9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (10) TMI 89 - HC - Companies LawWhether the proceedings for winding up of the Company before the Company Court is maintainable? Held that - It cannot be said that ARCIL has no locus to move winding up petition before the Company Court as it is an admitted fact that the debt is assigned by Dena Bank in favour of ARCIL and by virtue of such assignment winding up petition is filed. As pointed out above since the Company is unable to pay its debts and since considering the report of the Chartered Accountant and the balance-sheet the Company is totally insolvent which in our view has rightly been ordered to be wound up by the learned single Judge by giving cogent reasons. The learned counsel for the appellant is unable to point out that the Company s financial position is sound to meet the liabilities. In fact looking to the facts and circumstances and considering the report of the Chartered Accountant in our view the Company in question deserves to be wound up as it is totally in an insolvent position. Appeal dismissed.
Issues:
1. Maintainability of winding up petition by ARCIL as assignee of debt. 2. Validity of assignment under SARFAESI Act. 3. Company's insolvency and need for winding up. 4. Locus standi of ARCIL to move the Company Court for winding up. 5. Consideration of financial position of the Company. Issue 1: Maintainability of winding up petition by ARCIL as assignee of debt: The appellant argued that the winding up petition by ARCIL, as an assignee of the debt, is not maintainable. It was contended that ARCIL, being an assignee of the debt from Dena Bank, is not a valid assignee under the SARFAESI Act. However, the respondent's counsel relied on a Division Bench judgment which clarified that a bank or financial institution, even when acting as a trustee, can proceed under the Securitization Act and the RDB Act. The court noted that the recent Supreme Court decision upheld such assignments, establishing ARCIL's locus standi to move the Company Court for winding up based on the assignment. Issue 2: Validity of assignment under SARFAESI Act: The appellant raised concerns about the validity of the assignment in favor of ARCIL under the SARFAESI Act, arguing that ARCIL's status as a sole trustee affects its right to proceed under the Act. However, the court referenced the Division Bench judgment's interpretation of the term "debt" and "financial institution" under the RDB Act and the Securitization Act, emphasizing that ARCIL, as an assignee, had the right to apply for amendments based on the assignment. Issue 3: Company's insolvency and need for winding up: The respondent established the company's insolvency by relying on a Chartered Accountant's report, indicating the necessity for winding up under the Companies Act. The court reviewed the balance-sheet and the report, confirming the company's dire financial position. It was concluded that the company deserved to be wound up due to its insolvency, as supported by cogent reasons provided by the learned single Judge. Issue 4: Locus standi of ARCIL to move the Company Court for winding up: The court addressed the question of whether ARCIL, as an assignee of the debt, had the standing to file a winding up petition before the Company Court, especially when the principal creditor, Dena Bank, had initiated proceedings at the DRT. The court considered the assignment of assets, not liabilities, by Dena Bank to ARCIL, affirming ARCIL's locus standi to move the winding up petition based on the assignment. Issue 5: Consideration of financial position of the Company: The court noted the undisputed poor financial position of the company, as evidenced by the balance-sheet and the Chartered Accountant's report. Despite the appellant's inability to raise substantial points regarding the company's financial status, the court found no grounds to dispute the company's insolvency and upheld the decision to wind up the company by the learned single Judge. In conclusion, the High Court of Bombay dismissed the appeal and upheld the order for winding up the company, emphasizing the company's insolvency and the validity of ARCIL's standing as an assignee to move the winding up petition before the Company Court. The Official Liquidator was directed to take charge of the company's affairs, with no order as to costs.
|
