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Issues:
Petition for winding-up based on default in payment of debt and consent terms; Company's default in payment of instalment leading to advertisement of petition; Company's attempt to produce post-dated cheques rejected by petitioners; Dispute over depositing the amount received under consent terms during the pendency of the petition; Interpretation of section 531 of the Companies Act, 1956 regarding fraudulent preference and antecedent transactions. Analysis: The petition for winding-up was initiated by M/s. Castwell Engineering Corporation against Bombay Castwell Engineering Private Limited due to a debt of Rs. 92,560.12, which the company partially acknowledged under consent terms. The consent terms included payment of the debt, interest, costs of the petition, and machinery cost. However, the company defaulted on an instalment, leading to the petition being advertised. Despite some payments made by the company, it failed to pay the full amount, prompting the petitioners to reject post-dated cheques and seek winding-up. The petitioners argued they could retain the amount received under consent terms until determined by the official liquidator under section 531, a claim dismissed by the court. The court emphasized that in a winding-up petition, the company court retains jurisdiction regardless of mutual agreements between parties. The court clarified that the petition remains pending for hearing and final disposal, and the consent terms only trigger a "self-operating order" upon default. The court noted that the purpose of a winding-up order is not to benefit individual creditors but all creditors collectively. It ruled that the petitioners must deposit the amount received during the petition's pendency, rejecting the argument of using section 531 to retain the money. Regarding section 531 of the Companies Act, 1956, the court explained that payments made during the winding-up proceedings are not considered antecedent transactions subject to being deemed fraudulent preferences. It highlighted that the burden of proving fraudulent preference lies with the official liquidator, and in this case, the motive behind the payments to prefer the petitioners was not established. Consequently, the court directed the petitioners to deposit the amount received and adjourned further hearing to ensure compliance. Ultimately, the petitioners failed to deposit the required amount, leading to the court dismissing the petition with no order as to costs. The judgment aimed to uphold the principles of fairness and collective creditor rights in the context of winding-up proceedings, emphasizing the court's authority to regulate such matters for equitable outcomes.
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