2019 (3) TMI 1976 - HC - Companies Law

Seeking winding up of the respondent Company - Sections 433(e), (f), 434(1) (a) (c) and 439 of the Companies Act, 1956 - HELD THAT - A company is unable to pay its debt only when a demand is served at the registered office of the company to pay the sum so due and the company despite lapse of 3 weeks neglects to pay the sum or to secure the same. A petition under Section 433(e) can only be entertained after compliance of the mandatory procedure of Section 434 (1)(a) of the Companies Act. As no statutory notice has been sent against the company, namely, Times Internet Ltd, the said company cannot also be impleaded or subjected to a winding up proceeding. The present petition is accordingly dismissed with liberty to the petitioner to take steps as per law against the actual entity.

Summary

Issues:
Winding up petition under Sections 433(e), (f), 434(1)(a) & (c) and 439 of the Companies Act, 1956 seeking winding up of the respondent Company.

Analysis:
The respondent Company, Times Business Solution Ltd., ceased to exist after merging into Times Internet Ltd. by a court order under Sections 391-394 of the Companies Act. The petitioner was aware of this merger, as stated in the winding-up petition. However, the new entity, Times Internet Ltd., cannot be impleaded as the statutory notice under Section 434(1)(a) was not issued to it. The petitioner's claim that there was no denial of the merger in response to a legal notice is dismissed as the petitioner had knowledge of the amalgamation in the winding-up petition itself.

The court highlighted that the petitioner failed to take steps as required under Section 434(e) of the Companies Act despite knowing about the merger. Section 434(1) of the Act specifies the transfer of matters and proceedings to the Tribunal after a notified date by the Central Government. It also outlines the procedure for transferring proceedings relating to winding up of companies to the Tribunal. The court emphasized that a petition under Section 433(e) can only be entertained after complying with the mandatory procedure of Section 434(1)(a) which includes serving a statutory notice against the company.

The judgment clarified that a company can be considered unable to pay its debts only after a demand is served at its registered office and the company neglects to pay or secure the sum after three weeks. As no statutory notice was served against Times Internet Ltd., the company cannot be subjected to winding up proceedings. Therefore, the petition was dismissed with liberty given to the petitioner to take appropriate legal action against the actual entity. All pending applications were also disposed of in light of this decision.