Allowed

The Official Liquidator v. Nill

Madras HC1 Jul 2022COMP.A/224/2022

Case brief

AI extract

What is this about?

The Court allowed an application by the Official Liquidator for dissolution of M/s. Dwaraka Chit Fund Pvt. Ltd. The winding up proceedings were closed as they were futile given the negligible funds remaining and the age of the petition. The company was dissolved, the Official Liquidator discharged, and records scheduled for destruction.

What did the court decide?

Application allowed; company dissolved; Official Liquidator discharged; books and papers to be disposed off after 5 years; balance fund to be transferred to public account.

The Official Liquidator Vs Nill — Company and Corporate | Madras HC (2022)

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated: 01.07.2022

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CORAM

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THE HON'BLE MR.JUSTICE M.SUNDAR

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Company Application No.224 of 2022 in Company Petition No.7 of 1976 and Company Petition No.7 of 1976

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C.P.No.7 of 1976:

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M/s.Dwaraka Chit Fund Private Ltd., 242-B, Ramnad Road, I Floor Madurai - 625 009.

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... Petitioner

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Comp.A.No.224 of 2022:

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The Official Liquidator High Court, Madras As the Liquidator of M/s.Dwaraka Chit Fund Pvt. Limited (In Liquidation) Corporate Bhavan, IInd Floor, No.29, Rajaji Salai, Chennai-600 001. .. Applicant

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Prayer:

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This Company Application has been preferred, under Section 481 of the Companies Act, 1956 read with Rules 9 and 11(b) of the

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Page No.1/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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Companies (Court) Rules, 1959, praying

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(a) To take this report on record;

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(b) To permit the Official Liquidator to file the final account along with Auditor's Certificate received from Chartered Accountant M/s.Sarathy & Vasu, who was appointed by the Hon'ble Court;

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(c) To form an opinion that the Official Liquidator cannot proceed with the winding up proceedings and that it is just and reasonable to make an order to dissolve the company under Section 481 of the Companies Act, 1956;

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(d) The Official Liquidator may be permitted to transfer any refund from Income Tax Department if received on a future date to undistributed assets account u/s.555(2) of the Companies Act, 1956;

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(e) To permit the Official Liquidator to transfer the balance amount lying at the credit of the company to Undistributed Assets Account u/s.555(2) of the Companies Act, 1956 after meeting all the expenses related to winding up proceedings of the subject company;

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(f) To permit the Official Liquidator to dispose off books and papers of M/s.Dwaraka Chit Fund Limited (In Liquidation) immediately after the expiry 5 years from the date of dissolution of the company as per the Section 550(1) and (2) of the Companies Act, 1956;

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(g) To incur cost of this application do come out of the funds of the company in liquidation;

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(h) To pass such further or other order/s that this Hon'ble Court may deem fit and proper in the circumstances of the case;

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Page No.2/13

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https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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For Applicant in Comp.A.No.224 of 2022 : Mr.Bavisetty Sridhar Deputy Official Liquidator

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C O M M O N O R D E R

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Captioned main Company Petition i.e., 'C.P.No.7 of 1976'

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[hereinafter 'main CP' for the sake of convenience and clarity] is of the year 1976 and this 46 years old main CP in four years from now will be half a century old in this Court. Half a century may be a reasonable period of normal and continuous activity in History but it is clearly ancient and vintage qua litigation.

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2. Be that as it may, captioned application has been taken out b y 'Official Liquidator attached to this Company Court' [hereinafter 'OL' for the sake of convenience and clarity] inter alia under Sections 481 of 'the Companies Act, 1956' [hereinafter 'said Act' for the sake of convenience and clarity] with a prayer for dissolution of 'Dwaraka Chit Fund Pvt. Limited' [hereinafter 'said company' for the sake of convenience and clarity] which has gone into liquidation in main CP.

