Winding up by court ‑ Petition for winding up ‑ Management to be asked about non‑payment of debts before approving presentation of petitions under sub‑section (5) - Companies Law - No. 7/73,

Circular : No. 7/73, dated 9 ‑ 5 ‑ 1973. Subject:- Winding up by court ‑ Petition for winding up ‑ Management to be asked about non ‑ payment of debts before approving presentation of petitions under sub ‑ section (5) It is noticed by the Department that in certain cases sanction is accorded by the Regional Directors under section 439(5)/433(e) to file petitions for compulsory winding up of the companies on the basis that their liabilities exceeded assets by a wide margin as per the last copy of their annual accounts on the record of the Registrar of Companies and that the companies were notionally unable to pay their debts. During the course of hearing of the some of these cases, the management took the stand that there were no complaints from the creditors about the payment of their dues and the companies were in a position to meet the liabilities. It is seen that the Punjab and Haryana High Court has passed orders in some cases on this basis, dismissing such petitions moved by the Registrar. In order to put such petitions on a more sound footing, it is suggested that in future before approving the presentation of petitions under section 439(5), the Regional Director may specifically ask the management of the companies concerned to clarify whether there were any complaints from creditors about non‑payment of the debts due to them and whether they were in a position to meet their current liabilities and if so, how.