BANK OF INDIA vs M/S SARVODYA PAPER MILLS LTD
$~C-16 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 23rd April, 2024 + CO.PET. 15/1987 & CO.APPL. 561/2023, CO.APPL. 397/2024 BANK OF INDIA ….. Petitioner Through: versus M/S SARVODYA PAPER MILLS LTD ….. Respondent Through: Mr. Amit Agrawal, Ms. Reaa Mehta & Ms. Sana Jain, Advs. for OL. CORAM: HON’BLE MR. JUSTICE DHARMESH SHARMA DHARMESH SHARMA, J. (ORAL) CO. APPL. 397/2024
1. This is an application preferred on behalf of the Official Liquidator under Section 481 of the Companies Act, 19561 seeking dissolution of the company (in liquidation), namely M/s. Sarvodya Paper Mills Ltd. and praying that the Official Liquidator be discharged as its Liquidator.
2. Briefly stated, the above-noted application for dissolution has been moved in the present company petition which was instituted under Sections 433, 434 and 439 of the Companies Act of 1956, for the winding up of the respondent/company (in liquidation) on the ground of non-payment of outstanding dues amounting to Rs. 1,49,83,144.54/- along with due interest.
1 The Act
3. From a perusal of the record, it is borne out that a Provisional Liquidator was appointed to the company (in liquidation) vide order dated 10.11.1997 and pursuant to the same, citation of provisional liquidation was published in newspapers on 07.10.1999. Further, the respondent company was ordered to be wound up vide order dated 19.04.2005 and the Official Liquidator attached with this Court was appointed as its liquidator and it was directed therein the no further citations were required to be published.
4. It is stated that as per the record of the Registrar of Companies, Delhi the following persons are shown as the Directors of the company (in liquidation):
(i) Sh. Krishan Gopal Tiwari
66, Hasratpura, G.T. Road, Ghaziabad, Uttar Pradesh.
(ii) Sh. Durga Prasad Saboo
Dharuhera, Rewari, Haryana.
5. As regards the aforementioned Directors, statutory notices under Section 454 and 456 of the Act were served upon them on 12.12.1997, calling upon them to file Statement of Affairs and also recording of their statements under Rule 130 of the Companies (Court) Rules, 1959. However, it is stated that no Statement of Affairs were filed by the said Ex-Directors.
6. As regards the registered office of the company (in liquidation) situated at Flat No. 704, Akashdeep Building, Barakhamba Road, New Delhi, it is stated that possession was taken over by the Official Liquidator on 21.05.1998, from one K.K. Agarwal, Advocate (Court
Receiver). Further, pursuant to orders of this Court dated 29.01.2002 and 09.05.2002, vacant possession of said property was handed over to the landlady on 11.07.2002.
7. It is brought forth that the above-mentioned Court Receiver handed over the charge of the factory premises of the company (in liquidation) situated at A-62/65, Sikanderabad Industrial Area, Bulandsahar, Uttar Pradesh to the Official Liquidator on 21.05.1998. As regards the said factory premises, pursuant to order dated 14.11.2002, Sale Notices for the Land and Building of the factory as also Plant and Machinery at the premises were published in the newspapers namely, Indian Express” (English) and Amar Ujala” (Hindi) on 05.04.2003. Subsequently, the factory premises along with plant and machinery were sold by way of an auction for a sale consideration of Rs. 2,75,00,000/- and possession of the same was duly handed over to the Auction Purchaser on 22.03.2005.
8. In compliance with the order dated 19.04.2005, claims were invited from the creditors as well as workmen of the company (in liquidation) by way of publication in the newspapers namely, Statesman” (English) and Amar Ujala” (Hindi). Thereafter, a joint meeting was held on 15.02.2007 between the various secured creditors of the company (in liquidation) from whom claims were received, wherein it was agreed that the sale proceeds from the factory premises as well as plant and machinery, amounting to Rs. 2.75 corers be distributed amongst them on a pro-rata basis. Disbursement in the said manner was subsequently carried out, pursuant to the order dated 06.08.2007.
9. It is brought forth in the present application for dissolution that as on 18.05.2023, the funds position of the company (in liquidation) stood at Rs. 26,78,942.41/- and the expenses on account of liquidation as also statutory dues stood at Rs. 2,53,291/-. Therefore, it is stated that after adjustment of said expenses, a sum of Rs. 24,00,000/- would be available for distribution to the Secured Creditors.
10. It is stated that two more claims were received by the Official Liquidator; firstly, a claim from 3A Capital Services Ltd. on 27.01.2015, who represented themselves to be an Equity Shareholder of the company (in liquidation); and secondly, a claim was received from Trade Tax, Sikanderabad dated 19.11.2003.
11. However, since the company (in liquidation) did not have sufficient funds and no further assets were available with the Official Liquidator from which any money could be realised and be paid to any of the creditors of the company, other than its Secured Creditors, an application was moved on behalf of the Official Liquidator bearing CA No. 561/2023, interalia seeking permission to make payment to the Secured Creditors and transfer the available balance, if any, to the Common Pool Fund, after deduction of the Liquidation Expenses incurred by the office of the Official Liquidator.
12. At present, it is stated that the company (in liquidation) has no further assets, either movable or immovable, from which any money can be realised. Therefore, the present application has been filed under Section 481 of the Act for dissolution of the company (in liquiation), as no fruitful purpose would be served in keeping the present winding up proceedings pending.
13. At this juncture, it would be apposite to refer to the decision in Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti & Ors.2 whereby the Supreme Court inter alia held as under:-
2 (2007) 7 SCC 753
When the affairs of the Company have been completely wound up or the court finds that the Official Liquidator cannot proceed with the winding up of the Company for want of funds or for any other reason, the court can make an order dissolving the Company from the date of that order. This puts an end to the winding up process.
14. It would also be expedient to consider Section 481 of the Companies Act, 1956, which provides for dissolution of a company under such circumstances as are prevailing in the present matter, and the relevant portion of the same reads as under:
Section 481. Dissolution of company. (1) When the affairs of a company have been completely wound up or when the Court is of the opinion that the liquidator cannot proceed with the winding up of a company for want of funds and assets or for any of the reason whatsoever and it is just and reasonable in the circumstances of the case that an order of dissolution of the company should be made, the Court shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly. …….
15. In view of the aforementioned decision of the Supreme Court in Meghal Homes (supra) and keeping in mind the import of Section 481 (1) of the Act as also the facts and circumstances of the present case, these liquidation proceedings warrant to be brought to an end. Therefore, the present application is allowed. The company (in liquidation) M/s. Sarvodya Paper Mills Ltd., stands dissolved and the Official Liquidator is hereby discharged as its Liquidator.
16. Therefore, the Official Liquidator is permitted to make
payments to the Secured Creditors of the company (in liquidation) as detailed in Paragraph (9) of the instant application, and transfer the available balance, if any, to the Common Pool Fund. As prayed for, filing of the Half Yearly/Annual accounts of the company (in liquidation) with this Court may be dispensed with and the Official Liquidator is permitted to close the books of accounts of the company (in liquidaition).
17. A copy of this Judgment be communicated to the Registrar of Companies within 30 days by the Official Liquidator.
CO.PET. 15/1987
18. Accordingly, the present company petition and pending applications, if any, stand disposed of.
DHARMESH SHARMA, J. APRIL 23, 2024 Sadiq