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Our Legal Correspondent

CHENNAI, Aug. 22

THE Madras High Court has ordered the winding up of the Pollachi-based Sri Muthukumaran Cotton Mills for alleged default to pay the dues to a cotton supplier.

While disposing of a petition filed by M/s Jeetmal Nandlal, a proprietary firm praying for a direction to wind up the company, Mr Justice C. Nagappan said the Official Liquidator was appointed as liquidator of the respondent company (Sri Muthukumaran Cotton Mills), who shall take charge and proceed further.

The Judge further ordered that the directors of the respondent company should file a statement of the affairs of the company within three weeks.

The company petition was filed under Section 433(e) and (f) read with Sections 434(1) and 439 of the Companies Act, 1956 to wind up the respondent company. The case of the petitioner was that it had been supplying cotton bales to the respondent from 1995. In the year 1997, as per the company's order, the petitioner supplied, under four invoices, cotton bales to the value of Rs 20,48,455.43.

The respondent company took delivery of the goods, but did not make the payment for the full value, and there was a balance outstanding amounting to Rs 8,46,950. The petitioner sent statutory notice on June 7, 1999 calling upon the respondent company to clear the outstanding dues with interest.

The respondent received the notice, but did not respond. According to the petitioner, the respondent company was commercially insolvent and was unable to pay its dues, and hence liable to be wound up.

The respondent submitted to the Court that due to recession in textile industry, the respondent company faced difficulties and hence there was delay in making repayments to the petitioner. The respondent also said that a further sum of Rs 35,000 was paid up to July 28, 2000, and the balance outstanding as on August 21, 2000 came to Rs 8,11,950.

The Judge said that as per the affidavit filed by the petitioner, the respondent company had paid only a sum of Rs 3,80,000, and the last date of payment was November 1, 2001.

The respondent had still to pay a sum of approximately Rs 5,00,000, and the counsel for the respondent also did not attend the hearing of the petition and hence the company had to be wound up.

The Judge held that having acknowledged and undertook to pay the sum claimed in the petition; the respondent had failed to settle the amount. It was amply proved that the respondent was unable to pay its debt, and the respondent company was liable to be wound up.

Hence, the Judge ordered that the respondent company be wound up.

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