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2018 (2) TMI 27 - HC - Companies LawDissolution of firm - Held that - When the relevant provisions of Section 497 of the Act appear to have been complied with and when the affairs of the company are stated not to have been conducted in a manner prejudicial to the company, its members, as also to the public interest, the company could be ordered to be dissolved in terms of Section 497 of the Act. However, while ordering dissolution of the company under Section 497 of the Act, the Voluntary Liquidator is required to be directed to preserve the Books of Accounts of the company for a period of five years from the date of dissolution of the company. As the Official Liquidator is required to incur expenses for the purpose of making present report seeking dissolution of the company in terms of Section 497 of the Act, the directors of the company are required to be directed to pay ₹ 10,000/- being office expenses to the Official Liquidator. The company is ordered to be dissolved in terms of Section 497 of the Act from the date of submission of the report. The Voluntary Liquidator M/s.J. H. Mehta and Company, Chartered Accountant is directed to preserve the Books of Accounts of the company for a period of five years from the date of dissolution of the company.
Issues:
1. Dissolution of the company under Section 497(6) of the Companies Act, 1956. 2. Compliance with the provisions of Section 497 and other relevant provisions of the Companies Act, 1956 and Companies (Court) Rule, 1959. 3. Payment of office expenses to the Official Liquidator. Analysis: 1. Dissolution of the Company: The judgment concerns the voluntary winding up of a company, M/s.Tricot International Limited, as per Section 497 of the Companies Act, 1956. The company passed a special resolution for voluntary winding up and appointed a Voluntary Liquidator. The Official Liquidator submitted a report requesting the company's dissolution and preservation of Books of Accounts for five years from the date of dissolution. The Court found that all relevant provisions were complied with and ordered the dissolution of the company under Section 497 of the Act. 2. Compliance with Provisions: The Official Liquidator's report detailed compliance with various requirements under the Companies Act, 1956. The Board of Directors submitted a Declaration of Solvency, the Voluntary Liquidator filed necessary forms, and the final statement of accounts was approved at a General Meeting. The report also highlighted the financial position of the company as of 31.03.2016. Upon scrutiny, it was found that the company's affairs were not conducted in a prejudicial manner, leading to the decision for dissolution under Section 497. 3. Payment of Office Expenses: The Official Liquidator requested the directors of the company to pay office expenses of approximately &8377; 10,000 for submitting the dissolution report. The Court directed the directors to make this payment within four weeks from the date of the order. This aspect ensures that the costs associated with the winding up process are appropriately covered, aligning with the provisions of the Companies Act, 1956. In conclusion, the judgment by the High Court of Gujarat pertains to the orderly dissolution of M/s.Tricot International Limited through voluntary winding up as per Section 497 of the Companies Act, 1956. The detailed compliance with legal requirements, the financial position of the company, and the directive for payment of office expenses to the Official Liquidator were crucial aspects addressed in the judgment.
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