2018 (12) TMI 269 - HC - Companies Law

Dissolution of Company Granted after Winding-Up Process Completion. Advocates' Responsibility Emphasized.

The Court allowed the dissolution of M/s Mysore Tools Pvt. Ltd. as the winding-up process was completed, with all assets realized and liabilities settled. ... Dissolution of the company in liquidation seeked by OL - winding up process itself is completed by the Official Liquidator long ago - Held that: This Court is of the considered opinion that these series of Company Applications is nothing but a sheer abuse of process of law and these applications are absolutely not maintainable and these frivolous applications are filed for wasting public time and Court time. It is too late in the day for these applicants to make such applications when long ago the winding up process itself is completed by the Official Liquidator duly appointed by the Company Court. The property of the company itself was acquired by the KIADB and even compensation was received from the KIADB and the funds so received have been distributed among the stakeholders of the said company in accordance with the provisions of the Act and remaining amount transferred to Public Fund of Government of India. This Court is at loss to understand this kind of series of applications, when majority of them came to be disposed of and dismissed for lack of any bonafides on the part of such applicants. Still either the same lawyer or the different lawyer with the same tenor of applications has kept on filing such applications with obviously the lack of particulars, the draft of Scheme or any good reason for moving such application at this belated stage or any measure taken to show their bonafide in the matter. The Official Liquidator prays before the Court that it is needed to finally dissolve the company in question as nothing more remains to be done. The learned counsels for Applicants still press for these kind of Applications. Therefore, this Court is left with no other option but, with sense of remorse and pain, to dismiss these Applications with exemplary costs and order that filing of such Applications is strongly discouraged and put to an end. Issues Involved:1. Dissolution of the company in liquidation (M/s Mysore Tools Ltd.)2. Settlement of claims by the Official Liquidator3. Applications for revival of the company4. Abuse of process of law by filing frivolous applicationsIssue-Wise Detailed Analysis:1. Dissolution of the Company in Liquidation:The Official Liquidator filed CA No.54/2018 seeking the dissolution of M/s Mysore Tools Ltd. The assets of the company, specifically land, were acquired by the Karnataka Industrial Areas Development Board (KIADB) in 2005, and compensation amounting to Rs. 6,27,73,272/- was deposited with the Official Liquidator. The Court noted that the winding-up process, initiated in 1982, had been ongoing for 45 years. The Official Liquidator reported that all assets had been realized, liabilities settled, and no further assets were pending for realization. The Court, satisfied with the completion of the winding-up process, allowed CA No.54/2018 and ordered the dissolution of M/s Mysore Tools Pvt. Ltd.2. Settlement of Claims by the Official Liquidator:The Official Liquidator reported that the sum received from KIADB was used to pay the only secured creditor, State Bank of Mysore, a total of Rs. 3,14,61,026/-. The remaining amount was distributed to the equity shareholders, with a total of Rs. 3,39,00,000/- paid out. The unclaimed capital was transferred to the Public Account of India. The Court reviewed the Official Liquidator's actions and found that all liabilities towards creditors and shareholders had been discharged, and no funds were left to the credit of the company.3. Applications for Revival of the Company:Several applications were filed by ex-shareholders/promoters seeking leave to file a scheme of arrangement for the revival of the company. The Court noted that these applications lacked concrete steps, draft schemes, or earnest money deposits to show bona fides. The Official Liquidator highlighted that similar applications had been filed and dismissed in the past. The Court found these applications to be frivolous and an abuse of the process of law, as the winding-up process was already completed.4. Abuse of Process of Law by Filing Frivolous Applications:The Court observed a pattern of repeated, frivolous applications filed by the same or different lawyers with the same tenor, lacking particulars or bona fide reasons. The Court emphasized the dual role of advocates as spokespersons for their clients and officers of the Court, criticizing the lack of responsibility shown by the advocates in filing such applications. The Court dismissed the pending applications (CA Nos.245/2018, 135/2017, 382/2017, and 278/2018) with exemplary costs of Rs. 25,000/- each, to be deposited with the Registrar (Judicial) and remitted to the Prime Minister’s Relief Fund. Failure to deposit the amount would result in recovery proceedings under the Land Revenue Recovery Act.Conclusion:The Court allowed CA No.54/2018, ordering the dissolution of M/s Mysore Tools Pvt. Ltd., as the winding-up process was completed. The frivolous applications for revival were dismissed with costs, and the Court strongly discouraged the filing of such applications in the future. A copy of the dissolution order was directed to be forwarded to the Registrar of Companies.