1999 (11) TMI 827 - HC - Companies Law

Summary

Issues:
1. Hire-purchase agreement default leading to winding up petition.
2. Dispute over ownership rights and hypothecation of machinery.
3. Involvement of Haryana Financial Corporation in the case.

Issue 1: Hire-purchase agreement default leading to winding up petition

The petitioner-company filed a winding-up petition under sections 433(e), 434, and 439 of the Companies Act, 1956 against the respondent-company for defaulting on a hire-purchase agreement. The agreement involved the supply of a vapour absorption system, with the respondent-company failing to make payments as per the agreed terms. Despite assurances and attempts to reschedule payments, the respondent-company continued defaulting. The petitioner sought winding up due to outstanding amounts totaling Rs. 25,10,505 under the agreement.

Issue 2: Dispute over ownership rights and hypothecation of machinery

The respondent-company admitted to the hire-purchase agreement with the petitioner and the disbursement of Rs. 27 lakhs. However, a dispute arose regarding the ownership of the machinery and its potential sale. The Haryana Financial Corporation intervened, claiming a security interest in the machinery due to a loan advanced to the respondent-company. The Corporation argued that all present and future machinery was hypothecated to them, emphasizing their secured creditor status. The terms of the loan agreement specified the hypothecation of the respondent-company's assets, excluding those of the petitioner-company.

Issue 3: Involvement of Haryana Financial Corporation in the case

The Haryana Financial Corporation sought to be impleaded as a party in the case, asserting its status as a secured creditor with a claim of Rs. 18,40,643 against the respondent-company. The Corporation opposed a joint application for settlement, labeling it as a collusive compromise. However, the court dismissed the Corporation's application, ruling that their presence was unnecessary to decide on the winding-up petition. The court clarified that the Corporation's security interest did not extend to the machinery subject to the hire-purchase agreement between the petitioner and the respondent.

In conclusion, the court disposed of the winding-up petition with conditions regarding the sale of the machinery, emphasizing the need for permission from the Delhi High Court due to an existing legal dispute. The court directed the respondent-company to adhere to the payment schedule agreed upon in the joint application. Failure to comply could result in the revival of the winding-up petition.