2013 (8) TMI 1188 - HC - Companies Law

Summary

Issues:
Petition for winding up under Companies Act, 1956 due to non-payment of loan amount. Service of notice to the respondent. Acknowledgment of debt by the respondent. Appointment of Provisional Liquidator. Compliance with Companies Act requirements by the Directors of the respondent.

Analysis:
The judgment pertains to a petition filed by a bank seeking winding up of a company under Sections 433(e)/434(1)(a)/439 of the Companies Act, 1956, due to non-payment of a substantial loan amount. The petition was initiated as the respondent company failed to pay an amount of Rs. 11,77,65,057.22 paise, representing the loan advanced by the petitioner bank along with interest. Despite efforts to serve notice to the respondent, including publication in newspapers and affixation at the registered office, the respondent did not appear or file a reply, leading to the petition being heard in their absence.

The counsel for the petitioner highlighted the balance sheet of the respondent company, showing an acknowledgment of the debt owed to the bank as of a specific date. Additionally, a letter dated 29.07.2011 from the respondent to the bank further confirmed the outstanding amount due, serving as an admission of the debt as per Section 18 of the Limitation Act, 1963. Subsequently, a statutory notice demanding payment was issued to the respondent, which was duly served, but no response was received.

Based on the evidence presented, the court was satisfied that the respondent had neglected to pay the admitted debt to the bank, leading to the appointment of an Official Liquidator (OL) as the Provisional Liquidator of the respondent. The OL was tasked with taking over all assets, books of accounts, and records of the respondent, preparing an inventory of assets, and seeking valuation assistance if necessary. Moreover, the court ordered the publication of the petition citation in official gazettes and directed the Directors of the respondent to comply with specific requirements of the Companies Act by submitting relevant statements and documents within stipulated timelines.

In conclusion, the judgment underscores the legal recourse available under the Companies Act for non-payment of debts, emphasizing the acknowledgment and admission of debt as crucial factors in winding up proceedings. The appointment of a Provisional Liquidator and the directive for compliance with statutory obligations by the company's Directors aim to ensure orderly proceedings and protection of the creditor's interests.