2015 (8) TMI 1412 - HC - Companies Law

Revival and rehabilitation seeked - Held that - There is nothing on record for disagreement with the factual conclusions of the Board and its opinion based thereon that the respondent-Company was not positioned to make its net worth exceed its accumulated losses within a reasonable time. And the conclusions of the Board have not been objected to by any stakeholder in the respondent-Company. The respondent-Company is not in a position to meet its financial obligation or likely to become viable in the foreseeable future making its net worth exceed the accumulated loss (as held by the Board) and therefore it is just, equitable and in public interest that the respondent-Company be wound up. Consequently, the respondent-Company M/s. Deepak Casting Ltd. stands wound up under the Act of 1956 and the Official Liquidator attached to this Court is appointed as the Official Liquidator of the respondent-Company under Section 448 of the Act of 1956. The Official Liquidator may now further take appropriate steps as provided for in law under Section 457 (1) of the Act of 1956 including the steps to take in his custody the properties of the company in liquidation, if any and take steps for their safeguard subject to approval of this Court. He is directed to publish notice of this winding up order in two daily newspapers, one in vernacular and the other English i.e. Rajasthan Patrika, Alwar Edition and Hindustan Times, New Delhi Edition respectively. The Official Liquidator shall immediately take steps for requisite publication. Since the respondent-Company has been wound up by this order as earlier held, the Official Liquidator to proceed and take active steps for compliance with Section 457(1) of the Act of 1956 and do all acts where needed, as required and permitted in law.

Summary

Issues:
1. Winding up of a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985.
2. Appointment of Official Liquidator.
3. Compliance with legal procedures for winding up.

Winding up of a Sick Company:
The respondent company, categorized as a sick entity under the Sick Industrial Companies (Special Provisions) Act, 1985, sought revival and rehabilitation from the Board of Industrial and Financial Reconstruction (BIFR). However, after thorough evaluation, the Board determined that the company was incapable of becoming financially viable in the foreseeable future. Consequently, the Board recommended the winding up of the company under Section 20(1) of the Act of 1985. The Court concurred with the Board's findings, noting the absence of objections from any stakeholders. The Court held that the company was not in a position to meet its financial obligations or become viable, thus ordering the winding up of the respondent company.

Appointment of Official Liquidator:
Following the decision to wind up the company, the Official Liquidator attached to the Court was appointed as the Official Liquidator of the respondent company under Section 448 of the Companies Act, 1956. The Official Liquidator was directed to undertake necessary steps, including taking custody of the company's properties and publishing a notice of the winding up order in newspapers. The Ex-directors of the company were instructed to provide a statement of affairs within a specified timeframe. Additionally, India SME Asset Reconstruction Company Ltd., as a secured creditor, was directed to make payments to the Official Liquidator for publication costs and expenses related to the invitation of claims from creditors and workers.

Compliance with Legal Procedures for Winding Up:
To ensure compliance with legal requirements, the Official Liquidator was tasked with executing actions as per Section 457(1) of the Companies Act, 1956. The Court emphasized the importance of following due process, including publication of the winding up order and submission of necessary documents. Any payments made by India SME Asset Reconstruction Company Ltd. to the Official Liquidator were deemed a charge on the assets of the company in liquidation. The Court directed the supply of all relevant documents to the Official Liquidator for further proceedings.