2012 (2) TMI 199 - HC - Companies Law

Companies Act 1956 - Petition filed u/s 433(e) & 433(f) of Companies Act, 1956 seeking to wind up the Respondent-Company - respondent - Company , is a partnership firm engaged in the business of accepting deposits from the general public non-repayment of deposit of petitioner Held that - Respondent Company is unable to clear the debts of the creditors and therefore, the petitioners have made out a case for winding up of the Company Decided in favor of petitioner.

Summary

Issues:
Petition filed under Section 433(e) and (f) of the Companies Act, 1956 seeking winding up of a partnership firm engaged in accepting deposits and lending at high interest rates. Respondent firm incurred losses, failed to repay deposits, and had more liabilities than assets. Respondents claimed inability to repay due to financial crises and global market conditions. Petition admitted, no response received after advertisement. Court heard counsels for both parties and examined the financial situation of the respondent firm.

Analysis:
The petitioners sought the winding up of the respondent partnership firm under Section 433(e) and (f) of the Companies Act, 1956, alleging non-repayment of deposits and interest amounting to Rs. 11,67,945. The petitioners claimed the respondent firm was engaged in accepting deposits from the public and lending at high interest rates, resulting in losses and an inability to repay the petitioners. The petitioners asserted that the liabilities of the respondent exceeded its assets, justifying the winding up petition.

The respondents, represented by their counsel, filed a statement of objections stating their inability to repay due to financial crises and global market conditions. They argued that if the loans and advances made by the firm were recovered, they could repay the investors. The respondents submitted financial documents showing liabilities exceeding assets. Despite their intentions not to harm the investors' interests, the respondents admitted their inability to repay the petitioners.

Upon reviewing the materials on record, the Court found that the respondent firm was unable to clear its debts, supporting the petitioners' case for winding up. The respondent firm's counsel indicated a potential application for recalling the winding up order if funds were mobilized, but no concrete proposals were presented. Consequently, the Court allowed the petition, ordering the winding up of the respondent firm and appointing the Official Liquidator to take over its assets and liabilities.

The Court directed the petitioners to deposit a sum with the Official Liquidator for winding up expenses, serve a copy of the order on the Registrar of Companies, and publish the order in specified newspapers. With the final order for winding up issued, another related application was dismissed as it no longer required consideration.