Vaishnodevi Enterprises vs Tai Chongbang Textiles Industries Ltd.

K.A. Puj, J.—The petitioner has filed this petition under Sections 433 and 434 of the Companies Act, 1956, for winding up of the respondent-company on the ground that the respondent-company has failed to discharge its liabilities towards its creditors including the petitioner.

This court has issued notice on May 4, 2007. Notice was duly served on the respondent-company. Mr. Raju K. Kothari, learned advocate appears for the respondent-company. An affidavit-in-reply is filed on behalf of the respondent-company on August 21, 2007. After considering the petition as well as the reply filed by the respondent-company and after hearing learned advocates appearing for the respective parties, this court has passed an order of admission and advertisement on September 6, 2007. It was observed by the court that in view of the statement made in the petition read with the affidavit filed on behalf of the respondent-company and more particularly the averments made at paragraphs 7, 8, 9 and 10, it prima facie appeared that the financial position of the company was deteriorated and the company has admitted the dues, but was unable to pay the amount. The court has further observed that the secured creditors have enforced their security under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. The court therefore, passed an order of admission and directed the petitioner to issue advertisement in English daily The Indian Express, Ahmedabad edition and Jansatta, Gujarat daily, Ahmedabad edition. Publication in Government Gazette was dispensed with.

Pursuant to the said order, the petitioner has effected the advertisements and affidavit of publication along with the relevant newspaper cuttings is filed before this court on October 11, 2007.

Pursuant to the said advertisement, a communication is received by the petitioner''s advocate from Akhil Gujarat Cotton Mazdoor Sangh dated October 12, 2007, wherein it is stated that the Union has filed Special Civil Application No. 2666 of 2005 praying for quashing and setting aside the impugned possession notice as well as the notice for sale dated January 15, 2005 and February 19, 2005, collectively and praying for the directions to respondents Nos. 1 and 2 banks to explore the means of taking over the management of the company. The said petition was disposed of by this court vide its order dated May 10, 2005, directing the said banks to set apart Rs. 5 crores out of the sale proceeds in a separate account. The said amount was to be set apart without prejudice to the rights and contentions of the parties. Bank of India being respondent No. 1 in the said petition was directed to file necessary affidavit and undertaking before this court in this behalf. The court has also given liberty to the petitioner-union to approach an appropriate forum. It appears that pursuant to the said order, one Mr. G.P. Mohite, Chief Manager and the authorised officer of the bank has filed an affidavit and undertaking to the above effect. It appears from the letter of the union that subsequently, Bank of India has filed another petition being Special Civil Application No. 9821 of 2006, In the said petition, this court, has after considering the pari passu charge of the workers, directed to distribute the amount, from the sale proceeds at 32.194 per cent, in favour of the workers and accordingly, the dues of the workers were Rs. 3,14,11,157 and that the amount of distribution amongst the workers on pari passu charges had come to Rs. 1,01,12,538.50.

From the above referred proceedings before this court and from the communication received by the petitioner from the workers union, it clearly appears that the assets of the company have already been sold. Nothing remains which enables the company to carry on any business or to continue its existence. To pass a winding up order is merely an empty formality. The company is virtually closed and the secured creditors have already invoked the provisions under the Securitisation Act and sold the assets of the company.

In the above view of the matter, since the respondent-company has lost its financial substratum and failed to discharge its liabilities towards the creditors, the company is hereby ordered to be wound up. The official liquidator attached to this court is appointed as the liquidator of the company. He is directed to take charge of the assets, if any, of the company in liquidation. He is further directed to call for the details from the secured creditors, more particularly, from Bank of India and Dena Bank with regard to the amount realized from the sale of the assets of the company and amount paid to the workers till this date.

The official liquidator is further directed to go through the proceedings of Special Civil Application No. 2666 of 2005 and Special Civil Application No, 9821 of 2006 and the orders passed therein. After considering the development and outcome of the said proceedings, the official liquidator is directed to file a report before this court. The official liquidator is further directed to issue notices to the ex-directors of the company to file statement of affairs.

Subject to the aforesaid direction and observation, this petition is accordingly disposed of.