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In Re : Budhia Auto Associate Pvt. Ltd.

2016 (9) TMI 1081 - CHHATTISGARH HIGH COURT

Winding up petition - Held that:- If the company is unable to pay its debt, does not necessarily entitle the Court to order winding up of the company as the discretion to pass such an order, even in the case of the inability of a company to pay its debt, is by Section 433 vested in the Court and that discretion has to be exercised judiciously. While exercising the judicial discretion, apart from the non-availability of entire facts regarding the assets and liabilities of the current business of .....

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f 2015 - Dated:- 8-8-2016 - Hon'ble Shri Justice Prashant Kumar Mishra, J. For Petitioner Shri Siddharth Dubey, Advocate For Union of India Shri N.K. Vyas, Asstt. Solicitor General For State of CG Shri P.K. Bhaduri, Govt. Advocate ORDER 1. This petition for winding up has been preferred by the company itself without referring to the relevant clause of Section 433 of the Companies Act, 1956 ('the Act' in short), however, in course of argument it was informed that the petition is under .....

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leys, motor cycles, tractors, vans, launches, boats, aeroplanes, hydro planes, helicopters and aircrafts and other conveyances of all kinds and description suitable for propulsion of land, sea or the air or in any combination thereof whether propelled or assisted means of petrol, diesel, oil, spirit, gas, vapour, electricity, battery, solar energy, automatic energy, animal, mannual labour or any other powers whatsoever and of engines, chassis, bodies, tools and implements, spare parts for or in .....

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y is unable to pay, therefore, it has become commercially insolvent, therefore, the company is needed to be wound up. 5. On 18-11-2015 the petitioner has also filed two separate applications for stay of recovery of tax for the assessment period 2011-12 & 2012-13. In the first application it is averred that out of total demand of ₹ 1,68,06,577/- for the said periods the petitioner has already paid an amount of ₹ 75,65,998/-. Similar statement is made in the second application also .....

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petitioner company. 7. Learned Assistant Solicitor General appearing for the Registrar of Companies has referred to the decision of the Supreme Court rendered in Harinagar Sugar Mills Co. Ltd., Bombay v. M.W. Pradhan (now G.V. Dalvi), Court Receiver, High Court, Bombay AIR 1966 SC 1707 and the judgment rendered by the Andhra Pradesh High Court in Krishna Kilaru and Another v. Maytas Properties Limited Rep. By its Managing Director, Hyderabad Comp. Pet. No.70 of 2010 & other connected matters .....

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ing the statutory meeting; c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year; d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two; e) if the company is unable to pay its debts; 9. Even if any of the above stated 5 contingencies has arisen in a given case, it is still the discretion of the Court to direct or refuse winding up in view of l .....

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larly, in New Swadeshi Mills of Ahmedabad Ltd. v. Dye- Chem Corporation (1986) 59 Com Cases 183 (Guj) (DB), Rishi Enterprises, In re. (1992) 73 Com Cases 271 (Guj) and in Navjivan Trading Finance P. Ltd., In re. (1978) 48 Com Cases 402 (Guj), it has been held that a company will not be wound up merely because it is unable to pay its debts so long as it can be revived or resurrected by a scheme or arrangement or when it has still prospects of coming back to life. Although a petition can be filed .....

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shna Kilaru (supra) the Andhra Pradesh High Court has held that when a company is commercially insolvent it can be held that it is unable to pay its debts and the petition under Section 433 (e) and Section 434 (1) (c) of the Act is maintainable, however, in the case in hand, in the two pages petition, it has not been elaborated as to what are the assets and liabilities of the petitioner company in addition to the liability in form of tax dues payable to the State Government under the VAT Act. Th .....

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. If the petition of this nature is allowed, every defaulter who owes huge sum to the Government under the provisions of the Value Added Tax Act or the Income Tax Act, would rush to the company Court to declare itself insolvent and avoid payment of tax. 13. In Satish Chandra v. Union of India (1994) 5 SCC 495, the Supreme Court held that the power of winding up, conferred by Section 433 of the Act, is drastic. A winding up petition, praying for the economic death of a running and live commercial .....

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