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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3. Mr.Bavisetty Sridhar, learned 'Deputy Official Liquidator' [hereinafter 'Deputy OL' for the sake of convenience and clarity] who is before this Court on behalf of 'Official Liquidator attached to this Court' [hereinafter 'OL' for the sake of convenience and clarity] submits that a 'report dated 23.06.2022' [hereinafter 'said report' for the sake of convenience and clarity] has been filed in support of the captioned application.

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4. A careful perusal of said report brings to light that by order made by this Company Court way back on 13.02.1976 in main CP, OL was appointed as Provisional Liquidator qua said company inter alia with directions to take charge of all assets and effects of said company. Thereafter, the trajectory which the winding up proceedings took / what unfurled has been captured in said report from paragraph Nos. 2 to 10 and a scanned reproduction of the same is as follows:

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Page No.4/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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Page No.5/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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Page No.6/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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Page No.7/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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5. Paragraph No.11 of said report reads as follows:

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'11. That is submitted that in view of the above submission, the Official Liquidator could not continue to proceed with the winding up of the company in liquidation and it would be just and reasonable in circumstances of the case to dissolve the company in liquidation as envisaged under Section 481 of the Act.'

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6. The above is tell tale qua trajectory the matter has taken in this

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Company Court.

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7. Considering the balance or in other words fund position qua said

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company is a little over Rs.5.06 Lakhs and in any event, there is a prayer

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for deposit of this balance and possible refund from Income Tax

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Page No.9/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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Department into the Public Account of India in 'Reserve Bank of India' ['RBI'] under Section 555 of said Act, this Court has no hesitation in coming to the conclusion that continuing to have the main CP on the file of this Company Court will be a penny wise pound foolish exercise and it will not serve anybody's purpose.

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8. This Court is informed that in and by order dated 25.06.1976, said company has been ordered to be wound up and there is some doubt as to whether that would tantamount to closure of main CP. In this view of the matter, in exercise of inherent powers of this Company Court under Rule 9 of the Companies (Court) Rules, 1959, being Rules under said Act, main CP is resuscitated only to be closed vide instant order as the dissolution of said company is imperative for closure of main CP.

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9. In the light of the narrative thus far, this Company Court is of

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the opinion that OL cannot proceed with winding up of said company. Besides this, just and reasonable circumstance for dissolution exists inter alia in the light of penny wise pound foolish exercise narrative supra.

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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10. One of the limbs of prayer in a multi-limbed prayer in the captioned application i.e., limb (f) is for destruction of records in main CP in the office of OL. This Court is informed that destruction will be in accordance with Rules made by the Central Government which are traceable to sub-sections (1) and (2) of Section 550 of said Act. It is made clear that this prayer is answered in the affirmative as regards destruction of records in the office of OL. As regards the records of main CP in this Company Court are concerned, the same will be governed by digitization and destruction policy of this Court making of which is underway.

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11. Owing to narrative thus far, prayer limbs (a) to (e) and (g) acceded to. Therefore, captioned application is ordered as prayed for.

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12. As the small balance of a little over Rs.5.06 Lakhs and possible refund from Income Tax Department is going to be deposited in the Public Account of India in RBI, this Court has taken note of the fact that

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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the interest of creditors qua said company if any and if they surface at this distant point of time, the same also stands protected.

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13. Sequitur is, Captioned application is ordered on above terms set out supra elsewhere in this order. Said company stands dissolved and OL stands discharged. This means that the captioned main CP is also disposed of as closed. There shall be no order as to costs.

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01.07.2022

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Index : Yes/No Speaking/Non-speaking

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Page No.12/13 https://www.mhc.tn.gov.in/judis

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Comp.A.No.224 of 2022 in C.P.No.7 of 1976

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M.SUNDAR, J.,

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Company Application No.224 of 2022 in Company Petition No.7 of 1976 and Company Petition No.7 of 1976

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01.07.2022

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Page No.13/13 https://www.mhc.tn.gov.in/judis

The Official Liquidator v. Nill

Case brief

What is this about?

What did the court decide?

The Official Liquidator v. Nill

Case brief

What is this about?

What did the court decide?

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