2019 (5) TMI 1517 - HC - Companies Law

Winding up of Company - case of the OL/petitioner is that the Central Government received number of complaints from some investors of JVG Group of Companies regarding part payment of deposited amount - HELD THAT - It is not clear as to how this document absolves the liabilities stated in the Statement of Account of the respondent company. Merely because the shares of the respondent company were sold by some of the promoters to the present Management does not wash away liability of the respondent company on account of inter corporate loan received from the petitioner company - the balance-sheets of the respondent company, clearly and unequivocally demonstrate the dues payable to the petitioner company. It is clear from the SFIO report that the respondent company continues to occupy the said land purchased for ₹ 19,42,500/-. The respondent company continues to be liable to return the said land or the consideration received. This is a continuing cause of action. Hence, the question of limitation in this regard would not arise - It is clear that respondent continues to remain liable to return the land or to pay to the petitioner a sum of ₹ 19,42,500/-. In my opinion, there is no bona fide defence raised by the respondent company. Under Section 433(f) of the Companies Act, where a court is of the opinion that it is just and equitable, a company may also be wound up - In the present case clear allegations have been made by the petitioners that the petitioners own 22,99,400 shares in the respondent Company. That apart, a total of 59,81,900 shares are owned by the JVG Group of Companies in the respondent company which companies are also in liquidation. Despite having such a large shareholding, no notices are being sent to the Official Liquidator, who is now the Liquidator of the aforenoted various companies, about holding any meetings or sending copies of any balance sheets, annual accounts etc. It is clear that the respondent Company is acting in a manner which is prejudicial to its shareholders and to the affairs of the company. The full facts and circumstances of the case would justify the passing of a winding up order. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator - petition admitted.

Issues Involved:
1. Winding up of the respondent company under Section 433(e) and (f) read with Section 439 of the Companies Act, 1956.
2. Inter-corporate deposits made by the petitioners to the respondent company.
3. Allegations of siphoning funds and purchase of land using petitioners' funds.
4. Conduct of the respondent company prejudicial to the interest of the JVG Group of Companies.
5. Defence raised by the respondent company regarding its liabilities and management changes.
6. Just and equitable grounds for winding up under Section 433(f) of the Companies Act.

Detailed Analysis:

1. Winding up Petition:
The petition was filed under Section 433(e) and (f) read with Section 439 of the Companies Act, 1956, seeking the winding up of the respondent company. The petitioners, M/s. JVG Finance Limited, M/s. JVG Foods Limited, and M/s. JVG Farm Fresh Limited, are under liquidation and represented by the Official Liquidator (OL). The OL argued that the respondent company owes substantial amounts to the petitioners, as detailed in the SFIO report.

2. Inter-corporate Deposits:
The SFIO report indicated inter-corporate deposits amounting to ?23,22,44,266.55 made by the petitioners to the respondent company. The balance sheets of the respondent company from 31st March 1997 to 31st March 2004 reflected these deposits. Despite demand notices issued by the OL, the respondent company denied liability and refused repayment.

3. Siphoning Funds and Land Purchase:
The SFIO investigation revealed that funds from JVG Finance Ltd. were used to purchase land in District Gurgaon in the name of the respondent company, amounting to ?19,42,500/-. The respondent company has not refunded this amount, thus remaining a debtor to JVG Finance Ltd. The SFIO report provided detailed findings on the siphoning of funds for land purchases in various villages.

4. Prejudicial Conduct:
The petitioners argued that the respondent company's affairs were conducted in a manner prejudicial to the interests of the JVG Group of Companies. The petitioners did not receive notices for meetings or annual accounts from the respondent company, which is prejudicial to the majority shareholders.

5. Respondent's Defence:
The respondent company claimed that the current management purchased the company from the erstwhile owners and that the balance sheets did not reflect any liabilities as claimed by the petitioners. The respondent also argued that the claims were barred by limitation and that the previous year's book entries were written off by a board resolution. However, the court found no bona fide defence raised by the respondent company.

6. Just and Equitable Grounds:
The court referred to Section 433(f) of the Companies Act, which allows winding up on just and equitable grounds. The petitioners' substantial shareholding in the respondent company and the lack of notices for meetings and balance sheets indicated that the respondent acted prejudicially. The court also noted serious disputes regarding the management takeover and found it just and equitable to wind up the respondent company.

Conclusion:
The court admitted the petition and appointed the Official Liquidator as the Provisional Liquidator to take over the assets, books of accounts, and records of the respondent company. The citations were ordered to be published in specified newspapers and the Delhi Gazette. The court directed the Official Liquidator to prepare an inventory of the assets and seek police help if necessary. The case was listed for further hearing on 10.07.2019.

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