1994 (1) TMI 215 - HC - Companies Law

Summary

Issues:
Prayer for winding up of a private limited company under sections 433 and 434 of the Companies Act, 1956 based on unpaid decretal amount. Interpretation of consent decrees in Company Appeal and civil suit regarding default in payment and consequences. Dispute over whether a single default in payment makes the entire amount due and payable under the decrees.

Analysis:
The petitioner sought the winding up of a private limited company under sections 433 and 434 of the Companies Act, 1956, due to the company's inability to pay the decretal amount of Rs. 8,86,197.27. The claim arose from a consent decree in a Company Appeal and a civil suit, where the company was required to make payments in instalments starting from April 30, 1991. The petitioner argued that a single default in payment made the entire amount due under the decrees, leading to the claim amount. The respondent opposed the petition, contending that a single default did not trigger the entire amount due under the decrees.

The court analyzed the consent decrees in the Company Appeal and civil suit. The Company Appeal decree stated that any two defaults in payment would lead to the company petition being admitted and advertised. On the other hand, the civil suit decree clarified that a default in payment would make the entire balance amount immediately executable. The petitioner argued that a single default triggered the entire amount due, while the respondent maintained that the default terms should be read in conjunction with each other.

The court found that the company had paid all instalments as per the schedule, with only one default in payment of the second instalment, which was later paid with interest. The judge opined that the terms of default in the two decrees needed to be read together. The court refrained from interpreting the decrees conclusively, stating that the petitioner could pursue claims through execution proceedings. Ultimately, the court rejected the winding-up petition, noting that the petitioner had a remedy available, and the dispute did not warrant winding up the company based on the facts presented.