2001 (2) TMI 978 - HC - Companies Law

Punjab Wireless Systems Limited Ordered Winding Up Due to Financial Inability

HS. Oberoi & Associates Versus Punjab Wireless Systems Ltd.

HS. Oberoi & Associates Versus Punjab Wireless Systems Ltd. - [2003] 115 COMP. CAS. 326 (PUNJ. & HAR.) Issues Involved:1. Petition for winding up under Sections 433 and 439 of the Companies Act, 1956.2. Outstanding dues and financial inability of the respondent-company.3. Appointment of provisional liquidator.4. Impleadment of employees' unions.5. Admission and publication of the winding-up petition.6. Financial status and management of the respondent-company.7. Final order for winding up.Issue-Wise Detailed Analysis:1. Petition for Winding Up:The petitioner filed a petition under Sections 433 and 439 of the Companies Act, 1956, seeking the winding up of the respondent-company. The basis of the petition was the non-payment of dues for civil works and interior construction services rendered by the petitioner to the respondent-company.2. Outstanding Dues and Financial Inability:The petitioner provided evidence of works assigned and completed through letters of intent and affirmations of satisfactory completion. Despite repeated requests and a statutory notice under Section 434 of the Companies Act, 1956, the respondent-company failed to pay the outstanding amount of Rs. 8,26,498.89 along with interest. The respondent-company acknowledged this debt in their written statement but did not make any further payments, indicating their inability to discharge financial liabilities.3. Appointment of Provisional Liquidator:During the pendency of the petition, the petitioner moved for the appointment of a provisional liquidator under Section 450 of the Companies Act, 1956. The court, upon concluding that there was no possibility of revival for the respondent-company, appointed a provisional liquidator to take custody of the company's assets. This decision was challenged but upheld in Company Appeal No. 24 of 2000.4. Impleadment of Employees' Unions:Three employees' unions filed an application under Order 1, Rule 10 of the Code of Civil Procedure to be impleaded, arguing that the winding-up petition would adversely affect over 1,200 employees. The court accepted their request, and the unions were added as respondents.5. Admission and Publication of the Winding-Up Petition:After hearing the parties, the court directed the publication of the admission of the winding-up petition in the Indian Express (Chandigarh edition), the Dainik Tribune, and the Official Gazette of Punjab. This was affirmed by the petitioner through an affidavit.6. Financial Status and Management of the Respondent-Company:The court noted several critical points indicating the respondent-company's dire financial situation:- Admission of a liability of Rs. 500 crores, including losses and debts.- No revival scheme proposed by the respondent-company.- Failed attempts to secure loans.- Non-payment to creditors and employees for extended periods.- Absence of substantive management, with allegations of mismanagement unrebutted.- No unencumbered assets available, with all properties mortgaged.- A report from the official liquidator detailing claims from 239 creditors amounting to over Rs. 283.01 crores.7. Final Order for Winding Up:Given the respondent-company's inability to pay its debts and the lack of any viable revival plan, the court concluded that the ingredients of Section 433(e) and (f) of the Companies Act, 1956, were satisfied. Consequently, the court ordered the winding up of Punjab Wireless Systems Limited. The official liquidator, previously appointed as the provisional liquidator, was confirmed as the liquidator to take over the company's assets and records. The order was to be published in the Indian Express, Dainik Tribune, and the Official Gazette of Punjab.The judgment comprehensively addressed the issues, detailing the financial incapacity and mismanagement of the respondent-company, leading to the inevitable conclusion of winding up.