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2014 (1) TMI 1968 - HC - Companies LawInability to pay debts - alleged mismanagement leading to substantial financial losses - Section 439(8) of the Companies Act 1956 read with Rule 97 of the Companies (Court) Rules 1959 - HELD THAT - It is evident from the material on record that the first respondent is unable to pay its debts and therefore the present petition having duly been advertised there is due compliance of the requirement in law. Accordingly the petition is allowed. The Official Liquidator is appointed as the liquidator in winding up. The first respondent-company is ordered to be wound up. The petitioners shall deposit a sum of Rs. 50, 000/- towards the expenses involved in favour of the Official Liquidator. Petition allowed.
The Karnataka High Court, presided over by Hon'ble Anand Byrareddy, J., addressed a petition concerning the financial insolvency of Mars Print Pack Pvt. Ltd., incorporated in 1995. The petitioners, investors related to the company's Managing Director, alleged mismanagement leading to substantial financial losses and inability to repay a loan of Rs. 50,00,000/- obtained from respondent No.4. This default resulted in recovery proceedings before the Debt Recovery Tribunal, culminating in a recovery certificate favoring respondent No.4 for over Rs. 1,00,00,000/-. Despite this, respondent No.4 had not executed recovery actions, posing a threat of proceeding against the petitioners.
The petitioners filed under Section 439(8) of the Companies Act, 1956, claiming the company's inability to pay its debts, evidenced by the lack of response to a statutory notice. The court found sufficient grounds to support the petitioners' claims, noting the absence of representation from the respondents except respondent No.4. Consequently, the court ordered the winding up of Mars Print Pack Pvt. Ltd., appointing the Official Liquidator for the process. The petitioners were directed to deposit Rs. 50,000/- for liquidation expenses, file the order with the Registrar of Companies, and advertise the winding-up order in specified newspapers within four weeks.
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