Strict compliance with statutory requirements for winding up proceedings and the implications of non-compliance in deeming a company unable to repay its debts under Section 434(1)(a) of the Companies Act, 1956.

CA No. 2126 of 2013 (filed by the Respondent u/O 9 Companies Rules r/W Order XXXIX Rule 4 CPC)

1. This is an application filed by the Respondent, Prem Power Construction Private Limited (‘PPCL’), under Rule 9 of the Companies (Court) Rules (‘Company Rules’), read with Order XXXIX Rule 4 of the CPC and Section 151 of CPC for, inter alia, setting aside the ex parte interim order dated 15th February 2013 and the order dated 1st May 2013 passed by the Court.

2. The background to this application is that HDFC Bank Limited (‘HDFC’) filed the above petition seeking the winding up of PPCL under Section 433 (1) (e) of the Companies Act, 1956 (‘CA’). When the petition was first listed on 5th February 2013, the Court enquired whether HDFC, which is admittedly a secured creditor of PPCL, was interested in pursuing the petition. Learned counsel for HDFC sought a short adjournment. On 15th February 2013, the Court was informed by learned counsel for HDFC that it did not have any charge on any of the immovable properties of PPCL in respect of the loan advanced to it. Notice was then directed to be issued to PPCL with a direction to its Managing Director (‘MD’) to file an affidavit within four weeks of the service of notice setting out the details of all the movable and immovable assets of PPCL and enclosing its balance sheets, profit and loss accounts and statements of all its bank accounts for the last three years. An interim order was also passed restraining PPCL from creating any charge, alienating, transferring or parting with possession of any of its immovable assets.

3. On 1st May 2013 the affidavit of service of notice on PPCL filed by HDFC was taken note of. Since none appeared for PPCL, the Court proceeded to appoint the Official Liquidator (‘OL’) as the Provisional Liquidator (‘PL') to take over all the assets, books of accounts and records of PPCL. The petition was directed to be listed next on 18th July 2013. It is stated that pursuant to the above order, the OL took over the assets, books of accounts and records of PPCL.

4. PPCL filed Company Application No. 1049 of 2013 seeking vacation/modification of the order dated 1st May 2013. Notice was directed to be issued in this application on 17th June 2013. In the meanwhile, PPCL filed Company Appeal No. 37 of 2013 against the order dated 1st May 2013. On 11th September 2013, the said appeal was disposed of by the Division Bench (‘DB’) by the following order:

“At the very outset it has been suggested by Mr. Saurav Kirpal, learned counsel for the Appellant that since the impugned order dated May 01, 2013 was passed ex parte, the matter be remanded back to the learned Company Judge for hearing the Appellant. The prayer is not opposed by learned counsel for the Respondent subject to the condition that status quo is maintained in respect of the assets of the company which are stated to have been taken over by the Official Liquidator.

Learned counsel for the Official Liquidator confirms that the assets of the company have been taken over by the Official Liquidator and that status report in this regard has been placed before the learned Company Judge.

In view of the aforesaid the matter is remanded back to the learned Company Judge for hearing afresh. Status quo shall be maintained in respect of the assets of the Appellant Company pending the hearing of the matter.

Liberty is granted to the Respondent to move an appropriate application before the learned Company Judge for amendment of the petition, as prayed.

A copy of this order be given dasti to counsel for the parties.”

5. Pursuant to the above order, PPCL filed the present application with the prayers as earlier noticed. Mr. Saurabh Kirpal, learned counsel for PPCL submits that prior to the filing of the petition for winding up, no statutory notice was served on PPCL at its registered office in terms of Section 434 (1) (a) of the CA. He pointed out that before the DB, in its reply to Company Appeal No. 37 of 2013, HDFC admitted