M/s. Advance Television Network Ltd. vs The Registrar of Companies

Rajiv Sahai Endlaw, J

This appeal u/s 483 of the Companies Act, 1956 is preferred against the order dated 4th July, 2011 of the learned Company Judge dismissing Co.Pet.316/2006 filed by the appellant u/s 433(a) r/w Section 439 of the Act for voluntary winding up of the appellant Company. Notice of the appeal was issued. Finding that the learned Company Judge had also heard Prasar Bharti, though not a party, notice was issued to Prasar Bharti also. The counsels have been heard. The appellant Company sought its voluntary winding up, pleading that it was engaged in the business inter alia of telecasting T.V. Serials/Programs and had entered into an agreement with Prasar Bharti; that it suffered net loss of Rs. 41,90,576/-; that disputes also arose with Prasar Bharti which are subject matter of arbitration; that since 11th March, 1999 no business had been done; that in the circumstances the Directors of the appellant Company in the meeting held on 5th September, 2006 resolved for winding up of the appellant Company; that an Extraordinary General Meeting of the shareholders was also held on 9th October, 2006 which approved of the said course.

The learned Company Judge has dismissed the petition observing/holding, i) that winding up u/s 433 is a discretionary act of the Court, though to be guided by factors such as solvency, ability to pay debts and interest of creditors and that the Court should not exercise its discretion to wind up unless compelling reasons exist; ii) that Prasar Bharti had opposed the petition and pleaded that the same was only to defeat the claims of Prasar Bharti against the appellant Company and which are subject matter of arbitration; iii) that the appellant had also concealed that it had in the said arbitration proceedings filed a counter claim of Rs. 11,21,63,605/-against Prasar Bharti''s claim of Rs. 4,54,74,256/-; iv) that if the said counter claim of the Company succeeded, the possibility of revival of the appellant Company could not be ruled out; v) thus it could not be said that the substratum of the appellant Company had disappeared or that there was no possibility of resumption of business. The learned Company Judge in this regard has relied on New Swadeshi Mills of Ahmedabad Ltd. Vs. Dye-Chem Corporation (1986) 59 CC 183 (DB-Guj) and Bombay Metropolitan Transport Corporation Ltd. Vs. Employees of Bombay Metropolitan Transport Corporation Ltd.(CIDCO) (1991) 71 CC 473 (Bom.).

The counsel for the appellant Company, has during the course of hearing offered the undertaking of the present management of the appellant Company to, notwithstanding winding up, continue to contest the arbitration proceedings and not to leave the same to the Official Liquidator. The appellant Company has also offered to, if permitted to be wound up, give up the counter claim against Prasar Bharti in the said arbitration. Affidavits of the only eight shareholders of the appellant Company in support of the appeal have also been filed. It is also contended that there is no prospect of the appellant Company in doing any other business. It is also argued that once the procedure prescribed in law for voluntary winding up has been fulfilled, the Court should not come in the way. Reliance is placed on Surendra Kumar Pareek Vs. Shree Guru Nanak Oils Pvt. Ltd., (1995) 82 CC 642 (Raj.) where inspite of the objection of Rajasthan Financial Corporation that winding up was intended to avoid payment, the Rajasthan High Court had ordered winding up. Reliance is also placed on A. Sreedharan Nair Vs. Union Hardwares (Private) Ltd., (1997) 89 CC 37 (Kerala) where suspension of business for just one year was held to be sufficient for winding up.

We have enquired about the financial status of the appellant Company. The counsel for the appellant Company has handed over to us the copies of the balance sheet as on 31st March, 2007, 31st March, 2008, 31st March, 2009 & 31st March, 2010. A perusal thereof shows the appellant Company to have taken unsecured loans of Rs. 1,47,54,464/- and having inventories of Rs. 2,21,88,188/-. However the schedule giving particulars of the said inventories is not included in the compilation handed over to us.

We have further enquired from the counsel for the appellant, the steps taken by the creditors of the appellant Company, even though unsecured, for recovery of their dues of 1,47,54,464/-. The counsel states that no steps have been taken by any of the creditors for recovery of their dues till now.

Even though the counsel for the appellant Company has offered to give up the counter claim against Prasar Bharti and further offered that the ex management will continue to contest the claim of Prasar Bharti against the appellant Company and not burden the Official Liquidator with the same but in the entirety of the facts aforesaid we are suspicious of the motives of the appellant Company in seeking its winding up when there does not appear to be an apparent reason therefor. The possibility of the appellant Company seeking winding up for other oblique reasons which are not visible to this Court and of the management of the appellant Company seeking the winding up to remove a blemish from their own record and which may be coming in the way of their other ventures, cannot be ruled out.

We, in these circumstances, do not deem it appropriate to interfere with the discretion exercised by the learned Company Judge, for valid reasons, for refusing to wind up the appellant Company. The counsel for the Prasar Bharti has also opposed the claim for winding up. We accordingly dismiss this appeal. No order as to costs.