Company ordered to wind up under sections 433, 434, 439 for inability to pay debts and lack of defense

Gujarat HC ordered winding up of respondent company under sections 433, 434 and 439 of Companies Act, 1956 on grounds of inability to pay debts. Court found company had no means or capacity to pay petitioner's debt and lacked bona fide defence. Company had lost its substratum, making winding up appropriate. Official Liquidator attached to HC was appointed as Official Liquidator. Petition allowed.

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Issues:
Company petition for winding up under sections 433, 434, and 439 of the Companies Act, 1956 due to unpaid debt.

Analysis:
The petitioner, a chemical company, filed a Company Petition seeking winding up of the respondent company, Skylead Chemicals Ltd., for failure to pay its debt amounting to Rs. 25,12,633/-. Despite statutory notices and reminders, the respondent failed to pay the dues. The respondent also did not respond to the court notice served via registered post. The petitioner contended that the respondent had lost its substratum and was unable to pay its debts, justifying winding up under the Companies Act.

The respondent company had developed financial problems and was declared a sick industrial company by the Board for Industrial and Financial Reconstruction (B.I.F.R.). Various proceedings were initiated, including the appointment of the Industrial Development Bank of India (I.D.B.I.) as an operating agency to prepare a revival scheme. However, no viable rehabilitation scheme was submitted, leading to directions for winding up consideration. Efforts for revival, including a proposal from ARVEE Laboratories, did not yield positive results. The B.I.F.R. ultimately ordered the winding-up notice to be kept in abeyance pending further developments.

The High Court, after considering the facts and proceedings before the B.I.F.R., concluded that the respondent company lacked the means to pay its debt and had no viable defense. The court found that the respondent had lost its substratum and was unable to pay its dues, justifying the winding up. Consequently, the court ordered the winding up of Skylead Chemicals Ltd. under sections 433, 434, and 439 of the Companies Act, 1956. The Official Liquidator was appointed to take possession of all assets, accounts, and records of the company, and to submit a report within three months. No costs were awarded in the matter.

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