1988 (11) TMI 297 - HC - Companies Law

Summary

Issues:
- Winding up petition under sections 433 and 434 of the Companies Act, 1956.
- Compliance with the order of the Supreme Court regarding deposit of Rs. 11 lakhs by the respondent-company.
- Dispute over continuation of the winding up petition due to the withdrawal of the deposited amount by the petitioner-bank.

Analysis:
The High Court of Rajasthan dealt with a petition for winding up filed by United Asian Bank against M/s. Jaipur Oil Products Ltd. The company judge admitted the petition, leading to an appeal by the respondent-company to a Division Bench, which was dismissed. Subsequently, a petition for special leave to appeal before the Supreme Court was also dismissed. The respondent-company then deposited Rs. 11 lakhs as per the Supreme Court's order. However, a dispute arose when the petitioner-bank withdrew the amount, leading to objections raised by the creditors' counsel regarding the continuation of the winding up petition.

The creditors' counsel argued that by accepting and withdrawing half of the amount, the petitioner-bank implied an agreement not to pursue the petition further. Reference was made to a Bombay High Court case highlighting the importance of consent terms in such matters. On the other hand, the petitioner's counsel contended that no such agreement existed, emphasizing the lack of consent from their side. Another Bombay High Court judgment was cited to support this argument, focusing on the necessity of consent orders in similar situations.

The court carefully considered both parties' submissions and concluded that the dispute was not resolved by the cases cited. It was highlighted that in the absence of a consent order, the creditor has the right to receive any payment towards the dues, subject to the provisions of the Companies Act. The court noted that the mere deposit of Rs. 11 lakhs by the respondent-company did not imply an agreement to halt the winding up petition. The court observed that the respondent's objection was raised belatedly and lacked merit, especially considering the absence of a consent order akin to the cases referred to by the counsels.

Consequently, the court overruled the objection raised by the creditors' counsel, and the petition was scheduled for further hearing. The judgment emphasized the importance of consent orders and the lack thereof in the present case, ultimately allowing the winding up petition to proceed despite the dispute over the deposited amount.