9911796707
TMI Blog2004 (5) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... its directors being opponent Nos. 1 to 6. ( c )to appoint a professional chartered accountant or any other person as the Hon ble Court may deem fit as the liquidator of the company under section 515(1) of the Companies Act, 1956. ( d )to annul the transfer of any assets and properties of the company made by the directors and not by the liquidator of the company after the commencement of the winding up. ( e )to prevent the company from causing the transfer or disposal of any of its assets and properties under section 518(1)( b ) of the Companies Act, 1956 in favour of any person." 3. The case of the applicant is that the applicant is a creditor of respondent No. 1 for a sum of Rs. 1,23,218 being the cost of colours and chemicals supplied to respondent No. 1 along with interest thereon of Rs. 91,707 aggregating to a sum of Rs. 2,14,925. Respondent No. 1 was incorporated on 6-5-1986 as a Private Limited Company having its Registered Office and the place of business at the address mentioned in the cause title. It is further stated by the applicant that in pursuance of notice dated 1-2-2003 a general meeting of the shareholders of the Company (in liquidation) was convened on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o misguide the Court. It is further stated in the affidavit that in pursuance of resolution passed by the members on 3-7-2003 the entire procedure as prescribed under law has been followed by the Company including procedure prescribed under section 485(1) of the Act. A copy of the resolution dated 3-7-2003 has been annexed as R-2 to the affidavit, Mr. Gupta also invited attention to the notice of appointment of the Liquidator given to the Registrar of Companies, publication of notice in newspaper on 16-7-2003, publication in Government Gazette in support of the submission that section 485(1) of the Act had duly been complied with. 5.2 It is further stated in the affidavit that Respondent No. 1 had complied with provisions of section 488(1) of the Act and that the directors of the Company had formed an opinion regarding the financial capacity and capability of the Company to pay up all its dues within the specified period of three years from the commencement of the winding up. It is further averred that after obtaining valuation report of the assets and considering the Profit Loss A/c as on 31-3-2003, the directors had taken a decision which was bona fide and based on reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration was made and the copy of the said declaration along with report of auditors of the Company on the Profit and Loss A/c and balance sheet as on 31-3-2003 and the statement of the Company s Assets and Liabilities as on 31-5-2003 was sent to the Registrar of Companies on 30-6-2003 by post and "as per my information the said declaration has been received by the Registrar of Companies thereafter in due course by post". Thereafter it was submitted that the requirement of section 488(2) of the Act has been properly complied with and a request was made that the Court call for the files of the Registrar of Companies or the report from the registrar of companies to ascertain the correctness of the averments made in the affidavit on 6-5-2004. 8. As stated hereinbefore, accordingly, the learned advocate for Respondent No. 7 Mrs. Dawavala has produced copy of the declaration dated 5-6-2003 wherein the stamp of receipt No. 475553 appears, which goes to show that the same was received by the Office of the Registrar only on 29-7-2003. At this stage Mr. Gupta submitted that the documents were received in the Office of the Registrar of Companies at an earlier point of time, but becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the company is wound up in pursuance of a resolution passed within the period of five weeks after the making of the declaration, but its debts are not paid or provided for in full within the period specified in the declaration, it shall be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion. (5) A winding up in the case of which a declaration has been made and delivered in accordance with this section is in this Act referred to as a members voluntary winding up; and a winding up in the case of which a declaration has not been so made and delivered is in this Act referred to as a creditors voluntary winding up . [Emphasis supplied] 10. On a plain reading of sub-section (1) of section 488 of the Act, it is apparent that where a proposal to wind up a company voluntarily is made, its director or the majority of the directors, where there are more than two directors at a meeting of the Board, shall make a declaration verified by an affidavit, to the effect that the said directors have made a full inquiry into the affairs of the company and after such verification have formed an opinion that the company has no debts, or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provision stipulates in two conditions and by virtue of the employment of the term and in clause ( a ) it denotes that both the conditions have to be fulfilled so that the declaration shall have effect for the purpose of the Act. The delivery of the declaration to the Office of the Registrar for registration has to be before the date of passing of the resolution, mere making of the declaration within the five weeks preceding the date of resolution is not sufficient. The use of terms "shall have no effect" and "unless" in the opening part of sub-section (2) of section 488 of the Act make it clear that clause ( a ) which provides for two pre-requisite conditions stipulates mandatory compliance and failure of any one makes the declaration of no effect. Therefore, on the face of it Respondent No. 1 has failed to fullfil the pre-requisite conditions prescribed under section 488(2)( a ) of the Act. 10.3 Similarly, sub-clause ( b ) of sub-section (2) of section 48 of the Act is also a condition precedent which goes to show that such a declaration has to be accompanied by a copy of the report of the auditors of the Company and such report has to embody a statement of the company s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides for the consequence but also indicates that requirement of sub-section (2) of section 488 is mandatory in nature inasmuch as not only a declaration is required to be made but the same is required to be delivered with the period as provided under clause ( a ) of sub-section (2) of section 488 of the Act. 12. Hence, it is apparent on facts that there is failure to comply with mandatory requirements of section 488(2) of the Act resulting in the winding up as "creditors voluntary winding up." 13. Therefore, to safeguard interest of all concerned the Official Liquidator attached to this High Court is hereby appointed as Liquidator of the Company i.e., Arya Silk Mills Private Limited with all the powers as available to him under provisions of the Act. 14. In the aforesaid facts and circumstances of the case it is necessary that to verify the basis of the declaration made under section 488 of the Act the accounts of the Company are examined and verified by an independent agency. For the purpose Shri Ravindra N. Vepari, Chartered Accountant, based at Surat is hereby appointed to assist the Official Liquidator in undertaking the exercise of examination and verification ..... X X X X Extracts X X X X X X X X Extracts X X X X
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