Appellate Tribunal Affirms NCLT's Winding Up Order

The NCLT's order for winding up the company was affirmed by the Appellate Tribunal, which found no merit in the appeal. The Tribunal held that the winding up was necessary to meet the ends of justice and protect the company's interests. The appeal was dismissed, and the interim order dated 01.10.2021 was vacated.

---

---

Issues Involved:

1. Compliance with Consent Terms
2. Appointment of Observer-cum-Facilitator
3. Justification for Winding Up Order
4. Deadlock in Management
5. Statutory Non-Compliance

Summary:

1. Compliance with Consent Terms:
The appellants filed Company Petition No. 29 of 2016 under Sections 241 and 242 of the Companies Act, 2013, alleging oppression and mismanagement. Consent Terms were drawn and recorded by the Tribunal on 21st August 2017. Saakar Corporation was required to deposit Rs. 18,43,28,252 in an escrow account but deposited only Rs. 13,68,11,081, resulting in a shortfall of Rs. 4,75,17,171. The appellants alleged that respondents failed to comply with the Consent Terms, leading to further litigation.

2. Appointment of Observer-cum-Facilitator:
Due to non-compliance with the Consent Terms, the NCLT appointed Hon'ble Justice Dilip Karnik as Observer-cum-Facilitator on 8th March 2021 to mediate between the parties. Despite several meetings, the parties could not reach a consensus on the valuation or method of valuation of the company's lands and assets. The Observer-cum-Facilitator reported that settlement efforts failed.

3. Justification for Winding Up Order:
The NCLT, after considering the failure to reach a settlement and the persistent non-compliance with statutory requirements, ordered the winding up of the company. The Tribunal held that no other remedy was available and that winding up was just and equitable to protect the interests of the company and its stakeholders. The NCLT's decision was based on the principle that the company was defunct and not conducting any business.

4. Deadlock in Management:
The company faced a deadlock in management due to disputes among shareholders, with no business operations conducted since 2015. The financial statements had not been prepared since the financial year 2015-2016, and there were no board meetings since 01.04.2016. The Tribunal found that the deadlock and non-compliance with statutory requirements justified the winding up order.

5. Statutory Non-Compliance:
The company had not filed statutory accounts or complied with other regulatory requirements for several years. A Strike Off Notice under Section 248(1) of the Act was received from the Registrar of Companies. The Tribunal noted that the company's non-compliance with statutory obligations and the deadlock among shareholders necessitated the winding up to prevent further deterioration of the company's value.

Conclusion:
The NCLT's order for winding up the company was affirmed by the Appellate Tribunal, which found no merit in the appeal. The Tribunal held that the winding up was necessary to meet the ends of justice and protect the company's interests. The appeal was dismissed, and the interim order dated 01.10.2021 was vacated.

---