Single Judge Erred in Rejecting Winding Up Plea w.r.t Improper Sale of Co.’s Assets, Matter to Be Decided Afresh | HC

Case Detail: Sanjay Suchanti v. Anurag Cinema (P.) Ltd. - [2024] 160 taxmann.com 754 (HC - Patna)

Judiciary and Counsel Details

• P.B. Bajanthri & Alok Kumar Pandey, JJ.
• Arun Kumar, Dhananjay Mishra & Nitesh Kr. Nirala, Advs. for the Appellant. 
• S.D. Sanjay, Adv. for the Respondent

Facts of the Case

In the instant case, the Appellant, a shareholder in Anurag Cinemas filed a petition for the winding up of company u/s 433 alleging that the company had completely closed its business activities. He further alleged that the respondents (i.e. directors of the company) had demolished the building of the cinema hall, sold building materials, plants and machinery and misappropriated the sale proceeds.

Further, respondents have sold valuable land and buildings of the company at a throw-away price of Rs.1.54 lakh per decimal whereas the market price was Rs.15 lakh per decimal. These proceedings proceeded without calling for a meeting of shareholders.

The appellant also claimed that the filing of the balance sheet and annual return with the RoC was without compliance with section 215 of the Companies Act, 1956. Conversely, respondents have resisted the contentions of the appellant on the ground that Anurag Cinema was under heavy loss and consequently, they were compelled to sell certain plant machinery and land to meet liabilities.

Further, they also claimed that while taking the said steps, they had complied with all relevant statutory provisions. In fact, shareholders were notified at the relevant point of time and when required. The Single Judge proceeded to dismiss the petition.

It was noted that respondents have not answered with material. Further, the respondents have not provided any proof in support of sending notices to shareholders regarding holding a meeting of shareholders or to prove that notices were validly served and that the appellant remained absent.

High Court Held

The High Court observed that the respondents have vaguely defended while alleging that the appellant, who was also the Managing Director from the years 1980 to 1986, certain irregularities have been committed for which he was subjected to prosecution.

However, what happened to such prosecution had not been apprised. This was just only to prejudice the instant court, such a statement had been made. Further, no material had been placed on record to show that the requisite provisions were complied with while selling movable and immovable properties of the company.

The High Court held that in the absence of this material information, the Single Judge had committed an error in rejecting the petition. Therefore, the impugned order passed by the Single Judge was to be set aside and the petition was to be restored to the file of the Single Judge, who was requested to decide the petition afresh.