2014 (3) TMI 93 - HC - Companies Law

Winding up of company - Inability to pay debts - Non adherence to statutory notice - Held that - even after receipt of the statutory notice the dues which have been acknowledged by the respondent-Company have not been paid and the same remained outstanding - it is clearly established that the respondent Company has lost its financial substratum and it has become commercially insolvent. Hence it would be just and proper to direct that the respondent-Company - M/s. Gujarat Synthwood Limited be ordered to be wound up. Accordingly the respondent-Company is hereby ordered to be wound up - Decided in favour of petitioner.

Summary

Issues:
1. Petition for winding up of a company under Sections 433 and 434 of the Companies Act, 1956.

Analysis:
The petitioner filed a petition seeking winding up of the respondent-company, Gujarat Synthwood Limited, under Sections 433 and 434 of the Companies Act, 1956. The petitioner requested various reliefs, including appointing the Official Liquidator as the liquidator, restraining the respondent from dealing with its assets, and seeking payment of outstanding debts.

2. Commercial insolvency and inability to pay debts.

Analysis:
The petitioner argued that the respondent-company was not a going concern, commercially insolvent, and unable to pay its debts. The petitioner claimed to have advanced loans to the respondent, which remained unpaid despite repeated demands and acknowledgments by the respondent. The respondent admitted its liability but cited financial losses as the reason for non-payment.

3. Court proceedings and orders.

Analysis:
After issuing notices and granting interim reliefs, the Court admitted the petition and directed the respondent to pay the outstanding amount. Despite multiple opportunities, the respondent failed to appear or settle the dues. The Court, after considering the evidence and the respondent's financial situation, concluded that the respondent had lost its financial substratum and was commercially insolvent. Consequently, the Court ordered the winding up of the respondent-company and appointed the Official Liquidator to take charge of its assets and wind up the company as per the Companies Act, 1956. The Official Liquidator was instructed to submit a report within three months from the date of the order.