-up process. However, the court clarified that the provisions of the SARFAESI Act override section 537 of the Companies Act, granting secured creditors the right to enforce security interest without seeking leave of the Company Court. Consequently, the objections raised by the secured creditors were dismissed. Citing the Supreme Court's decision in Allahabad Bank v. Canara Bank, the court emphasized that the SARFAESI Act takes precedence over the Companies Act. The judgment highlighted that the distribution of proceeds and priorities among creditors, especially secured creditors, falls under the jurisdiction of the Tribunal as per the RDB Act, not the Company Court. Therefore, the court allowed the petition, ordering the winding up of the respondent-company and directing the petitioners to deposit a specified sum with the Official Liquidator for initial winding-up expenses. Additionally, the petitioners were instructed to publish the order in a newspaper and serve a copy on the Registrar of Companies within specified timelines.
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