2014 (3) TMI 133 - HC - Companies Law

Winding up of company - Inability to pay debts - Statutory notice has been duly served upon the respondent-Company, however, no reply has been given nor requisitions of the said statutory notice have been complied with - Held that - it clearly transpires that the petitioner advanced loan of Rs.5,00,000 and even though, the same is confirmed, the respondent-Company has neglected to pay the same - it is clearly established that the respondent-Company has lost its financial substratum and it has become commercially insolvent, hence, it would be just and proper to direct that the respondent-Company Amadhi Investments Limited be wound up. Accordingly, the respondent-Company Amadhi Investments Limited is hereby ordered to be wound up. The Official Liquidator attached to this Court appointed as Provisional Liquidator as per order dated 01.10.2013 is hereby appointed as Official Liquidator of the respondent-Company and the Official Liquidator is directed to take over the possession of the entire assets of the respondent-Company i.e movable, immovable as well as Bank Accounts etc. The Official Liquidator is further directed to do the needful for winding up of the respondent-Company as provided under the Act. The Official Liquidator shall submit a report within a period of three months - Decided in favour of assessee.

Summary

Issues:
Petition for winding up under Sections 433 and 434 of the Companies Act, 1956 based on outstanding loan amount and insolvency of the respondent-Company.

Analysis:
1. The petitioner filed a petition seeking winding up of the respondent-Company under Sections 433 and 434 of the Companies Act, 1956 due to non-payment of a loan amount of Rs.5,00,000 along with interest. The respondent-Company acknowledged the debt but failed to make any payments despite repeated reminders and a statutory notice.

2. The petitioner contended that the respondent-Company's inability to pay its debts, as evidenced by the outstanding amount and lack of response to the statutory notice, indicated commercial insolvency. The Court admitted the petition after observing the facts and circumstances, allowing the petitioner to issue an advertisement regarding the admission of the petition.

3. Subsequently, the Court appointed the Official Liquidator as the provisional liquidator to take charge of the company's assets and prepare an inventory. The petitioner published an advertisement specifying the final hearing date, and no other creditor came forward in response to the advertisement.

4. Both parties agreed that the respondent-Company was not a going concern and was unable to pay its debts. The Court noted the petitioner's loan, the respondent-Company's failure to repay, and the appointment of the Official Liquidator as the Provisional Liquidator.

5. Considering the respondent-Company's financial position and commercial insolvency, the Court ordered the winding up of the respondent-Company, appointing the Official Liquidator as the Liquidator to take possession of all assets and accounts. The Official Liquidator was directed to initiate the winding-up process as per the Companies Act, with a requirement to submit a report within three months. The petition for winding up was allowed accordingly.