2013 (5) TMI 434 - HC - Companies Law

Voluntary liquidation - Held that - From the statement of accounts it appears that there has been no transaction in the accounts of the Company, except for withdrawal of an amount of Rs.610/- from the Bank. An amount of Rs.638/- was credited in the account of the Bank leaving balance of Rs.28.15p only. Prima facie, it appears that the amount of Rs.638/- in the Bank account of the Company was credited on account of accumulation of interest since commencement of winding up proceeding. There is no asset of the Company, which may be proceeded with for disbursement to its creditors, if any, in liquidation proceeding. This Court also finds that after taking charge, the then Official Liquidator made attempts to convene meeting of the Company with its Creditors and Contributors repeatedly but with no success. Therefore, the then Official Liquidator could not proceed in the matter further to comply the provisions of sections 497, 508 and 509 of the Companies Act. This Court also finds that till now, no creditor of the Company has come forward before this Court to lay any claim against the Company. In the circumstances, this Court finds that there is no option left in this liquidation proceeding than to close the same and direct for dissolution of the Company in exercise of powers under section 481 of the Companies Act, 1956 read with Rule 9 of the Company (Courts) Rules, 1959. Report of the Official Liquidator is accepted and the requirement of compliance with provisions of Sections 497, 508 and 509 of the Companies Act, 1956 as well as requirement of audit of final account annexed as Annexure-C with the said report are dispensed with. The Company stands dissolved in accordance with law with effect from the date of this order. Let the Official Liquidator take follow-up steps as per the law.

Summary

Issues involved:
1. Dissolution of a company under voluntary liquidation.
2. Appointment and removal of liquidators.
3. Realization of company assets and liabilities.
4. Compliance with provisions of the Companies Act, 1956.
5. Exercise of inherent powers by the Court.

Analysis of Judgment:

1. Dissolution of a company under voluntary liquidation:
The case involved a company initially incorporated as a Private Limited Company in 1936, which later went into voluntary liquidation due to operational challenges. The Company's history, including its assets, liabilities, and legal actions, was detailed in the judgment. The Official Liquidator prayed for the company's dissolution based on the final account audit report.

2. Appointment and removal of liquidators:
The judgment highlighted the appointment and discharge of various liquidators throughout the company's winding-up process. The Court discharged the initial voluntary liquidator and appointed a new one due to perceived delays in realizing company assets. Subsequently, the Official Liquidator was appointed after the removal of the second liquidator for similar reasons.

3. Realization of company assets and liabilities:
The judgment discussed the challenges faced in realizing the company's assets, particularly in relation to a pending lawsuit against another entity for dues. The dismissal of the lawsuit and subsequent appeal led to a situation where the company had minimal assets, making it difficult for the Official Liquidator to manage the company's affairs effectively.

4. Compliance with provisions of the Companies Act, 1956:
The Official Liquidator made efforts to convene meetings with creditors and contributors as required by the Companies Act, but faced obstacles due to lack of funds and cooperation. Despite attempts to comply with statutory provisions, the lack of available assets and creditor claims hindered the liquidation process.

5. Exercise of inherent powers by the Court:
Given the prolonged nature of the liquidation proceedings, the Court invoked its inherent powers under Rule 9 of the Company (Courts) Rules, 1959 to waive compliance with certain provisions of the Companies Act. The Court found no viable option but to close the liquidation proceedings and order the company's dissolution under section 481 of the Companies Act, 1956.

In conclusion, the Court accepted the Official Liquidator's report, dispensed with the compliance requirements, and ordered the dissolution of the company effective immediately. The judgment highlighted the challenges faced in managing the company's affairs due to lack of assets and creditor claims, leading to the decision to close the liquidation proceedings.