2020 (12) TMI 867 - Tri - Companies Law

Seeking winding up of HMT Bearings Limited - Seeking appointment of Counsel who filed the petition as provisional liquidator - Section 272 of the Companies Act, 2013 - HELD THAT - This Tribunal is empowered under Section 275 (1) of the Companies Act, 2013 to appoint an Official Liquidator for the purpose of winding up of the Company and for this purpose the Tribunal, in accordance with Section 275 (2) of the Companies Act, 2013, to appoint the Company Liquidator from amongst the Insolvency Professionals registered under the Insolvency Bankruptcy Code, 2016. The Petitioner cannot be considered for Company Liquidator as he has rendered his services as an Advocate for Company and the Bench is apprehensive that it may amount to conflict of interest. Upon hearing the submission made by the Learned Counsel for Petitioner and the facts and circumstances stated in the petition, namely the bonafide action taken pursuant to the decision of the Central Government to wind up the Company under Section 271-272 of the Companies Act, this is considered to be a fit case to order winding up / closure of the Company i.e. M/s HMT BEARINGS LIMITED - application allowed.

Issues Involved:
1. Petition for winding up of HMT Bearings Limited.
2. Appointment of a Provisional Liquidator.
3. Compliance with the Cabinet Committee on Economic Affairs (CCEA) and Ministry of Heavy Industries directives.
4. Observations and clarifications sought by the Registrar of Companies (RoC).
5. Appointment of a Company Liquidator.
6. Execution of the winding-up process and related compliance.

Detailed Analysis:

1. Petition for Winding Up of HMT Bearings Limited:
The Company Petition was filed under Section 272 of the Companies Act, 2013, seeking the winding up of HMT Bearings Limited. The petition also sought the appointment of the Counsel who filed the petition as the provisional liquidator. The company, formerly known as Indo-Nippon Precision Bearings Limited, was incorporated on 21.10.1964 and is a subsidiary of HMT Limited, a Government of India Undertaking. The company was directed to close by the Cabinet Committee on Economic Affairs (CCEA) and the Ministry of Heavy Industries & Public Enterprises.

2. Appointment of a Provisional Liquidator:
The petitioner sought the appointment of Dr. K. Lakshmi Narasimha, Advocate and Insolvency Professional, as the provisional liquidator. However, the Tribunal noted a potential conflict of interest as he had rendered services as an Advocate for the company. The Tribunal relied on the discussion paper dated 12.05.2019 of the Insolvency & Bankruptcy Board of India, which proposed prohibiting an IP from acting as a liquidator if they had rendered professional services in any other capacity for the same process.

3. Compliance with CCEA and Ministry of Heavy Industries Directives:
The CCEA approved the closure of the company on 01.01.2016, and the Ministry of Heavy Industries directed the company to take action under Sections 271-272 of the Companies Act, 2013. The Board of Directors resolved to authorize the Managing Director to take necessary steps for the winding-up process, and a Special Resolution was passed in the Extraordinary General Meeting held on 11.02.2020 to wind up the company.

4. Observations and Clarifications Sought by RoC:
The Registrar of Companies, Hyderabad, furnished comments on the petition, highlighting several observations:
- Annual Returns and Balance Sheet up to 31.03.2019 were filed.
- Clarification was sought on whether all shareholders, including two foreign body corporates, were informed and their consent obtained.
- Discrepancies were noted in the company's Statement of Affairs regarding gross assets and liabilities.
- Supporting documents were requested for waiving Government of India loans amounting to ?6011 lakhs.

The petitioner provided compliance, including a certificate from M/s N. Naresh and Co, Chartered Accountants, clarifying the waiver of the Government of India loan.

5. Appointment of a Company Liquidator:
The Tribunal appointed Shri Sai Ramesh Kanuparthi, Insolvency Professional, as the Company Liquidator. He was directed to file a declaration within seven days disclosing any conflict of interest or lack of independence. The Liquidator was tasked with completing the winding-up process within six months and performing tasks specified under Chapter XX of the Companies Act, 2013.

6. Execution of the Winding-up Process and Related Compliance:
The Tribunal ordered the following:
- The directors and officers of the company were directed to hand over all books of accounts and audited financial statements to the Liquidator within 30 days.
- The Liquidator was to initiate the winding-up process as per Section 277 (5) to (8) of the Companies Act, 2013.
- A fee of ?2,50,000 per month plus actual expenses was fixed for the Liquidator.
- The Liquidator was to file monthly reports along with minutes of the Winding-up Committee meetings until the final report for dissolution was submitted.
- The Liquidator was to seek the Tribunal's approval for the dissolution of the company upon completion of the winding-up process.
- No suit or legal proceedings were to be instituted by or against the company without the Tribunal's leave.
- The Registry was directed to communicate the order to the Liquidator and the Registrar of Companies, who was to update the company's status and notify the order in the official gazette.

Conclusion:
The Tribunal allowed the Company Petition and ordered the winding up of HMT Bearings Limited, appointing Shri Sai Ramesh Kanuparthi as the Company Liquidator. The Liquidator was directed to complete the process within six months, with detailed compliance and reporting requirements outlined.

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