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Issues:
Company petition for winding up under Companies Act, 1956. Analysis: The petitioner, a bank, filed a company petition seeking to wind up the respondent-company due to non-payment of dues under a hire purchase facility. The respondent failed to pay instalments totaling Rs. 1,51,92,944.96, despite repeated requests and demands. The petitioner served a legal notice and terminated the agreement, but the respondent did not respond or make any payment. The petitioner argued that the respondent's net worth was eroded, assets were disposed of without permission, and funds were diverted, indicating financial instability. The respondent opposed the petition, suggesting a settlement in instalments with interest waiver. However, the court found that the debt was not disputed, and the respondent had failed to make any payment or propose a viable settlement. The court noted the respondent's financial inability to pay even a portion of the debt, leading to the conclusion that the company had lost its financial substratum and was unfit to pay its creditors. The respondent's argument that a civil suit was already filed and thus the company petition should not be entertained was dismissed. The court clarified that filing a civil suit did not preclude the petitioner from seeking winding up if all legal requirements were met. Reference to previous judgments highlighted that winding up proceedings are discretionary, but the mere existence of a civil suit does not bar a winding up petition. The court emphasized that the respondent's inability to pay the outstanding amount was the determining factor in ordering winding up. The court directed the winding up of the respondent-company and appointed the Official Liquidator to take possession of its assets, bank accounts, and records. The Official Liquidator was tasked with preparing inventories and submitting a report within three months.
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