2013 (2) TMI 339 - HC - Companies Law

Winding up petition - Petitioner a company registered in Hong Kong was supplying to the Respondent computer peripherals and digital cameras payments were permitted on D/A basis within 90 days from the date of bill of lading - as on 28th February 2005 a sum of USD 59,743.90 (principal interest) was outstanding - Held that - In the absence of Respondent denying its liability which is reflected in its audited balance sheet as on 31st March 2006, the entry in the books of accounts of the Respondent that the aforementioned amounts were outstanding to the Petitioner should be taken to be acknowledgment of the debt. In the above circumstances, this Court is satisfied that the Respondent is unable to liquidate its debts within the meaning of Section 433 (2) of the Act. Accordingly, the petition is admitted. The OL is appointed as PL of the Respondent directed to take over the assets of the Respondent together with its books of accounts and other relevant records as may be available at the registered office of the Respondent. The OL is permitted to seek police assistance where required. The OL will file a status report in this Court within four weeks & also confirm that the interim order passed by the Court on 27th April 2004, and made absolute on 22nd November 2011, restraining the Respondent from selling, alienating, transferring or parting with the immovable assets without the leave of the Court , has been duly complied with. The OL will take necessary steps to ensure compliance with this direction by the Director of the Respondent. The Petitioner is directed to effect publication of the citation of this petition in the official gazette, Statesman and Danik Jagran in terms of Rule 24 of the Rules.The Directors of the Respondent are directed to strictly comply with the requirements of Section 454 of the Act and Rule 130 of the Rules and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit within a period of 21 days from today.

Summary

Issues:
Petition for winding up under Section 433 (e) of the Companies Act, 1956 due to outstanding payments. Preliminary objections raised by the Respondent. Appointment of provisional liquidator (PL) and compliance with legal procedures.

Analysis:
The petition was filed seeking winding up of the Respondent company due to outstanding payments for computer peripherals and digital cameras supplied by the Petitioner. Despite attempts to settle the dispute, the Respondent did not appear, leading to the court hearing submissions from both sides. The Petitioner claimed outstanding amounts with interest, alleging non-payment despite reminders and false assurances by the Respondent. The Respondent raised objections regarding the petition's compliance with statutory provisions, which were later addressed by providing necessary authorizations.

Regarding the merits of the case, the Respondent acknowledged transactions but raised defenses of defective goods and running payments. However, no substantial evidence was presented to support these claims, and the court noted that such defenses were raised belatedly. The Respondent's attempts to quantify losses and suggest selling goods to another entity were refuted by the Petitioner. The court found discrepancies in the Respondent's claims and acknowledged the outstanding amounts reflected in the Respondent's balance sheet.

The court, after thorough consideration, concluded that the Respondent was unable to liquidate its debts, justifying the appointment of a provisional liquidator (PL) to secure the company's assets. The court referred to a past case highlighting the importance of following legal procedures for such appointments. Despite the Petitioner withdrawing an earlier application for PL, the court deemed it necessary to appoint one due to the prolonged nature of the case and the Respondent's lack of representation in recent hearings.

The court admitted the petition, appointed the Official Liquidator (OL) as PL, and directed the PL to take over the company's assets and records. The OL was instructed to file a status report, ensure compliance with court orders, and the Petitioner was directed to publish the petition citation. The Directors of the Respondent were also ordered to provide a statement of affairs within a specified timeframe, emphasizing compliance with legal requirements.

Overall, the judgment addressed the issues of outstanding payments, legal objections, and the appointment of a provisional liquidator, ensuring due process and protection of creditor interests in the winding up process.