2011 (4) TMI 1199 - HC - Companies Law

Winding up appropriation/adjustment of the amounts - amount due and payable - Company has neglected to pay any amount as demanded by the above notice - petition and has also published the notice in a two daily newspapers and accordingly the affidavit dated 1-4-2011 is filed. Thereafter also there is no willingness on the part of the respondent Company to pay the dues. It appears that the Company is unable to perform its functions under the provisions of the Companies Act, 1956 since it has lost its sub-stratum and accordingly, it is ordered to be wound up

Summary

Issues Involved:
Petition for winding up under sections 433 and 434 of Companies Act, 1956 due to non-payment of dues by respondent Company.

Analysis:
The petitioner filed a petition seeking winding up of the respondent Company, Zenat Software Ltd., under sections 433 and 434 of the Companies Act, 1956. The petitioner had provided a financial facility in the form of a loan of Rs. 1,00,00,000 to the respondent Company, with specific terms of interest and repayment. Despite the issuance of a statutory notice under section 434(1)(a) and subsequent non-payment, the respondent Company failed to clear the dues, indicating its inability to pay debts in the normal course of business. The petitioner contended that the Company had become insolvent, justifying the appointment of the Official Liquidator as a provisional Liquidator during the pendency of the petition.

The respondent Company acknowledged its inability to pay the dues, as stated by the petitioner. The Company did not dispute the facts presented and failed to respond to the statutory notice within the stipulated period, further confirming its financial distress. The Profit and Loss Account and Balance sheet of the respondent Company revealed significant losses and accumulated debts, highlighting its financial instability.

After considering the submissions from both parties and reviewing the financial status of the respondent Company, the Court found that the Company owed a substantial amount to the petitioner, which remained unpaid despite repeated demands and statutory notices. The respondent Company's admission of being unable to pay the debt, coupled with its financial records showing substantial losses, led the Court to conclude that the Company had lost its ability to function under the Companies Act, 1956. Consequently, the Court ordered the winding up of the respondent Company and appointed the Official Liquidator to take charge of its assets and properties in accordance with the law.

In conclusion, the Court granted the petitioner's prayer for winding up the respondent Company, as it was evident that the Company was unable to meet its financial obligations, leading to insolvency. The appointment of the Official Liquidator was deemed necessary to oversee the winding up process and manage the Company's assets appropriately. The petition was disposed of with the Court's order for winding up and the appointment of the Official Liquidator.