2013 (11) TMI 386 - HC - Companies Law

Winding up - unable to pay dues with running accrual of interest - Held that - On a careful consideration of the contentions put forward by the petitioner and the documents produced on record in this case, it is clear that the contentions of the petitioner with regard to the claim made herein would sustain the principles of law on the subject and therefore, a winding up order can be passed. It is therefore, clear that the petitioner has made out sufficient grounds to order winding up of the respondent Company under Section 433(e) of the Companies Act, 1956 - Court is of the view that the respondent Company is required to be wound up as it has failed to discharge its liabilities and the respondent Company has lost its financial substratum and the Company has incurred liabilities to such an extent that they cannot be fulfilled. Under these circumstances, this Court is of the view that this is a fit case for passing the winding up order and accordingly, the respondent Company is ordered to be wound up under the provisions of the Companies Act, 1956. The Official Liquidator attached to this Court is appointed as the Liquidator of the Company. The official Liquidator attached to this Court as a provisional liquidator was directed by this Court by an order passed in the matter on 02.08.2011 to take custody and possession of the assets and properties of the Company and while taking possession, the Official Liquidator was also directed to take inventory and draw a Panchnama of the assets of the Company and take further necessary action in accordance in law so that properties of the Company can be safeguarded - official Liquidator attached to this Court shall now take necessary action under Section 454 of the Companies Act, 1956 directing the Ex-Directors of the Company to file statement of affairs of the respondent Company as on the date of the winding up - Petition allowed.

Issues:
1. Recovery of outstanding amount under Companies Act, 1956.
2. Appointment of Provisional Liquidator.
3. Failure of respondent Company to pay debts.
4. Grounds for winding up petition.
5. Public advertisement and opposition.
6. Passing of winding up order.
7. Appointment of Official Liquidator and further actions.

Issue 1: Recovery of outstanding amount under Companies Act, 1956
The petitioner filed a petition under Sections 433 and 434 of the Companies Act, 1956, seeking recovery of Rs.4,00,435 along with interest. The Court issued notices to the respondent Company, and despite the Director accepting the service, no appearance was entered by the Company. The Court found the claim valid as it remained unpaid, leading to the admission of the matter.

Issue 2: Appointment of Provisional Liquidator
After further hearings, the Court admitted the petition under Section 433 of the Companies Act, 1956, and appointed the Official Liquidator as a Provisional Liquidator. The Official Liquidator was directed to take custody of the Company's assets and properties, draw an inventory, and proceed as necessary under the law. Interim relief was continued, and public advertisements about the petition were published.

Issue 3: Failure of respondent Company to pay debts
The respondent Company failed to pay its debts despite repeated reminders and statutory notices. The Company did not dispute receiving products from the petitioner or entering appearance in Court, indicating neglect in fulfilling financial obligations. The Court found evidence supporting the Company's inability to pay debts.

Issue 4: Grounds for winding up petition
The petitioner, engaged in marketing and supplies, had a longstanding business relationship with the Company. Despite delivering products and issuing invoices, the Company failed to make payments. Statutory notices were ignored, leading to the petitioner seeking winding up of the Company due to insolvency and non-payment of dues.

Issue 5: Public advertisement and opposition
Public advertisements were issued, but no opposition was received. The respondent Company's failure to appear and defend against the claims constituted an uncontroverted admission of the debt. The Court considered the petitioner's contentions and documents as sufficient grounds for a winding up order.

Issue 6: Passing of winding up order
Considering the Company's defaults in payment and loss of financial substratum, the Court ordered the winding up of the respondent Company under Section 433(e) of the Companies Act, 1956. The Official Liquidator was appointed as the Liquidator, with directions to safeguard the Company's properties and assets.

Issue 7: Appointment of Official Liquidator and further actions
The Official Liquidator was directed to take necessary actions under Section 454 of the Companies Act, 1956, requiring Ex-Directors to file a statement of affairs of the Company. The petition was disposed of, and the respondent Company was ordered to be wound up.

This detailed analysis of the judgment outlines the legal proceedings, grounds for winding up, and the Court's decision based on the Companies Act, 1956.

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