The duty of parties to disclose all material facts and the consequences of concealing information in legal proceedings.

S.K. Gangele, J.

This appeal has been filed against the order dt. 25-3-2012 passed by the Company Judge in Company Petition No. 5/2011. By the aforesaid order, the learned Company Judge allowed LA. No. 2590/2011 filed by the respondent No. 1 and appointed a provisional Liquidator.

2. The respondent No. 2 filed a winding up petition of the appellant-company. It is pleaded that the respondent No. 1 advanced inter corporate deposits to the appellant-company and an amount of Rs. 5.15 crores was advanced. The appellant-company admitted the aforesaid debt. It agreed to pay the debt vide settlement agreement dt.18-1-2010 in two instalments before May 31, 2011. But it paid only Rs. 2 crores and rest of the amount have not been paid. On 15-2-2011 the liability of the payment of Rs. 5,73,97,440 was due against the appellant-company. Respondent No. 1 further pleaded that the appellant-company did not file annual returns and it was running in loss and substratum of the company was lost. It was under suspension on account of non-compliance of listing agreement clause since 28-2-1997. It filed LA. No. 2590/2011 under sections 443 and 445 of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959 for appointment of provisional Official Liquidator. The respondent No. 1 pleaded that on 31st January, 2011, an amount of Rs. 5,73,97,440 was due as admitted debt against the appellant-company. The appellant had been incurring losses since 2007-08 and it did not file the annual returns. Criminal complaint was also filed against the Board of Directors of the company before the CJM. It is further pleaded that the company has lost its substratum, hence, a provisional Official Liquidator be appointed.

3. Appellant company in its reply denied the allegations. It pleaded that the appellant has enough fund available with it to pay the debt of the respondent No. 1. The net worth of the appellant-company is more than Rs. 150 crores. The appellant-company further pleaded that the provisional Liquidator could not be appointed because it is a last resort. The working of the company is quite satisfactory. The Central Government allowed the appellant-company to deal in the business of selling and purchase of land. The appellant-company submitted a proposal before the Company Judge for grant of permission to sale the land.

4. Learned Company Judge vide impugned order has held that there was no progress in regard to financial condition of the appellant-company, outstanding dues against the appellant-company have been enhanced day by day. The company has to pay to various creditors including MPFC, Provident Fund Organization and workers besides the respondent No. 1-company. Learned Company Judge further observed that fair distribution of the assets of the company is necessary so that one creditor be not benefited at the expense of the others and appointed Official Liquidator attached to the Court as provisional Liquidator.

5. Learned senior counsel appearing on behalf of the appellant-company has contended that the order passed by the learned Company Judge is contrary to law. There is no strong prima facie case for winding up of the company neither the substratum of the company has been lost. It is not in the public interest to appoint the provisional Liquidator. It is further submitted that the total assets of the company are to the tune of near about Rs. 150 crores. The value of the land of the appellant-company is in excess than the liability of the company. In such circumstances, the order passed by the learned Company Judge is contrary to law. In support of his contentions, learned senior counsel relied on the following judgments: -

(i) M/s M. Gordhandas and Co. v. M.W. Industries, AIR 1971 SC 2600,

(ii) In the matter of Gaya Sugar Mills Ltd., 1950 Com. Cas. 151,

(iii) Company Petition No. 4 of 1972, Virendra Singh Bhandari and others v. Nandlal Bhandari and Sons, decided on 27-4-1981,

(iv) K.P. Mishra and others v. Medwin Laboratory, (1995