2020 (3) TMI 36 - HC - Companies Law

Winding up of respondent company - Section 433 and 434 of the Companies Act, 1956 - outstanding dues - HELD THAT - Even though a Statutory notice was issued, the respondent company refused to accept the service of such statutory notice. No reply was given to such statutory notice and, therefore, the defence put forward by the respondent company in its affidavit in reply is nothing but an after-thought. It is on record that the respondent had admitted its outstanding dues and in fact made some payments after the meeting dated 26.6.2014 held between the representatives of the petitioner and respondent company. Even considering the losses for three financial years as also the pendency of SARFAESI proceedings reveal that the respondent company is a loss making company and has lost its financial substratum and the same leads to only one conclusion that the company is not in a position to pay its debts to the creditors. It would be just and proper to direct that the respondent company Polo Ceramic Private Limited be wound up - Petition allowed.

Summary

Issues involved:
Petition for winding up under Sections 433 and 434 of the Companies Act, 1956 due to outstanding dues and dishonored cheque.

Analysis:
1. The petitioner filed a petition seeking winding up of the respondent company, Polo Ceramics Pvt. Ltd., under Sections 433 and 434 of the Companies Act, 1956, due to outstanding invoices totaling to ?14,17,778.00. The respondent company acknowledged the debt but failed to make full payment, leading to a balance of ?12,67,778.00. Despite reminders and commitments, the respondent defaulted on payments, prompting the petitioner to seek legal recourse.

2. Following part payments made by the respondent, discussions were held regarding a payment plan, and a cheque for ?1,00,000.00 was issued but later dishonored due to insufficient funds. The respondent admitted financial difficulties and promised payment once funds were available, but subsequent actions indicated the company's inability to meet its obligations.

3. The petitioner issued a statutory notice which the respondent refused to accept, and the respondent's defense of inferior quality of goods was deemed an afterthought. The court noted the respondent's consistent losses and financial instability, leading to the conclusion that the company was unable to pay its debts, justifying the winding up order.

4. In light of the circumstances, the court ordered the winding up of Polo Ceramics Pvt. Ltd., appointing the Official Liquidator as the Provisional Liquidator to take possession of the company's assets and handle the winding-up process as per the provisions of the Companies Act, 1956. The petition for winding up was allowed, citing the respondent's financial incapacity to settle its dues.