1984 (4) TMI 231 - HC - Companies Law

Issues Involved:
1. Petition for winding up under Section 433(e) of the Companies Act, 1956.
2. Respondent-company's inability to pay debts.
3. Dispute over the principal amount and interest.
4. Counter-claims by the respondent-company.
5. Financial viability of the respondent-company.
6. Jurisdiction and propriety of the Civil Judge's injunction.
7. Withdrawal of deposited amount by the petitioner-company.

Issue-wise Detailed Analysis:

1. Petition for winding up under Section 433(e) of the Companies Act, 1956:
The petitioner-company filed a petition under Section 433(e) of the Companies Act, 1956, seeking an order to wind up the respondent-company, Vikrant Tyres Ltd., on the grounds that the respondent-company was unable to pay its debts.

2. Respondent-company's inability to pay debts:
The petitioner-company claimed that the respondent-company had not paid a sum of Rs. 5,47,443.03, being the principal amount due under the contract, along with interest. Despite a statutory notice demanding payment, the respondent-company issued a delayed reply stating counter-claims and did not pay the amount. The court was informed that the respondent-company showed liabilities exceeding eight crores in its balance sheet, suggesting its inability to pay debts.

3. Dispute over the principal amount and interest:
The respondent-company admitted a liability of Rs. 3,37,395.16 as of March 31, 1981, but disputed the interest claims of Rs. 1,61,414 and Rs. 48,633.81, asserting there was no agreement to pay interest. The petitioner-company contended it was entitled to interest under the Interest Act and the Sale of Goods Act.

4. Counter-claims by the respondent-company:
The respondent-company argued that it had counter-claims for damages due to faulty machinery supplied by the petitioner-company, which exceeded the amount claimed by the petitioner. The court pointed out that under Section 433 of the Act, counter-claims are not permissible in winding-up proceedings and should be pursued through a separate suit for damages.

5. Financial viability of the respondent-company:
The respondent-company argued that its liabilities were normal business liabilities and did not indicate an inability to pay debts. The court allowed the respondent-company to deposit the admitted amount in court to demonstrate its solvency. The respondent-company deposited Rs. 3,37,395.16 but sought to prevent the petitioner from withdrawing it until its counter-claims were adjudicated.

6. Jurisdiction and propriety of the Civil Judge's injunction:
The respondent-company obtained an ad interim ex parte injunction from the Civil Judge, Mysore, preventing the petitioner from withdrawing the deposited amount. The High Court found this injunction obstructed justice and was issued without proper jurisdiction. The court warned the Civil Judge to exercise greater caution and directed that a copy of the order be communicated to him as a measure of admonition.

7. Withdrawal of deposited amount by the petitioner-company:
The petitioner-company filed an application to withdraw the deposited amount without prejudice to its right to claim interest. The respondent-company filed a memo agreeing to the withdrawal in light of a Supreme Court decision. The court allowed the petitioner to withdraw the amount, noting that the debt claimed was discharged, and closed the winding-up petition, leaving the interest and damages claims to be decided by an appropriate forum.

Conclusion:
The petition for winding up was closed as the respondent-company deposited the admitted amount, demonstrating its solvency. The court allowed the petitioner to withdraw the amount, and any claims for interest or damages were left open for adjudication by an appropriate forum. The court emphasized that inferior courts should not interfere with matters already before a superior court.

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