The Hon’ble Sri Justice C.V.Nagarjuna Reddy Company Petition No.184 of 2013
Dated 17.09.2014
Between:
Mr.N.Ramesh Babu Reddy …Petitioner And M/s.Contenental Informatics India Ltd., Hyderabad and another.
…Respondents Counsel for the Petitioner: Mr.M.L.Narsimham Counsel for respondent No.1: None appeared Counsel for respondent No.2: Mr.B.Appa Rao for Mr.B.Narayana Reddy, Asst. Solicitor General The Court made the following:
Order:
This Company Petition is filed for winding up of respondent No.1- Company.
The petitioner averred that he was one of the promoters of respondent No.1- Company; that respondent No.1- Company was incorporated on 11.06.1997; that he was appointed as its Managing Director and continued as such till the year 2002; and that respondent No.1- Company has ceased its business operations due to several problems from 31.03.2002. He has further averred that all the Directors of respondent No.1- Company have resigned by the end of the year 2002 and that the said Company has become defunct in all respects. He has further stated that respondent No.1- Company has unsecured creditors to a tune of Rs.70 Lakhs and that there are claims by the Income Tax Department to a tune of Rs.4.22 Crores.
This Court has ordered notice to respondent No.1-Company. As service could not be effected, a notice was published in ‘Economic Times’ daily newspaper with the permission of the Court. Despite publication of notice, no one appeared for respondent No.1- Company.
This Court has examined the maintainability of this Company Petition filed, for winding up of respondent No.1-Company, by the petitioner, who claims to be one of its contributories, under Section 439 (4) (b) of the Companies Act, 1956 (for short ‘the Act’) and passed an order to that effect on 05.12.2013. On 30.01.2014, this Court has directed the impleadment of Registrar of Companies, Andhra Pradesh as respondent No.2 in the Company Petition and adjourned the case to enable the learned Assistant Solicitor General to take instructions from the impleaded respondent as to whether it would be appropriate if he exercises his power under Section 560 of the Act for striking off the name of respondent No.1- Company from the Register. The Registrar has filed a report, wherein he has, inter alia, stated that his office record shows that the Company has two active charges/secured loans amounting to Rs.61 lakhs from Vasavi Co-Operative Urban Bank Limited and The Federal Bank Limited, for which two Form-8’s were filed and registered with the Registrar’s Office; that apart, the balance sheet as on 31.03.2001, shows further secured loan liability of Rs.14,43,049/- towards Jubilee Hills Co-Operative Urban Bank Limited and HP Finance Company; that respondent No.1- Company has fixed assets worth Rs.2.64 lakhs, investments worth Rs.99.99 lakhs besides the sum of Rs.4.12 Crores being shown under the head ‘Loans and Advances” recoverable by the Company. The Registrar has, therefore, opined that it is not feasible to exercise his power under Section 560 of the Act.
By detailed order, dated 18-03-2014, this Court has admitted the Company Petition and ordered publication of the same in two daily newspapers of English and Telugu edition each. Accordingly, proof of publication has been filed by the petitioner. However, no one participated in the proceedings on behalf of respondent No.1- Company.
The petitioner has filed chief-examination affidavit as PW.1. It is inter alia stated therein that respondent No.1- Company has continued its business operations since its inception in the year 1997 till its cessation on and from 31.03.2002; that respondent No.1- Company has seized its business operations due to down trend in software business and global recession; that he was appointed as Managing Director of respondent No.1- Company on 11-06-1997 and continued as such till 2002; that all the Directors of respondent No.1- Company have resigned at the end of 2002 and that since the 5th Annual General Body Meeting could not be held in the year 2002, he has automatically ceased to be the Managing Director of respondent No.1- Company. PW.1 has further deposed that as a promoter and contributor, he has tried in all possible ways to turn around respondent No.1- Company, but all his efforts went futile and that there are claims against respondent No.1- Company by unsecured creditors and the Income Tax Department to the tune of Rs.12 Lakhs and Rs.4.22 Crores respectively. He has further deposed that as one of the subscribers to the Memorandum of Association of respondent No.1- Company and a shareholder and contributory having shares therein, he satisfied the conditions prescribed in Section 439 (4) (b) of the Act, to maintain the winding up petition.
The petitioner adduced documentary evidence vide Exs.A.1 to A.5 through PW.1.
Ex.A.1 is the certified copy of the Certificate of Incorporation of respondent No.1- Company; Ex.A.2 is the certified copy of Memorandum of Association of respondent No.1- Company; Ex.A.3 is the certified copy of Articles of Association of respondent No.1- Company; Ex.A.4 is the certified copy of Annual Return of respondent No.1- Company for the year 2000-2001 and Ex.A.5 is the certified copy of form No.2 (Return of Allotments), dated 15.02.1999, showing the shares allotted to PW.1.
Mr.B.Appa Rao, learned Counsel representing Mr.B.Narayana Reddy, learned Assistant Solicitor General appearing for respondent No.2- Registrar of Companies, has cross-examined PW.1. In his cross-examination, PW.1 has deposed that in the year 2002, PW.1 and all the Directors of respondent No.1- Company have resigned; that thereafter, no one was elected in the place of the previous Board of Directors and that after the 4th Annual General Body Meeting, no further meeting as such was held. It is further deposed that in the year 2003, the affairs of respondent No.1- Company were closed and that since then, it has not been conducting any operations.
Under Section 439 (1) (c) of the Act, an application for winding up of a Company can be presented inter alia by any contributory or contributories. Under Section 433 (f) of the Act, a Company can be wound up, if the Court is of the opinion that it is just and equitable to do so.
From the facts pleaded by the petitioner, and the evidence adduced by it, which remained uncontroverted, it is proved that the affairs of respondent No.1- Company have come to a complete stand still from the end of the year 2002 and that thereafter, even the Board of Directors is not in existence. This Court, is therefore, of the opinion that it is just and equitable to wind up respondent No.1- Company so that its liabilities can be distributed among its creditors from out of its realizable assets.
For the above-mentioned reasons, respondent No.1- Company is wound up. The Official Liquidator is appointed as the liquidator of respondent No.1- Company for taking over its assets and liabilities. The petitioner shall deposit a sum of Rs.25,000/- towards initial expenses of the Official Liquidator within one month from today. The petitioner shall also carry out advertisement in two newspapers v iz . , Andhra Bhoomi (Telugu) and Economic Times (English) having circulation in the State of Telangana. The petitioner shall also furnish a copy of this order to the Registrar of Companies, Hyderabad, within one month.
Company Petition is ordered accordingly.
(C.V.Nagarjuna Reddy, J) Dt: 17th September, 2014
LUR