2017 (8) TMI 868 - HC - Companies Law

Winding up petition - Held that - The Official Liquidator was directed to file a report under Section 481 of the Companies Act for dissolution of company within two weeks. Hence the Official Liquidator had filed an application No.1206/2017 and stated that Mr. Sachin Duggal, ex-director of the company in liquidation visited the office on 03.02.2014 and his statement was recorded under Section 130 of Company (Court) Rules. The other directors namely Mr.Sachin Duggal, Mr.Kartik Sehgal and Mrs.Indira Sehgal also visited the office on 11.08.2014 when Mrs.Indira Sehgal and Mr.Kartik Sehgal submitted an affidavit dated 13.08.2014 mentioning that the company is having no liability, creditors or assets. Similar affidavit dated 02.09.2014 by Mr.Sachin Duggal, the ex-director was submitted. The default notice was issued to Mr.Jonathan Edward Chales Grange, ex-director on 01.10.2014 but it could not be served since his address was not found. The fund position of the company in liquidation is Rs.-4,664/- as on 17.04.2017 and hence due to its abysmal fund position, no claims were invited. No claims even otherwise were received by the Official Liquidator. The Division Bench in company application No.34/2014 vide its order dated 07.12.2015 allowed moving of application under Section 481 of the Companies Act, 1956 in the present case. This Court vide its order dated 03.02.2016 permitted the Official Liquidator to publish notice of dissolution for inviting no objection(s) for dissolution of Company in Jansatta (Hindi) and Hindustan Times (English). In terms of order dated 03.02.2016 of this Court dissolution notice has been published in Jansatta (Hindi) and Hindustan Times (English) on 11.06.2016. Till date no objection has been received against the dissolution of above said company. No fruitful purpose will be served to continue the Liquidation proceedings. Thus, this is a fit case for the dissolution of the company. In the circumstances M/s SMX Technologies (India) Ltd. (in liquidation) is directed to be dissolved under Section 481 of the Companies Act, 1956 and the Official Liquidator is discharged from the liquidation proceedings of the company. The Official Liquidator is permitted to close the books of accounts of the company in liquidation after appropriating the negative funds in the company fund from the company pool fund.

Summary

Issues:
Winding up petition filed by shareholders and directors of respondent company, fraud allegations against managing director, irregularities in conduct of company affairs, appointment of Official Liquidator, dissolution of the company.

Winding up Petition:
The petitioners, shareholders and directors of the respondent company, filed a winding up petition due to irreconcilable deadlock in management and loss of faith in the managing director, Mr. Kartik Sehgal. The petition detailed the joint venture agreement, shareholding structure, and the fraudulent acts committed by Mr. Sehgal, leading to a complete halt in business activities.

Fraud Allegations:
The petition highlighted instances of fraud committed by Mr. Kartik Sehgal, including misrepresentation, misappropriation of funds, and collusion with third parties to defraud the petitioners. The fraudulent activities led to criminal charges being filed under various sections of the Indian Penal Code and a subsequent investigation by the Police.

Irregularities in Company Affairs:
Apart from the fraud allegations, the petitioners uncovered irregularities in the conduct of the respondent company's affairs, such as unauthorized appointment of additional directors, failure to file annual returns, and non-compliance with regulatory requirements. These irregularities further eroded the petitioners' trust in the management of the company.

Appointment of Official Liquidator and Dissolution:
Following the winding up petition, an Official Liquidator was appointed by the Court to oversee the liquidation process. The Official Liquidator submitted reports indicating the lack of assets and liabilities in the company, leading to a recommendation for dissolution. The Court, considering the circumstances and the principles laid down by the Supreme Court, directed the dissolution of the company under Section 481 of the Companies Act, 1956, discharging the Official Liquidator from further proceedings.

Conclusion:
The Court, after thorough consideration of the petition, fraud allegations, irregularities in company affairs, and the Official Liquidator's reports, ordered the dissolution of the respondent company, M/s SMX Technologies (India) Ltd., under Section 481 of the Companies Act, 1956. The Official Liquidator was directed to close the company's accounts and appropriate any negative funds before dissolution. The petition and all pending applications were disposed of in light of the dissolution order.