1967 (9) TMI 72 - HC - Companies Law

Winding-up order granted for Chitale Agricultural Products Ltd due to insolvency. Provisional liquidator appointment dismissed.

The court granted the creditors' petition for the winding-up of Chitale Agricultural Products Ltd due to the company's inability to pay debts and ... Company when deemed unable to pay its debts Issues: Creditors' petition for winding up of a company based on inability to pay debts, commercial insolvency, appointment of provisional liquidator, and prosecution of pending appeal.Creditors' Petition for Winding Up:The judgment pertains to a creditors' petition seeking a winding-up order for a company named Chitale Agricultural Products Ltd under the Companies Act. The petition is grounded on the company's inability to pay its debts, as per sections 434(1)(a) and 434(1)(c) of the Act. The petitioner has claimed a specific sum, which remains unpaid by the company, making a strong case for a winding-up order solely based on this default.Commercial Insolvency:The petitioner further argues that the company is commercially insolvent, emphasizing the financial position of the company. The company's balance sheet reveals significant assets invested in a subsidiary company that is yet to commence production. In contrast, the company carries substantial liabilities, indicating commercial insolvency. The company's admission of its insolvency in an affidavit supports the petitioner's claim for a winding-up order on the grounds of commercial insolvency.Appointment of Provisional Liquidator and Appeal Prosecution:While some creditors advocate for the appointment of a provisional liquidator to safeguard company assets and facilitate the prosecution of a pending appeal in the Supreme Court, the judgment dismisses this suggestion. The court finds no reason to deviate from issuing a winding-up order, given the compelling case presented by the petitioner. The liquidator, post the winding-up order, is granted the authority to prosecute the pending appeal if suitable arrangements are made by the creditors to fund the process.Cost Allocation and Advertisement of Winding-Up Order:Regarding costs, the judgment stipulates that the costs of the petitioner and the company will be covered from the company's assets separately. Shareholders and other creditors appearing in the petition will also be entitled to costs from the company's assets. The winding-up order is directed to be advertised in specified newspapers and published in the official Gazette for public notice.