2022 (5) TMI 147 - HC - Companies Law

Seeking dissolution of company - Section 481 of the Companies Act 1956 - HELD THAT - Though it cannot be gainsaid that the OL is unable to proceed with the winding up of said company for want of funds it is clear that just and reasonable circumstances exist for acceding to the dissolution prayer. These reasonable circumstances are as alluded to/delineated. This takes this order back to the seven limbed prayer in the captioned company application - it would be appropriate that the undistributed funds in the hands of OL the details of which have been captured in the said report shall be deposited in the appropriate Public Account of India in the Reserve Bank of India after making permissible standard statutory deductions and after incurring reasonable incidental expenses as permissible under the statute and the Rules threat i.e. said Act and Rules therein. The company is dissolved - application allowed.

Summary

Issues involved:
Dissolution of a company under Section 481 of the Companies Act, 1956; Disposal of company application and company petition; Settlement of claims and funds position of the company in liquidation; Prayer for dissolution and transfer of funds; Compliance with Section 555 of the Companies Act, 1956; Disposition of the main company petition after more than 40 years.

Analysis:
The judgment by the Madras High Court pertains to a company application and a company petition, involving the dissolution of a company under Section 481 of the Companies Act, 1956. The Official Liquidator (OL) sought the dissolution of 'Mount Mechanical Works (P) Limited,' which had gone into liquidation in a previous order. The winding up process was detailed in a report submitted by the OL, highlighting settled claims totaling over Rs. 80.60 lakhs and the settlement of a secured creditor to the tune of Rs. 65 lakhs. The funds position of the company as of November 2021 was presented, showing cash, bank, and investment amounts totaling Rs. 48,05,986.28.

The company application presented a multi-limbed prayer, including taking the report on record, filing the final account without audit, forming an opinion on dissolution, transferring funds for liquidation expenses, and transferring the remaining balance to undistributed assets account under Section 555 of the Companies Act, 1956. The Court noted that the main company petition was over 40 years old, with no current claims and idle funds. It deemed it unjustifiable to keep the main petition pending, as it would be a wasteful exercise.

The Court found just and reasonable circumstances to accede to the dissolution prayer, ordering compliance with prayer limbs (a), (b), (c), (e), and (f). However, it rejected limb (d) concerning the transfer of funds, citing Section 555 of the Companies Act, which mandates depositing undistributed assets into a Public Account of India. The judgment ultimately dissolved the company and disposed of the main company petition accordingly, with no order as to costs. The decision aimed to prevent idling of funds and ensure compliance with statutory provisions, bringing closure to the long-standing matter before the Company Court.