INTRODUCTION

The present case is a winding-up petition under the Companies Act, 1956, filed by Kotak Mahindra Bank Ltd. (the petitioner/creditor) against Manisha Parivahan (P) Ltd. (the respondent company), in respect of non-payment of debts pursuant to Section 433(1)(e), read with Sections 434 and 439 of the Act. The matter reached a stage where the Official Liquidator (OL) filed an application under Section 481 of the Companies Act, 1956 and moved for the dissolution of the company on the basis that the affairs had been fully wound up, there were no assets available for realisation and it was no longer of any value to keep the proceedings pending. As part of an interlocutory application related to the winding up proceedings, the OL also sought an action for default against the ex-directors of the company under Section 454(5) & (5A) for their failure to file the Statement of Affairs, however, this was of limited relevance since the company had been ordered to be dissolved.

FACTS

• Filing of the winding-up petition: 

The petition was filed on the premise of non-payment of dues of ₹28,61,469 despite the service of statutory notice dated 22.06.2009.

• Provisional winding up:

It was on 05.08.2011 that the Court provisionally wound up the company, and appointed the OL as provisional liquidator. The Company and the officers were restrained from alienating any assets.

• Settlement attempt:

 It was on 23.12.2011 that based on the company’s own undertaking to pay ₹33 lakhs in full and final settlement, that I vacated the earlier order and discharged the OL.

• Revival of proceedings:

The Company defaulted on settlement. On application made by the petitioner, the Court further revived the winding-up on 08.08.2013, and reappointed OL (official liquidator). The ex-directors were ordered to hand over the records to the OL, and file the Statement of Affairs.

• Properties: 

The ROC records indicate that the registered office is in Delhi, and there are properties in Surat, Gujarat — all residential properties, none possessed by the Company, except one shop which has already been vacated.

• Movable assets: 

ICICI Bank was approached, and they confirmed that there were no funds deposited in the company account. The ex-directors disclosed that 11 trucks were owned — 6 sold to pay the trade creditors, 5 remaining. On 05.01.2023, this Court made an order for ex-directors to assist in recovering the remaining 5 trucks which were to be sold. On 01.06.23, all parties agreed that they should just be treated as scrap and valued at ₹75,000 each (total ₹3,75,000) — this value has been deposited in Court by DD.

• Bank deposits: 

Balance due to OL subsequently directed to HDFC Bank. No response received. 

• Citations: 

Winding-up notice publication in The Statesman (English), Veer Arjun (Hindi) and Delhi Gazette in October 2011.

• Financial position: 

On 18.07.2023, the company had a negative balance of ₹18,68,419; further realisation of assets anticipated. 

ISSUES 

• Whether it is just and reasonable under section 481 to make the dissolution order when no assets exist and therefore liquidation cannot progress.
• Whether the Court can relieve the official liquidator from further publication of the final winding-up citation. 
• Whether the matters under section 454(5) & (5A) regarding the Order consequent upon the failure to file the Statement of affairs, continues following the dissolution order. 

ARGUEMENTS 

Official Liquidator 

• The affairs of the company have been completely wound up — There are no movable / immovable assets to be realised. 
• The negative position of assets renders any continuation of a liquidation of any commercial substance pointless.
•  Dissolution under section 481 requested and exemption from further publication of any citation, closure of the company’s books. 

Ex-directors / Respondent company 

• No opposition clearly recorded at this stage (company has been in liquidation for years). 
• Admitted during the proceedings that they would not be able to recover any assets (trucks) other than asking to settle for scrap value.

JUDGEMENT

• On Dissolution (Section 481): Referring to Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti 2007 (7) SCC 753, the Court held that where all affairs have been completely wound up or the OL cannot proceed through a lack of funds or assets and it is just and reasonable, the Court can order dissolution. In this context, there were no recovery assets left; the affairs had essentially been completed. Ordered dissolution of M/s Manisha Parivahan (P) Ltd. The OL was discharged and permitted to close its books of accounts, after deducting expenses or losses from the Common Pool Fund. The OL was exempted from the publication of the final citation for winding-up. 

• On the connected criminal petition (Section 454(5) & (5A)): Since the Court ordered dissolution, there was no useful purpose remaining in prosecuting the ex-directors on account of their failure to file a Statement of Affairs in this liquidation — petition disposed of. 

The Court made the following directions: OL to communicate the dissolution order to the ROC within 30 days. All pending applications disposed of. 

CONCLUSION

This judgement illustrates the terminal stage of the liquidation process – where asset realisation for liquidation is exhausted, and further proceedings in this winding-up serve no utility, then dissolution under Section 481 is appropriate. The Court supported OL’s practical mind-set: settling scrap-value trucks knew that recovery efforts were futile and in the end avoided unnecessary publication costs. Further, post-dissolution, if the Court orders dissolution proceedings for the same offences under section 454, then those proceedings cease and must be pursued separately from any dissolved company. The decision affirms Meghal Homes that a winding-up ends when the affairs are completely wound up or when it is impossible for any further actions, after which use of the Court should be for closure.

According to Section 481(1), once the affairs of a company are completely wound up or the OL cannot continue because of a lack of funds/assets, and it is “just and equitable” to terminate the proceedings, the Court must make an order that the company is dissolved. The Court accepted the Supreme Court’s interpretation in Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti (2007) 7 SCC 753 which said that dissolution was proper when there remained nothing to be done in liquidation. 

In this case the Court declared: 

Exhaustion of Asset Realisation – they had realised all known assets, both movable and immoveable: all known assets were sold, or were unrecoverable in the case of the last few trucks which were sold and dealt with as scrap by agreement of the parties. 

Negative Fund Position – there were liabilities of the company that outweighed its available resources; there was no ongoing business activity nor litigation resulting in recoveries for the company. 

Futility of Continuation – there was nothing to liquidate therefore keeping it alive served no purpose and incurred futility of prolonging administrative costs. 

Public Interest – the cost of delaying the liquidation on the grounds that there can be no recovery only adds to the costs borne by creditor or ultimately taxpayer.

The OL’s criminal petition under s454(5) & (5A) against the former directors for failing to file a Statement of Affairs, was also dealt with. Once the Order for Dissolution was made, it was considered pointless to continue to seek to obtain a penalty, as there is no longer a winding-up estate. While the Court left the possibility open to pursue any separate action, within the liquidation proceeding these matters were closed off. 

The Court ordered dissolution to take effect immediately, discharged the OL, allowed the accounts to be closed after expenses dedicated from the Common Pool Fund, and discharged the OL from future public notices. The Court also ordered that the ROC be informed.

This decision reinforces the proposition that liquidation is a process that is not infinite; that it is a role of the Court to acknowledge when further pursuit is impossible and formally bring closure. It demonstrates effective judicial administration – balancing necessary adherence to statutory procedure and economic reality – while embracing the Supreme Court’s view that the winding-up process is at an end when nothing remains to be managed.