Law: Companies Ordinance, 1984

Section: 305

Companies Ordinance (LXVII of 1984)--Ss. 305 & 306---Winding up of company--Bank defaulter-­Failure to clear the debts---Right of bank to initiate winding up proceedings against defaulter company---Providing additional securities to bank--Company failed to demonstrate that the Company was in a functional condition and was making profits--­Company further failed to prove that it was capable to discharge its liabilities to point out the debts owed to the bank as per record of the Company nor the company had come out with the statement showing how much amount could be deposited by it to discharge the liabilities of the bank---Company in written statement made no specific denial regarding liabilities towards the bank---Civil suits were pending between the parties against each other particularly one filed by bank for recovery of amount of loan---Company Judge concluded that the Company was not commercially viable unit and continued proceedings of winding up---Plea raised by the company was that the bank had instituted winding up proceedings for the recovery of its outstanding amounts and such proceedings could not be substituted for the recovery of amount and that the Company had assets more than the alleged outstanding dues ---Validity--­Demand of bank requiring the Company to pay the amount which was due, was neither fulfilled, nor the security was enhanced within the period of 30 days, therefore, on completion of period of 30 days, notwithstanding any development which had taken place later on, including the furnishing of security, would render the proceedings of winding up which had been initiated after furnishing of security, because it was construing strictly to the provisions of S.306(1)(a) of Companies Ordinance, 1984---Cause of action had accrued to bank of winding up--Company might be liabilities which it owed to the bank but fact remained that it was not in a running condition nor it was commercially viable because it could not show profit for the purpose of discharging its debts/ loans obtained by it from bank---Company Judge had rightly wound up the Company Appeal was dismissed. Kamadenu Enterprises v. Vivek Textile Mills Pvt. Ltd. (1984) 55 Company…

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