2024 (6) TMI 452 - HC - Companies Law

Company dissolved under Section 481 after liquidation finds no assets for unsecured creditors, Official Liquidator discharged

BANK OF INDIA Versus M/s SARVODYA PAPER MILLS LTD

The Delhi HC allowed dissolution of a company under Section 481 of the Companies Act, 1956. The company in liquidation had no sufficient funds or assets ... Seeking dissolution of the company (in liquidation) - Section 481 of the Companies Act, 1956 - HELD THAT:- Since the company (in liquidation) did not have sufficient funds and no further assets were available with the Official Liquidator from which any money could be realised and be paid to any of the creditors of the company, other than its Secured Creditors, an application was moved on behalf of the Official Liquidator bearing CA No. 561/2023, interalia seeking permission to make payment to the Secured Creditors and transfer the available balance, if any, to the Common Pool Fund, after deduction of the Liquidation Expenses incurred by the office of the Official Liquidator. At present, it is stated that the company (in liquidation) has no further assets, either movable or immovable, from which any money can be realised. Therefore, the present application has been filed under Section 481 of the Act for dissolution of the company (in liquidation), as no fruitful purpose would be served in keeping the present winding up proceedings pending. Keeping in mind the import of Section 481 (1) of the Act as also the facts and circumstances of the present case, these liquidation proceedings warrant to be brought to an end. Therefore, the present application is allowed. The company (in liquidation) – M/s. Sarvodya Paper Mills Ltd., stands dissolved and the Official Liquidator is hereby discharged as its Liquidator. Application for dissolution allowed. Issues involved: Application for dissolution of a company (in liquidation) u/s 481 of the Companies Act, 1956.Summary:Issue 1: Appointment of Official Liquidator and winding up proceedings- A Provisional Liquidator was appointed for the company (in liquidation) and the company was ordered to be wound up.- Official Liquidator was appointed and took possession of the company's registered office and factory premises.- Sale of factory premises and distribution of sale proceeds among secured creditors were carried out.Issue 2: Directors' non-compliance- Directors were served with statutory notices to file Statement of Affairs, but they did not comply.Issue 3: Financial position and claims- Funds position of the company (in liquidation) and expenses on account of liquidation were detailed.- Claims were received from creditors, including an Equity Shareholder and Trade Tax department.Issue 4: Application for dissolution- Official Liquidator sought permission to pay secured creditors and transfer remaining balance to Common Pool Fund.- Company had no further assets for realization of funds, leading to the application for dissolution u/s 481 of the Act.Decision:- Referring to relevant legal provisions and a Supreme Court decision, the Court allowed the application for dissolution.- The company (in liquidation) was dissolved, and the Official Liquidator discharged.- Official Liquidator permitted to make payments to secured creditors and close the company's accounts.- Judgment to be communicated to the Registrar of Companies within 30 days.Conclusion:- The company petition and pending applications were disposed of in accordance with the decision for dissolution.