2015 (9) TMI 452 - SC - Companies Law

Winding-up petition - unable to pay the dues - the claim was for a sum of ₹ 3,54,500/- together with interest at the rate of ten per cent per annum together with ₹ 1,09,958/- deducted by the Respondent on account of the tax deducted at source (TDS). These amounts have remained unpaid even after the receipt of the statutory notice. - Held that - The Company Judge had no alternative but to proceed for Winding up of the Respondent Company since it had failed to discharge the admitted debt even after the service of the afore-noted statutory notice. The said junior Advocate of the Respondent had, in fact, displayed legal sagacity in getting the winding-up of the Company postponed and avoided the publication in the Winding-up petition by praying for and obtaining leave to pay the debt in installments. Had he not done so, the Respondent would have had to pay the entire debit at once or face certain commercial death as a consequence publication/citation of Winding-up petition. The Respondent has abused the judicial process in order to delay the discharge of an acknowledged debt for almost a quarter of a century, in which period it has continued in business. These Appeals are allowed. - Respondent to directed to pay the said admitted dues - All these amounts are payable within 45 days from today. No extension for payment shall be granted since the accommodation and the indulgence granted by the learned Company Judge has been abused by the Respondent. - Decided in favor of appellants.

Summary

Issues:
Appeal against Order setting aside concession made by Junior Counsel.

Analysis:
The Appeals challenged the Order passed by the Division Bench of the High Court, setting aside the Company Judge's rejection of the Respondent's plea regarding a concession made by the Junior Counsel. The Appellant filed Winding-up petitions against the Respondent for outstanding debts, even after a statutory Notice under the Companies Act. The Respondent admitted the debts but offered to pay in installments to avoid Winding-up. The Company Judge accepted this arrangement. However, the Division Bench set aside this Order, leading to further litigation.

The Company Judge rejected the Respondent's plea for re-hearing or modification of the consent Order, emphasizing that the Junior Counsel's concession was rightly made to avoid adverse consequences. The Respondent's conduct was deemed not bona fide, leading to the dismissal of their petition with costs. The Division Bench, however, remanded the case for rehearing, questioning the concession made by the Counsel. The Appellants argued that the Division Bench's leniency towards the Respondent only prolonged the litigation, citing relevant legal precedents.

The Supreme Court found no justification for the Division Bench's decision, emphasizing that the Respondent had abused the judicial process to delay debt repayment. The Court set aside the impugned Order and directed the Respondent to pay the admitted dues, interest, costs, and TDS amounts within 45 days. Failure to comply would allow the Appellant to move the Company Judge to admit the Winding-up petition promptly. The Court highlighted the importance of timely debt repayment and criticized undue leniency leading to prolonged litigation.

In conclusion, the Supreme Court allowed the Appeals, modifying the Orders of the Single Judge to ensure prompt payment of admitted dues by the Respondent. The Court emphasized the need to avoid abuse of the judicial process and promptly settle acknowledged debts to prevent unnecessary prolongation of litigation.