2003 (11) TMI 340 - HC - Companies Law

Summary

Issues:
1. Dispute over non-functioning machinery supplied by the petitioning creditor.
2. Company's payment obligations for specific bills.
3. Direction for company to furnish security or bank guarantee.
4. Admission of winding up petition for specific bill amounts.
5. Payment schedule and interest calculation for the admitted amount.
6. Permission for petitioning creditor to file suit for the balance amount.
7. Consequences of default in payment or security furnishing.
8. Timeline for filing suit and release of security.
9. Stay of winding up petition upon payment and consequences of default.

Analysis:

1. The court noted a dispute regarding the functionality of machinery supplied by the petitioning creditor to the company. The company claimed the machinery was not working properly, but the court found the facts in the company's letter to be confusing and not a clear statement of the issue. Despite the dispute, the court acknowledged the company's payment obligations for specific bills and directed the company to secure the claim by providing security within three weeks.

2. The court admitted the winding up petition for certain bill amounts totaling Rs. 5,32,820, subject to scrutiny by the department. The company was directed to make payments in six equal monthly installments, carrying 9% interest per annum from the date of the petition filing until full payment. The payment schedule was specified, with the first installment due by a certain date and subsequent installments monthly thereafter until full payment.

3. Regarding the balance amount claimed in the petition, the petitioning creditor was granted permission to file a suit if deemed necessary before the competent court of jurisdiction. In case of default in making payments or providing security as directed, the petitioning creditor was authorized to make publications in specific newspapers, and the company was given a timeline to file a suit or risk the release of the security.

4. The court specified that if the directed payments were made as instructed, the winding up petition would be permanently stayed. However, in case of default, the matter would be returnable after a specified period. The judgment outlined the necessary steps for both parties to comply with the court's directives to resolve the dispute effectively.