2018 (5) TMI 2154 - HC - Companies Law

Winding up of Company - company is unable to discharge its debts and is commercially insolvent - HELD THAT - The company is indebted to petitioner, is unable to discharge its debts, is commercially insolvent and requires to be wound up. It is ordered to pass appropriate orders directing respondent company be wound up under the provisions of Section 433 (e), 434 (1) (a) and 439 of the Companies Act, 1956 for its inability, neglect and failure to pay and discharge its admitted debs and liabilities - it is directed to appoint Official Liquidator, High Court of Judicature at Bombay as Liquidator of respondent company with all powers under the Companies Act, 1956/2013 including the power to take possession of all the assets, books of account, stock in trade, cash on hand, movable properties including furniture and fixtures as well as all immovable properties. Petition allowed.

Summary

Issues:
Winding up petition under the Companies Act, 1956 based on commercial insolvency.

Analysis:
The petitioner filed a winding-up petition against the respondent company, alleging that the company was unable to discharge its debts and was commercially insolvent. The petitioner claimed that the company had failed to pay for goods supplied, resulting in a dishonored cheque and outstanding payments. The company did not respond to the statutory notice, leading to a presumption of inability to pay by the court. The company's defense, raised in an affidavit, contended that the materials supplied were defective, but no supporting communication was provided. The court found the company's defenses to be afterthoughts and unsustainable, leading to the admission of the petition.

The company argued that the petition was not maintainable as a reference was pending before the Board of Industrial & Financial Reconstruction (BIFR) and the petitioner had not obtained leave from BIFR before filing. However, the court noted the lack of evidence to support this claim. The company also mentioned a civil suit filed in another court, but the court found the company's defenses to be unsubstantiated. The court ordered the admission of the petition and directed the petitioner to advertise it in local newspapers and the government gazette.

Despite an opportunity given to the company to avoid winding up by depositing a specified amount, the company failed to comply. The petitioner advertised the petition as directed, and the court found the company to be indebted, unable to discharge its debts, and commercially insolvent. Consequently, the court allowed the petition, directed the winding up of the company under the Companies Act, 1956, and appointed the Official Liquidator as the Liquidator with extensive powers. The Official Liquidator was instructed to take immediate steps without waiting for further notification.

In conclusion, the company petition was allowed, and the Official Liquidator was directed to proceed with the winding-up process in accordance with the law. The court ordered the forwarding of a copy of the order to the National Company Law Tribunal for information, thereby disposing of the company petition.