2018 (2) TMI 1571 - HC - Companies Law

Winding up of company - present application was filed after the Official Liquidator had taken possession of at least two of the major assets of the company (in liquidation) and all further proceedings towards winding-up of the company (in liquidation) have been stayed - Held that - From a perusal of the application filed by the applicant company, it appears that the same has been filed with a bare assurance to revive the company (in liquidation), without disclosing the actual facts and figures with regard to the outstanding statutory and other dues of the company (in liquidation). The applicant has only alleged that the secured creditors of the company (in liquidation) being the banks and financial institutions have chosen to remain outside the winding up proceeding. There is no statement in the application about the source of fund of the applicant for payment of the outstanding dues of even the creditors, at whose instance the company (in liquidation) suffered the order of winding up. The fact that there is total lack of bona fide on the part of the applicant to file the present application and to obtain the said order dated March 22, 2017 is further evident from the fact that even though in Annexure E to the application, it held out to pay substantial amounts to each of its creditors, at whose instance the winding-up applications had been admitted, within six months from the date of stay of the winding-up proceeding but admittedly, not a single penny has been paid to any of the creditors in spite of expiry of six months from the date of the order dated March 22, 2017.

Issues: Application under Section 466 of the Companies Act, 1956 for maintaining status quo regarding ownership and possession of assets of a company in liquidation, failure to pay outstanding dues leading to winding-up, possession of assets by Official Liquidator, statutory claims of income tax and service tax authorities, lack of disclosure of outstanding dues in the application, lack of bona fide in filing the application, non-payment to creditors despite assurances.

Analysis:
1. The applicant filed an application under Section 466 of the Companies Act, 1956 seeking to maintain status quo regarding the ownership and possession of assets of a company in liquidation. The applicant claimed to hold 70,6000 equity shares of the company and obtained an order directing the Official Liquidator to maintain status quo. The interim order was extended until the disposal of the application. The company faced multiple winding-up applications due to outstanding dues to creditors, leading to the company being directed to be wound up by a learned Single Judge.

2. The Official Liquidator took possession of the company's assets, including the registered office, land, shed, and a flat. The applicant, claiming to be a major shareholder, filed the current application after the Official Liquidator had taken possession of significant assets. The Official Liquidator reported statutory claims of income tax and service tax authorities against the company for substantial amounts, highlighting the non-filing of statements of affairs by ex-directors of the company in liquidation.

3. The application failed to address the statutory dues of the company towards income tax and service tax authorities. It lacked disclosure of outstanding dues and the source of funds for payment. The Court noted a lack of bona fide on the part of the applicant, as no payments were made to creditors despite assurances within the specified timeframe. The Court dismissed the application with costs to be paid to petitioning creditors in the winding-up applications.

4. The Court ordered the applicant to pay costs to each petitioning creditor within a specified timeframe and vacated all interim orders. The application was scheduled for further review to ensure compliance with the cost payment directive. The judgment emphasized the importance of transparency, disclosure of outstanding dues, and genuine intentions in such applications under the Companies Act, 1956.

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