COMP/97/2007 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 97 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- ====================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ====================================== VAISHNODEVI ENTERPRISES - Petitioner Versus TAI CHONGBANG TEXTILES INDUSTRIES LTD. - Respondent ====================================== Appearance : MS KIRAN CHOPRA FOR MR SUDHIR M MEHTA for Petitioner. MR RAJU K KOTHARI for Respondent. ====================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ COMP/97/2007 2/6 JUDGMENT Date : 17/03/2008 ORAL JUDGMENT 1. The petitioner has filed this petition under Sections 433 & 434 of the Companies Act, 1956 for winding up of the respondent Company on the ground that the respondent Company has failed to discharge its liabilities towards its Creditors including the petitioner. 2. This Court has issued notice on 04.05.2007. Notice was duly served on the respondent Company. Mr. Raju K. Kothari, learned advocate appears for the respondent Company. An affidavit-in-reply is filed on behalf of the respondent Company on 21.08.2007. After considering the petition as well as the reply filed by the respondent Company and after hearing the learned advocates appearing for the respective parties, this Court has passed an order of admission and advertisement on 06.09.2007. It was observed by the Court that in view of the statement made in the petition read with the affidavit filed on behalf of the respondent Company and more particularly the averments made at para 7, 8, 9 & 10, it prima facie appeared that the financial position of the company was deteriorated and the company has COMP/97/2007 3/6 JUDGMENT admitted the dues, but was unable to pay the amount. The Court has further observed that the Secured Creditors have enforced their security under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act. The Court, therefore, passed an order of admission and directed the petitioner to issue advertisement in English daily Indian Express, Ahmedabad edition and Jansatta - Gujarati daily, Ahmedabad edition. Publication in Government Gazette was dispensed with. 3. Pursuant to the said order, the petitioner has effected the advertisements and affidavit of publication along with the relevant newspaper cuttings is filed before this Court on 11.10.2007. 4. Pursuant to the said advertisement, a communication is received by the petitioner's advocate from Akhil Gujarat Cotton Mazdoor Sangh dated 12.10.2007 wherein it is stated that the Union has filed Special Civil Application No.2666 of 2005 praying for quashing and setting aside the impugned possession notice as well as notice for sale dated 15.01.2005 and 19.02.2005 collectively and COMP/97/2007 4/6 JUDGMENT praying for the directions to the respondent Nos.1 & 2 Banks to explore the means of taking over the management of the Company. The said petition was disposed of by this Court vide its order dated 10.05.2005 directing the said Banks to set apart Rs. 5 Crores out of the sale proceeds in a separate account. The said amount was to be set apart without prejudice to the rights and contentions of the parties. Bank of India being the respondent No.1 in the said petition was directed to file necessary affidavit and undertaking before this Court in this behalf. The Court has also given liberty to the petitioner Union to approach an appropriate forum. It appears that pursuant to the said order, one Mr. G.P. Mohite, Chief Manager and Authorized Officer of the Bank has filed affidavit and undertaking to the above effect. It appears from the letter of the Union that subsequently, Bank of India has filed another petition being Special Civil Application No. 9821 of 2006. In the said petition, this Court has after considering the pari pasu charge of the workers directed to distribute the amount from the sale proceeds @ 32.194% in favour of the workers and accordingly, the dues of the workers were Rs. 3,14,11,157/- and that the COMP/97/2007 5/6 JUDGMENT amount of distribution amongst the workers on pari passu charges had come to Rs.1,01,12,538.50 ps. 5. From the above referred proceedings before this Court and from the communication received by the petitioner from the Workers Union, it clearly appears that the assets of the Company have already been sold. Nothing remains which enables the Company to carry on any business or to continue its existence. To pass a winding up order is merely an empty formality. The Company is virtually closed and Secured Creditors have already invoked the provisions under the Securitisation Act and sold the assets of the Company. 6. In the above view of the matter, since the respondent Company has lost its financial substratum and failed to discharge its liabilities towards Creditors, the Company is hereby ordered to be wound up. The Official Liquidator attached to this Court is appointed as the Liquidator of the Company. He is directed to take charge of the assets, if any of the Company in liquidation. He is further directed to call for the details from the Secured Creditors, more particularly, from COMP/97/2007 6/6 JUDGMENT Bank of India and Dena Bank with regard to the amount realized from the sale of the assets of the Company and amount paid to the workers till this date. The Official Liquidator is further directed to go through the proceedings of Special Civil Application No.2666 of 2005 and Special Civil Application No.9821 of 2006 and the orders passed therein. After considering the development and outcome in the said proceedings, the Official Liquidator is directed to file a report before this Court. The Official Liquidator is further directed to issue notices to the Ex-Directors of the Company to file statement of affairs. 7. Subject to the aforesaid direction and observation, this petition is accordingly disposed of. Sd/- [K. A. PUJ, J.] Savariya