Since the company’s managed services division (MSD) was sold a couple of years ago, cloud computing has been the principal business of the Mumbai-based Zenith Infotech, promoted and run by the father-son duo of Rajkumar Saraf and Akash Kumar Saraf.
The court decided to allow the sale to protect the interests of employees and on expectations this was likely to fetch better valuation compared to an outright winding-up. Two different entities have valued the cloud business at about Rs 200 crore.
How it all unfolded
Akash, chief executive of Zenith Infotech, said, “We will be appealing (against) the order. We will be countering the verdict.” He declined to comment on specific findings in the verdict.
“After the sale of the MSD business, the representation made to the shareholders was brazenly breached by the promoters/directors of the company and not a single paisa was paid to the petitioner/bondholders towards the outstanding FCCBs. This shows the promoters/directors of the company dishonestly made a false representation to their shareholders that they would be selling the undertaking of the company to repay the FCCBs and, thereafter, defrauded the shareholders by not paying a single paisa towards the FCCBs, despite the sale of the MSD business for $54,712,461,” said the December 13 order by judge S J Kathawala.
“In view thereof, the company, Zenith Infotech Ltd, is directed to be wound up. The official liquidator, High Court, Bombay, is appointed as liquidator of the company with all the powers prescribed under the provisions of the Companies Act, 1956. However, the winding-up order is stayed up to April 16, 2014, to facilitate the possible sale of the CC (cloud computing) business of the company as a going concern so as to ensure the employees of the company associated with the said business do not lose their employment or any benefits related thereto, and also the sale of properties and assets of the company, if required.”
The order clarified the administrator appointed under the admission order would continue for the sale of the cloud computing business and, if necessary, for the properties and the assets of the company.
Through the past year, the company stock has fallen about 90 per cent. On Tuesday, the stock closed at Rs 3.40 on the BSE, down 3.7 per cent.