2011 (9) TMI 839 - HC - Companies Law

Petition seeking winding up of a company - creditor as well as shareholder / contributor of the company - held that - no purpose is going to be served to continue the Company since the objects for which it was incorporated has substantially failed and it is impossible for the Company to carry out business of the Company in view of differences between the Directors and total lack of management who have lost their confidence in each others and the differences have reached to the extent that there is every possibility of more litigations cropping up between them. - winding up order issued.

Summary

Issues:
- Winding up petition filed under Sections 433, 434 & 439 of the Companies Act, 1956.
- Claim of petitioners as creditors and contributories/shareholders.
- Allegations of financial mismanagement and non-compliance with statutory obligations by the respondent company.
- Special resolution passed for winding up the company.
- Submission of statement of affairs and lack of objections.
- Court's decision on the winding up petition.

Analysis:
The petition was filed seeking the winding up of the respondent company under Sections 433, 434 & 439 of the Companies Act, 1956, due to financial difficulties and non-compliance with statutory obligations. The petitioners claimed to be creditors and contributories/shareholders of the company, holding a significant number of shares. Allegations were made regarding financial mismanagement, non-payment of statutory dues, and a lack of business transactions since 1982, leading to a complete deadlock within the company.

A special resolution was passed in an Extraordinary General Meeting held in 1992 for the winding up of the company under Section 433 of the Companies Act. Despite this resolution, no steps were taken by the directors to wind up the company, and no annual general meetings were held for several years. The Official Liquidator's report highlighted the company's failure to furnish balance sheets and assets/liabilities information, emphasizing the need for a statement of affairs to ascertain the company's financial position accurately.

After considering the submissions and lack of objections, the Court found it just and equitable to wind up the company in the public interest. The Court directed the winding up of the respondent company and ordered the Registrar to draw the winding up order. The petitioners were instructed to publish the winding up order in national and local newspapers, serve the notice to the respondent company, and comply with the Companies (Court) Rules for the winding up process. The decision was based on the company's inability to function effectively, the fulfillment of statutory requirements for winding up, and the lack of objections raised against the winding up petition.