Dasaldhan Chemicals P. Ltd. vs Skylead Chemicals Ltd.

N.V. Anjaria, J.—The present company petition under sections 433, 434 and 439 of the Companies Act, 1956, is filed by the petitioner-Dasal-dhan Chemicals P. Ltd., with a prayer that the respondent-M/s. Skylead Chemicals Ltd., be ordered to be wound up as it is unable to pay its debt. The petitioner-company is engaged in the business of dealing in and trading in various chemical products such as methanol, acetic acid, formic acid, etc.; and it is stated that the petitioner is also the authorised dealer of G.N.F.C. Ltd. The petitioner-company has its registered office at B/4, Vijay Tower, Opp. Aabad Dairy, Kankaria Road, Ahmedabad. The case of the petitioner is that the petitioner-company and M/s. Sky-lead Chemicals Ltd. (hereinafter mentioned as "the company") had business relations since long and the company used to purchase the chemical products from the petitioner time to time. It was stated that at the commencement of financial year on April 1, 2009, in the account the company maintained by the petitioner, the amount payable by it to the petitioner was Rs. 13,14,537. During the financial year 2009-10, the company made further purchases from the petitioner as per Invoices Nos. 0133, 0157, 0749, 0807, 0893, 0919, 0988, 0998, 1041, 1061, DN020, DN0130, DN014, DN015, DN016 and 1683. The total dues at the end of financial year as on March 31, 2010, recoverable from the company was Rs. 25,12,633 stated the petitioner.

Since the company was not paying the said dues, the petitioner sent statutory notice on January 1, 2013, under sections 433 and 434 of the Companies Act, calling upon the company to pay the said amount of Rs. 25,12,633 with 18 per cent, interest from April 1, 2010, till payment and the company was asked to pay the total amount with interest within 21 days from the date of the receipt of the said statutory notice. Despite the notice as above, the company failed and did not pay the amount. The reminders were also sent to it by the petitioner. The respondent even did not reply to the statutory notice.

On the aforesaid facts, the petitioner pleaded that the company is rendered incapacitated to pay its debt and has lost its substratum, attracting liability to be wound under the provisions of the Companies Act. As recorded in the order passed by this court on September 3, 2013, the company refused to accept the service of notice of this court issued in the present petition, when the same was sought to be served by direct service. The petitioner was thereafter permitted to serve the company by registered post as well. The acknowledgment receipt of the Postal Department was placed on record and the website of the Postal Department also showed that the document in question namely notice of the court sent by registered post A.D. was delivered to the company. Thus, the notice was duly served, however the company did not opt to enter appearance, and did not choose to oppose the petition.

It may be mentioned that the affidavit of service of notice of this court on the company was filed by the petitioner on March 9, 2013. The petition came to be admitted on September 3, 2013, by order of this court. The notice of admission of the petition was ordered to be published in one daily newspaper in Gujarati language and another daily newspaper in English language, viz., Divya Bhaskar and Indian Express in Ahmedabad and Rajkot Edition and in Akila newspaper. The necessary advertisement regarding admission of the petition was thus published.

On behalf of the company, one Shri Lokedrasinh C. Roal, the director filed affidavit dated June 19, 2014, stating, inter alia, that the respondent-company had of late developed financial problems and filed application before the Board for Industrial and Financial Reconstruction (BIFR) which was registered as Case No. 160 of 2005. It was stated by order dated September 19, 2006, the company-M/s. Skylead Chemicals Ltd., came to be declared as a sick industrial company. The Industrial Development Bank of India (IDBI) was appointed as an operating agency under section 17(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), with directions issued to prepare a revival scheme for the company. Affidavit mentioned about the dates of the proceedings that took place before the BIFR, further stating that the final decision of the BIFR was awaited.

It was submitted in the affidavit -in-reply that therefore, the petition may be kept pending. The affidavit-in-reply also stated that one Mayur Shah had also filed Company Petition No. 15 of 2002 against the company, in which, this court on September 5, 2007, passed the following order:

"It is an admitted position that the proceedings before the BIFR are pending. Office to list the matter as and when the note is filed by either side that the proceedings before the BIFR are terminated or concluded. The respondent-company shall also report to this court, within a period of four weeks from the date of termination and/or conclusion of the proceedings before the BIFR, that the proceedings are concluded."

