2011 (8) TMI 965 - HC - Companies Law

Winding up claim of creditors adjusted against deposits made by creditors Held that - even when the defendant does not seem to have any defence, the Court may out of sympathy allow it an opportunity to prove his defence by securing the claim of the plaintiff. I would grant such an opportunity to the Company but upon their securing the sum of Rs. 50,08,921 by furnishing a bank guarantee of a nationalised bank for the said amount in favour of the petitioning creditor within four weeks from date. The Company will renew such bank guarantee from time to time at least one week before its expiry subject to orders to be passed by the Civil Court. The petitioning creditor will not invoke the bank guarantee without the leave of the Civil Court. Such leave will be granted by the Civil Court if the Company is unable to prove its right

Summary

Issues:
1. Claim amount discrepancy between the petitioning creditor and the Company.
2. Interpretation of the agreement dated 14-9-2009 regarding adjustments and supplies.
3. Company's denial of acknowledging the full claim amount.
4. Determining the rightful ownership of the disputed amount and the relationship status between the parties.
5. Application of legal principles in winding up applications and granting opportunities for defense.

Analysis:
1. The winding up application involves a discrepancy in the claim amount, initially at Rs. 1,01,48,543.37 without interest, but later scaled down to Rs. 50,08,921 by the petitioning creditor in their Affidavit-in-Reply.

2. The interpretation of the agreement dated 14-9-2009 is crucial in understanding the adjustments and supplies between the parties. The Company maintained that the balance confirmation was subject to the terms of this agreement, while the petitioning creditor argued that the arrangement was never acted upon.

3. The Company denied acknowledging the full claim amount in their reply to the statutory notice, emphasizing that they did not confirm, acknowledge, or admit the dues as stated by the petitioning creditor.

4. The judgment focused on determining the rightful ownership of the disputed amount, highlighting that as of now, Rs. 50,08,921 belonging to the petitioning creditor is retained by the Company. The relationship between the parties was debated, with the Company claiming it continues, while the petitioning creditor had the option to terminate it.

5. Legal principles from Mechalec Engineers & Mfgs. v. Basic Equipment Corpn. were applied, allowing the Company an opportunity to prove its defense by securing the claimed amount through a bank guarantee. The judgment granted the Company four weeks to furnish the bank guarantee, failing which the petitioning creditor could apply for admission of the winding up petition.

In conclusion, the judgment addressed the claim amount discrepancy, the interpretation of the agreement, the Company's denial, the rightful ownership of the disputed amount, and the application of legal principles in winding up applications to ensure fairness and opportunity for defense.