2017 (5) TMI 317 - HC - Insolvency and Bankruptcy

Winding up petition - Failure and neglected to repay the loan under the Dollar Loan Agreement - first GOL loan and second GOL loan were classified as non-performing assets in the books of the petitioner - Held that - A perusal of the record, including the minutes of various meetings of the JLF clearly indicates that the respondent has admitted the liability of the petitioner from time to time. The respondent is heavily indebted not only to the petitioner in the aforesaid two petitions but large number of other creditors. The liabilities of the respondent are much more than the assets. A perusal of the minutes of the meeting of the JLF clearly indicates that the liabilities of the respondent, including the statutory liabilities and towards the arrears of wage is also substantial in addition to the liabilities of the other secured and unsecured creditors. The promoters of the respondent have admitted before this Court that the shareholding of the promoters is now reduced to 2%. Upon raising a query by this Court to the learned counsel for the respondent whether the respondent would be in a position to infuse any funds to revive the company, learned counsel for the respondent, on instructions, states that in view of the fact that the shareholding of the promoters is now reduced to 2%, there is no possibility of the promoters infusing any further funds. A perusal of the record clearly indicates that neither the promoters nor the investors are now agreeable to infuse any funds in the respondent for its revival. None of these parties have made any offer before this Court also though repeatedly asked to infuse any funds even at this stage. The ONGC Limited has already terminated the major contract awarded to the respondent. In these circumstances, do not find any scope of any revival of the respondent company in the facts and circumstances of this case highlighted aforesaid. The respondent in this case has not only admitted the liability of the petitioner but of large number of other creditors. Though there was an attempt made by the intervenors by holding large number of meetings from time to time during the period between 18th April, 2014 and February, 2017, the members of the JLF could not revive the respondent. These two petitions are pending in this Court since 2014. The respondent however, could not make any other proposal also for clearing the dues of these petitioners. Thus before the assets of the respondent are frittered away, the same are required to be protected by this Court in the interest of all the creditors, including the petitioners by passing appropriate orders including by appointing the Official Liquidator as a Provisional Liquidator. Thus the facts of this case, it is clearly beyond reasonable doubt that the respondent has not only admitted the liabilities of the petitioner, but is heavily indebted to large number of creditors. Inspite of several opportunities the respondent had for its revival, the respondent is not in a position to revive. In this situation, it is not inclined to accept the submission of the learned counsel for the respondent and the intervenors that these petitions are filed with a view to pressurize the respondent company and are not bonafide. Petition admitted.

Summary

Issues Involved:
1. Winding up of the respondent company due to inability to pay debts.
2. Intervention and impleadment in the company petition.
3. Admission of company petitions and appointment of Official Liquidator.

Detailed Analysis:

1. Winding up of the Respondent Company Due to Inability to Pay Debts:
The petitioner sanctioned multiple loans to the respondent and its subsidiary, Great Offshore (International) Limited, which were guaranteed by the respondent. The respondent failed to repay the loans, leading to the classification of the loans as non-performing assets (NPA). Despite statutory notices and demands, the respondent acknowledged its liabilities but failed to make payments. The respondent's inability to repay debts was admitted in various communications and meetings. The respondent's financial distress was further evidenced by the significant arrears in statutory dues and wages, and the cancellation of major contracts, such as the ONGC contract. The court concluded that the respondent was heavily indebted, with liabilities exceeding assets, and there was no scope for restructuring or revival.

2. Intervention and Impleadment in the Company Petition:
Eight banks and financial companies filed an application for intervention and impleadment in the company petition, presenting minutes from the Joint Lenders' Forum (JLF) meetings. The JLF meetings revealed that the respondent's accounts were declared as NPA, and various corrective action plans were discussed but not implemented due to the respondent's financial instability. The lenders, including Axis Bank, Exim Bank, and others, formed committees to address asset sales and restructuring but faced challenges due to the respondent's inability to meet financial obligations and the refusal of promoters to infuse funds. The court allowed the intervention application, recognizing the significant involvement of multiple creditors in the restructuring efforts.

3. Admission of Company Petitions and Appointment of Official Liquidator:
The court considered the arguments and evidence presented by both parties. The petitioners argued that the respondent admitted its liabilities and failed to revive despite multiple opportunities. The intervenors contended that the restructuring process was ongoing and requested more time. However, the court noted that the respondent and intervenors failed to present any viable plan for revival or infusion of funds. The court emphasized the need to protect the assets of the respondent in the interest of all creditors. Consequently, the court admitted the company petitions and appointed the Official Liquidator as Provisional Liquidator, directing the publication of the winding-up order in local newspapers and the Maharashtra Government Gazette.

Conclusion:
The court found that the respondent company was unable to pay its debts and that there was no realistic prospect of revival. The intervention by multiple creditors was acknowledged, but their efforts were deemed insufficient to prevent winding up. The court ordered the admission of the company petitions and the appointment of the Official Liquidator to safeguard the interests of all creditors.