2021 (2) TMI 1392 - HC - Companies Law

Seeking for an order of winding up of the respondent-company on the ground of inability to pay debts - Section 433(e) and (f) 434 and 439 of the Companies Act 1956 - HELD THAT - Clearly a case is made out as regards inability to pay debts and also in light of the assertion that the business activity has stopped as made out by the learned counsel for the respondent and recorded by this Court it is also just and equitable that the petition be allowed. The respondent-company deserves to be wound up under Section 433(e) and (f) 434 read with Section 439 of the Companies Act 1956 - The respondent-company namely M/s. Indus Garments (India) Private Limited is ordered to be wound up. The winding up order is to be advertised by way of publication in The Hindu English Daily Newspaper and Udayavani Kannada Daily Newspaper in terms of Rule 113 of the Company (Court) Rules 1959. The Official Liquidator is appointed as the Liquidator of the company and after taking charge of the assets as per Rule 114 is to proceed as per the Act and Rules. Petition disposed off.

Summary

Issues:
Petition for winding up under Sections 433(e) and (f), 434, and 439 of the Companies Act, 1956 based on inability to pay debts.

Analysis:
The petitioners filed a petition seeking winding up of the respondent-company due to unpaid debts. The petitioners claimed that despite supplying goods to the respondent and raising necessary invoices, a balance of Rs. 18,57,479 remained unpaid. The respondent acknowledged this balance, but failed to make payments as promised, as indicated by an email and a statutory notice sent by the petitioners. The notice was returned with the postal endorsement 'left', suggesting service. The petitioners argued that sending the notice to the registered office address, even if not received, satisfied the service requirement under Section 51 of the Companies Act and Section 27 of the General Clauses Act. The Delhi High Court's judgment supported this interpretation. Additionally, the respondent did not dispute its inability to pay debts, with its counsel admitting that business operations had ceased. The court found the notice service valid and the debt unpaid, justifying the winding-up petition.

The court noted the respondent's counsel's statement confirming the cessation of business operations, further supporting the petition for winding up. The court admitted the petition, ordered advertisement, and appointed the official liquidator as the provisional liquidator. Given the respondent's inability to pay debts and the cessation of business activities, the court deemed it just and equitable to wind up the respondent-company under Sections 433(e) and (f), 434, and 439 of the Companies Act, 1956. The court directed the winding-up order's publication in newspapers and appointed the Official Liquidator as the Liquidator of the company to proceed with asset management as per the Act and Rules. Other winding-up petitions by creditors were also addressed, allowing them to lodge claims before the Official Liquidator for adjudication. The court disposed of the petition, clarifying the procedure for creditors to make claims before the official liquidator for adjudication.