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Issues: (i) whether the winding-up petition was maintainable in the absence of service of the statutory demand notice at the company's registered office; (ii) whether the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 barred the winding-up petition; and (iii) whether the company should be wound up on the basis of the BIFR and AAIFR findings.
Issue (i): whether the winding-up petition was maintainable in the absence of service of the statutory demand notice at the company's registered office.
Analysis: Section 434(1)(a) of the Companies Act, 1956 requires a demand to be delivered at the company's registered office before the company can be deemed unable to pay its debts. The notice relied upon was addressed to the managing director and was not served at the registered office in the manner mandated by the provision. Strict compliance was necessary because a winding-up petition is not a mere recovery proceeding.
Conclusion: The notice was invalid for want of compliance with Section 434(1)(a), and this objection was accepted.
Issue (ii): whether the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 barred the winding-up petition.
Analysis: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 prohibits winding-up proceedings during the pendency of inquiry or related proceedings, except with the requisite consent. The company had already been registered before the BIFR and the winding-up petition was filed during that pendency. No consent of the Board was shown. Subsequent developments did not cure the initial statutory bar, since maintainability had to be tested on the date of filing.
Conclusion: The petition was barred by Section 22(1), and this defence succeeded.
Issue (iii): whether the company should be wound up on the basis of the BIFR and AAIFR findings.
Analysis: The BIFR recorded that the company had no viable rehabilitation proposal and opined that it was just, equitable and in public interest that the company be wound up under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The AAIFR affirmed that view. The High Court was required to consider that expert opinion and independently assess the material. On the record, no effective opposition was placed against the winding up in the connected proceeding.
Conclusion: The company was ordered to be wound up on the basis of the BIFR and AAIFR findings.
Final Conclusion: One petition was rejected for non-compliance with the statutory notice requirement and the SICA bar, while the connected proceeding culminated in an order for winding up of the company.
Ratio Decidendi: For a winding-up petition based on deemed inability to pay debts, service of the statutory demand at the registered office is mandatory, and where proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 are pending, a winding-up petition cannot be maintained without the required consent.
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