1999 (10) TMI 644 - HC - Companies Law

Summary

Issues: Modification of court order for deposit, discrepancies in material supplied, inability to pay debts, dishonored cheques, receipt of payment from Delhi Jal Board, rectification of defects in supplied equipments, direction for deposit and security, inspection of equipments, disposal of application.

1. Modification of Court Order for Deposit:
The respondent filed an application seeking modification of the court order passed in C.A. No. 1887 of 1998, directing them to deposit Rs. 50 lakhs within two weeks. The respondent argued that they were unable to pay as the petitioner did not rectify discrepancies pointed out by the Delhi Jal Board, withholding about Rs. one crore due to financial constraints. The petitioner contended that the respondent received Rs. 50 lakhs from the Delhi Jal Board, issued dishonored cheques, and was unable to pay debts, opposing any modification of the order.

2. Discrepancies in Material Supplied:
The respondent claimed that no amount was due as the petitioner had not rectified discrepancies in the material supplied, as requested by the Delhi Jal Board. The financial constraint due to the petitioner's failure to rectify defects led to the inability to deposit the amount as per the court order, necessitating modification.

3. Inability to Pay Debts:
The petitioner filed a winding-up petition against the respondent under the Companies Act, alleging the respondent's inability to pay debts. The respondent acknowledged dishonored cheques and financial constraints, proposing to pay Rs. 25 lakhs and provide security for the balance amount upon rectification of defects, as per the court's directions.

4. Receipt of Payment from Delhi Jal Board:
It was established that the respondent received Rs. 50 lakhs from the Delhi Jal Board for supplies made by the petitioner, corroborated by documents. The petitioner supplied equipment worth around Rs. 60 lakhs for which defects were pointed out by the Delhi Jal Board, necessitating rectification by the petitioner.

5. Rectification of Defects in Supplied Equipments:
The court directed the respondent to deposit Rs. 25 lakhs within three weeks and furnish security for the balance amount, contingent on the petitioner rectifying defects in supplied equipment. Representatives of both parties were to inspect the equipment at the Delhi Jal Board's office, ensuring rectification of any defects to release withheld payment.

6. Direction for Deposit and Security, Inspection of Equipments:
In compliance with the respondent's undertaking, the court directed the deposit of Rs. 25 lakhs within a specified timeframe, releasing the amount to the petitioner upon satisfactory security. The balance amount required security for restitution, with both parties' representatives inspecting and rectifying defects in the supplied equipment.

7. Disposal of Application:
The court disposed of the application based on the directions issued for deposit, security, and inspection of equipment, ensuring rectification of defects and release of withheld payment, thereby resolving the dispute between the parties.