2012 (6) TMI 200 - HC - Companies Law

Winding up - respondent are commercially insolvent and they are unable to pay their debts - Held that - As petitioner had advanced the loan under a loan agreement and since the respondents have not disputed the claim it is evident that the respondents are not in a position to discharge their liability - as there is negligence to pay the amount which is due to the petitioner the respondent company is liable to be wound up so as to enable the Official Liquidator to take charge of the assets and recover the amounts.

Summary

Issues Involved:
Petition filed under Section 433(e) of the Companies Act for winding up the respondent-company due to commercial insolvency and inability to pay debts.

Analysis:

Issue 1: Petition for Winding Up
The petitioner filed a petition under Section 433(e) of the Companies Act, stating that the respondent-company is commercially insolvent and unable to pay its debts. The petitioner had sanctioned a loan of Rs. 20,00,000 to the respondent, which was disbursed on 24.01.2007. Despite certain payments made by the respondent, they defaulted in paying the monthly instalments regularly, leading to an amount repayable of Rs. 12,75,699-03. A statutory notice was issued to the respondent on 16-12-2009, which was received but not replied to or paid. The Court admitted the petition on 18.01.2012, directed publication of the admission in newspapers, and the respondent did not dispute the claim. The Court found that the respondent was negligent in paying the amount due, leading to the decision that the respondent company should be wound up to enable the Official Liquidator to recover the amounts.

Issue 2: Court Order
The Court allowed the petition and appointed the Official Liquidator as the liquidator, who would take charge of the assets of the respondent-company and proceed further in accordance with the law. The petitioner was directed to deposit Rs. 50,000 with the Official Liquidator within four weeks as initial expenses towards liquidation. Additionally, the petitioner was required to publish the winding-up order in 'The Hindu' English newspaper and 'Vijaya Karnataka' Kannada newspaper.

This judgment highlights the legal process and consequences of commercial insolvency under the Companies Act, emphasizing the Court's role in winding up a company when it is unable to pay its debts. The detailed analysis of the loan agreement, default in payments, issuance of statutory notice, and lack of response from the respondent led to the Court's decision to wind up the company. The appointment of the Official Liquidator and the requirements placed on the petitioner for the liquidation process demonstrate the legal procedures involved in such cases.