In Re: Cinco Laboratories Private Ltd.

C.P. Sinha, J.—This application u/s 433(e) of the Companies Act, 1956, has been filed by the Registrar of Companies, Bihar, for winding up of the opposite party-company, Cinco Laboratories Private Ltd., Patna. The necessary sanction u/s 439(5) of the Companies Act for riling of this application of the Central Government has been obtained and it forms annexure " 1 " to the petition. The necessary facts in support of the prayer for the winding up of the company are set out in the petition to show that the company is wholly unable to pay its debts and requires to be wound up.

The above sanction was accorded on the company's balance-sheet as it obtained on the 31st of December, 1963. A preliminary objection was raised on behalf of the company that sanction was to be treated as invalid in the eye of law in view of the fact that this petition was filed much later, i.e., on September 22, 1970, within which subsequent balance-sheets have come into being. Both sides were heard on this point and it was negatived in this court's order No. 21 dated November 26, 1971.

Subsequent balance-sheets were for the years 1964 to 1969 as also for 1970, which the company had duly lodged with the Registrar of Companies. An objection was raised on behalf of the Registrar that the balance-sheets of 1964 to 1969 could not be looked into because necessary additional fees chargeable on them because of their late filing had not been paid by the company. So far as the balance-sheet of 1970 was concerned, there was no dispute that it had been filed in time, and, as such, it could be referred to. Accepting this objection, the company has since deposited the additional fees as chargeable under rules on the balance-sheets of the years 1964 to 1969. As such, there is now no objection on behalf of the Registrar about these balance-sheets being looked into in the course of this hearing. An examination of the above balance-sheets, i.e., 1964 to 1969, shows some profit of the company. In the balance-sheet of 1970 a profit of Rs. 2,479.79 has been shown. Mr. R.P. Katriar, learned counsel for the petitioner, has, however, submitted that while striking out this profit the depreciation on the fixed assets of the company at the prescribed rate of 10 per cent. has not been taken into consideration. According to him, the amount of this depreciation on the fixed assets, which is of Rs. 25,293.02, would be approximately Rs. 2,529 and if this fact is taken into consideration, it will appear that the company has no profit, even according to its latest balance-sheet of 1970. On this his request is that the company still deserves to be wound up because it is to be treated as being incapable of paying its debts.

After having carefully considered all the facts and circumstances of the case, I am inclined to think that the company does not deserve to be wound up at present. It appears that the huge loss, as suffered by the company as disclosed in its balance-sheet of the year 1963, has gradually been liquidated subsequently and according to the balance-sheet of 1970 it has a profit of the aforesaid amount of Rs. 2,479.79. This is a sound indication of improvement in the company's position by and by. It cannot, therefore, be said that the company's position is not likely to improve to the extent that even after allowing depreciation on its fixed assets, as above, it registers a profit and be in a position to pay its debts, if any. The company's position, as it stands at present, as disclosed in its balance-sheet of 1970, is not such that it is to be treated as being wholly unable to pay its debts requiring its winding-up as prayed for.

For the above reasons, the prayer for winding up the company, as made in the present petition, is at present rejected and the petition is dismissed without costs.