2000 (2) TMI 781 - SC - Companies Law

Winding up - direction to furnish security - Held that - Appeal allowed. The direction of the Division Bench that the appellant should furnish security in the sum of Rs. 70 lakhs before the withdrawal of said amount is hereby set aside and the order of the Company Judge dated 9-12-1998 is restored. If the amount is lying in a fixed deposit for any particular term it will be open to the appellant to move the Prothonotary for breaking up the fixed deposit and for withdrawal of the said amount in favour of the appellant.

Summary

Issues:
Winding up petition for default in payment - Dispute over amount due - Order to deposit specified amount - Appeal against direction to furnish security for withdrawal of deposited amount.

Analysis:
The appellant-company filed a winding up petition against the respondent-company for default in payment. The Company Judge ordered the respondent to deposit a specified amount within a time frame, failing which the petition would stand admitted. The respondent admitted to the amount due and sought permission to deposit the sum. However, on appeal, the Division Bench directed the appellant to furnish security for withdrawing the deposited amount, even though the amount was not in dispute. The Supreme Court, upon hearing both parties, held that the security condition was unwarranted as the amount was admitted by the respondent. Therefore, the Supreme Court set aside the Division Bench's direction and restored the Company Judge's order. The appellant was given the option to withdraw the amount without the need for providing security, especially if the amount was held in a fixed deposit.

This judgment highlights the importance of considering the admitted amount in legal proceedings and the necessity of providing security for withdrawal of funds in dispute. The Supreme Court's decision focused on the fairness of the conditions imposed on the appellant, emphasizing the respondent's admission of the amount due. By setting aside the security requirement, the Court upheld the original order's integrity and allowed the appellant to access the deposited amount without additional conditions. The judgment serves as a reminder of the principles of fairness and adherence to admitted facts in legal matters, ensuring equitable outcomes for all parties involved in disputes over financial obligations.