2010 (3) TMI 1180 - HC - Companies Law

Summary

Issues Involved:
1. Admission of Company Petitions against the Respondent Company.
2. Financial status and liabilities of the Respondent Company.
3. Petitioners' claim and Respondent Company's defense.
4. Respondent Company's additional affidavit and restructuring proposal.
5. Role of unsecured creditors and CDR Mechanism.
6. Court's decision on winding up the Respondent Company.

Summary:

1. Admission of Company Petitions against the Respondent Company:
The Company Petition was taken up for hearing and final disposal. Several Company Petitions were admitted against the Respondent Company, M/s Indage Vineyards Pvt. Limited, with claims totaling Rs. 41,89,55,559.19. Additional claims were also made by other creditors, including M/s Kotak Mahindra Bank for Rs. 18 crores.

2. Financial status and liabilities of the Respondent Company:
The Respondent Company's Net Current Assets were stated to be Rs. 200 crores, and fixed assets around Rs. 76 crores. However, the liabilities included Rs. 200 crores to secured creditors and Rs. 200 crores to unsecured creditors. The Company was deemed commercially insolvent, with unpaid executive staff and statutory dues.

3. Petitioners' claim and Respondent Company's defense:
The petitioners sought winding up of the Respondent Company for an unpaid loan amount of Rs. 1,13,22,276. The Respondent Company admitted to the debt but attributed its financial troubles to the global recession. The Court found the defense devoid of merits and admitted the Company Petition, noting the Respondent Company's inability to pay its debts.

4. Respondent Company's additional affidavit and restructuring proposal:
An additional affidavit was submitted, citing various external factors for the financial difficulties and proposing debt restructuring through the Corporate Debt Restructuring Mechanism (CDR Cell). However, the Court found no substantial evidence of a viable "business plan" and noted discrepancies in the Respondent Company's statements.

5. Role of unsecured creditors and CDR Mechanism:
The Court emphasized the importance of protecting unsecured creditors, who were not part of the CDR Monitoring Committee. The CDR scheme was voluntary and not binding on unsecured creditors, who preferred to pursue winding up proceedings.

6. Court's decision on winding up the Respondent Company:
The Court decided to wind up the Respondent Company, highlighting the excessive liabilities and the potential prejudice to unsecured creditors and employees. The liquidator was directed to take possession of the Company's assets and submit a report. A conditional stay of the order was granted for two weeks, with specific conditions to prevent asset disposal without Court permission.

Conclusion:
The Company Petition was allowed, and the Respondent Company was ordered to be wound up, with the liquidator taking immediate action to secure the Company's assets.