2002 (2) TMI 1216 - HC - Companies Law

Summary

Issues Involved:
1. Admitted liability and payment dispute.
2. Withdrawal of deposited amount.
3. Set-off claim by Defendants.
4. Procedural compliance and evidence requirement.

Detailed Analysis:

1. Admitted Liability and Payment Dispute:
The Plaintiffs sold fire protection equipment worth Rs. 75,88,413.63 to the Defendants, who acknowledged receipt and made a partial payment of Rs. 60,00,000. The remaining Rs. 15,88,413.63 was not paid. The Plaintiffs claimed that the Defendants unconditionally acknowledged this liability in a letter dated 12-5-1998. The Defendants, however, contested this, arguing that the acknowledgment was for auditing purposes and not an admission of liability. The Defendants also highlighted various complaints about the Plaintiffs' performance and claimed overpayment.

2. Withdrawal of Deposited Amount:
The Plaintiffs sought to withdraw the deposited amount of Rs. 15,88,413.63, relying on an order by Mr. S.S. Nijjar, J., who directed the Defendants to deposit the amount to show bona fides and avoid the winding-up petition. Mr. D.K. Deshmukh, J. initially allowed the withdrawal subject to furnishing a bank guarantee, but this order was kept in abeyance by the Division Bench upon appeal.

3. Set-off Claim by Defendants:
The Defendants argued that they had overpaid the Plaintiffs and claimed a set-off. They provided correspondence showing dissatisfaction with the Plaintiffs' work and delays, supporting their claim that the amount was disputed. The Defendants contended that the deposit was made under judicial direction, not as an admission of liability.

4. Procedural Compliance and Evidence Requirement:
The Court emphasized the necessity of a decree before allowing withdrawal of the disputed amount. It was noted that the Plaintiffs' reliance on the letter dated 12-5-1998 was insufficient without a decree. The Court cited a precedent where withdrawal without a decree was disallowed, reinforcing that procedural norms must be followed, and evidence must be recorded to resolve the dispute.

Conclusion:
Both Notices of Motion were dismissed. The Court ruled that neither party could withdraw the deposited amount without a decree. The amount was to remain in a fixed deposit, accruing interest, until the dispute was resolved through proper legal procedures and evidence recording. This decision ensures compliance with procedural laws and protects the interests of both parties pending a final judgment.