It was submitted that the present case is similar. It was further stated that the petitioner had also instituted summary suit for recovery of the amount claimed in the present petition before the City Civil Court, Ahmedabad which came to be disposed of by the learned City Civil Judge on the ground that the proceedings were pending before the BIFR under the SICA.

Heard the learned advocate Mr. Tarak Damani for the petitioner and the learned advocate Mr. Manish J. Patel for the company-M/s. Skylead Chemicals Ltd.

During the hearing of this petition, the learned advocate for the petitioner produced a copy of summary record and proceedings of hearing held on July 2, 2014, before the Bench of the BIFR. The proceedings and development recorded by the BIFR in relation to the said company which had gone sick are relevant to be stated.

After the company was declared to be a sick industrial company by the BIFR and operating agency the IDBI was appointed directing to prepare a scheme of renewal for the company, neither the company, nor the IDBI submitted any rehabilitation scheme, nor they submitted any status report. Time was again granted and extended for giving a workable rehabilitation scheme, but nothing was submitted. The company filed appeal before the AAIFR and the Appellate Bench also, inter alia, directed that the company should expeditiously settle the dues of the secured creditors, etc. The company had secured creditors being the Gujarat State Financial Corporation and others.

As all the efforts failed in the direction of renewal of the company, on October 17, 2012, the Bench of the BIFR issued direction, inter alia, for issuance of show-cause notice under section 33 of the SICA to explain as to why the company should not be considered for winding up. The company was once again asked to reconcile the dues of the GSFC, but the company could not deliver or yield any result in its favour. During the hearing before the BIFR as recorded, the company was given opportunity on more than one occasions to settle the dues with the secured creditors. All that was in vain and the company could not show its financial soundness or revival possibility. Ultimately, on February 20, 2014, the Bench of BIFR directed that the show-cause notice be issued to the company for winding up and gist thereof to be published in the newspapers for the information of the shareholders, workers and creditors for their objections and suggestions. It appears that a proposal for revival was offered by one ARVEE Laboratories. In the subsequent hearing, the BIFR, inter alia, ordered the winding up notice to be kept in abeyance.

In the proceedings of July 2, 2014, the BIFR ordered that though the company was offered one-time settlement by the GSFC, it did not pay any amount towards that. Regarding the proposal of ARVEE Laboratories, it was mentioned that the same was not acceptable and needed substantial improvement. Ultimately, the following conclusions came to be drawn by the Bench of the BIFR:

"(i) OA (TDBI) to submit a report on the improved offer of ARVEE Laboratories as promised during the hearing, giving concrete recommendation whether the offer is accepted or not, within a period of two weeks.

(ii) If the OA (IDBI) does not report an improved proposal acceptable to the lenders by July 20, 2014, the winding up shall stand confirmed."

From the above narration of facts, as well as the details coming out from the summary record and proceedings before the BDFR, it becomes crystal clear that the respondent-company has no means or capacity to pay its debt to the petitioner claimed in the present petition. The company does not have any defence, much less any bona fide defence towards dues. Therefore, a clear situation obtained is that the company is unable to pay its debt and that it has lost its substratum. Accordingly, the respondent-company-M/s. Skylead Chemicals Ltd., is liable to be wound up. The petition therefore deserves to be allowed and accordingly, it is allowed.

The respondent-company-M/s. Skylead Chemicals Ltd., is hereby ordered to be wound up under the provisions of sections 433, 434 and 439 of the Companies Act, 1956. The official liquidator attached to this court is hereby appointed as official liquidator for the said company-M/s. Skylead Chemicals Ltd. The official liquidator is directed to take possession of all the assets of the company, both movable and immovable properties. The official liquidator is further directed to take within his custody and control all the accounts, books and other relevant records and the entire affairs of the company. The official liquidator shall carry out necessary inventory and prepare panchnama in that regard and shall file an appropriate report before this court within a period of three months. If required, the official liquidator is free to take service of official valuer for the purpose of preparation of inventory report, possession notes and for getting other details recorded in relation to the affairs of the company. There shall be no costs.