2025 (1) TMI 956 - HC - Companies Law

Company dissolved under Section 481 after Official Liquidator completes process and gets discharged from duties

Gujarat HC dissolved a private limited company under Section 481 of the Companies Act, 1956. The court accepted the Official Liquidator's report and ... Dissolution of the company - Section 481 of the Companies Act, 1956 - HELD THAT:- Having heard the learned advocate for the Official Liquidator and on perusal of the record of this report and in the facts of the case the report deserves to be accepted. The Official Liquidator is permitted to make payment towards professional fees of Rs. 1,500/- to M/s. P. C. Rathod & Co., Chartered Accountants towards preparation of Auditor’s Certificate from common pool account available with the Official Liquidator since there is no fund in the account of the company in liquidation. Conclusion - M/s. Tirupati Foundry Private Limited (In Liquidation) is hereby dissolved under Section 481 of the Act and the Official Liquidator attached to this Court stands discharged and is relieved as liquidator of M/s. Tirupati Foundry Private Limited., (in Liquidation). ISSUES: Whether the Official Liquidator can seek dissolution of a company under Section 481 of the Companies Act, 1956 when the affairs of the company have been completely wound up or when further winding up is not possible due to lack of assets and funds. Whether the Official Liquidator's actions in not taking possession of certain company assets, due to their status as personal property or prior lawful possession by others, can be ratified by the Court. Whether ex-directors' failure to submit Statement of Affairs and record statements under Section 454 of the Companies Act, 1956, justifies initiation of criminal proceedings under Section 454(5) of the Act. Whether the sale of company assets under the State Financial Corporation Act, 1951 and validation of such sales by the Court affect the winding up process and dissolution. Whether the Official Liquidator must notify relevant authorities and creditors prior to dissolution and consider any objections received. Whether the Official Liquidator can be discharged and relieved from duties upon dissolution of the company under Section 481. Whether the provision under Section 559 of the Companies Act, 1956 allows aggrieved parties to apply for review of the dissolution order within two years. RULINGS / HOLDINGS: The Court held that under Section 481 of the Companies Act, 1956, 'when the affairs of a company have been completely wound up or when the Court is of the opinion that the liquidator cannot proceed with the winding up of a company for want of funds and assets or for any other reason whatsoever and it is just and reasonable in the circumstances of the case that an order of dissolution of the company should be made,' the Court shall make an order for dissolution accordingly. The Court ratified the Official Liquidator's action of not taking possession of certain assets which were personal properties or already lawfully possessed by others, based on relevant documents and information provided. The Court found the initiation of criminal proceedings under Section 454(5) of the Companies Act, 1956 against ex-directors justified due to their failure to comply with statutory obligations to submit Statement of Affairs and record statements. The Court confirmed the sale of company assets under the State Financial Corporation Act, 1951 and validated such sales, recognizing their effect on the liquidation process. The Official Liquidator complied with the requirement to notify the Registrar of Companies, Income Tax Department, secured creditors, and ex-directors prior to dissolution, and no objections were received. The Court allowed the Official Liquidator to be discharged and relieved from duties upon dissolution of the company under Section 481. The Court acknowledged that under Section 559 of the Companies Act, 1956, any aggrieved party may apply for review of the dissolution order within two years from the date of the order. RATIONALE: The Court applied the statutory framework of the Companies Act, 1956, particularly Sections 454, 459, 481, and 559, and relevant Rules under the Companies (Court) Rules, 1959. The Court relied on the principle that dissolution is appropriate when winding up cannot proceed further due to absence of assets and funds, and it is 'just and reasonable' to dissolve the company. The Court emphasized compliance with procedural safeguards, including notification of concerned authorities and creditors prior to dissolution. The Court's ratification of the Official Liquidator's actions reflects deference to official reports and factual findings regarding possession of assets. The Court recognized the procedural avenue under Section 559 for review, ensuring protection of rights of aggrieved parties post-dissolution. No dissent or doctrinal shift was indicated; the decision follows established statutory interpretation and procedural norms governing company liquidation and dissolution.