2017 (8) TMI 1629 - HC - Companies Law

Revival of Winding up proceedings - Failure in payment of instalments - HELD THAT - The winding up proceedings revive. This is not a case of a simple default. The company has avoided compliance with the undertaking given to the Supreme Court by filing the consent terms. This is evident from the fact that after paying the first instalment the company committed default. This was not remedied immediately but they have been in default since April. Though the Order of this court required the petition to be be advertised the Petitioners have played along and appear to have now arrived at fresh and modified terms. The process is being misused. Given past conduct this renewed attempt at settlement does not appear bonafide. The petition already stands admitted. Accordingly, the provisions of clauses 6 and 7 are now required to be performed in accordance with the order dated 22 nd March, 2017. Stand over as per CMIS for final hearing.

Summary

Issues: Admission of petition based on default in payment of installments, non-compliance with consent terms, revival of winding up proceedings.

Analysis:
1. The petitioner's counsel informed the court that if the matter was settled, the order of admission could be recalled after a further advertisement was issued. The parties were given time to obtain instructions and agree on revised terms.
2. The parties arrived at revised consent terms for payment in installments, as per the petitioner's counsel. However, the second installment due was not paid, leading to the petition standing admitted based on default.
3. The petition was initially admitted on a conditional order due to the respondent company's failure to deposit a specified amount. The appeal resulted in an increase in the amount to be deposited, which the company failed to comply with.
4. The Supreme Court directed the company to deposit a certain amount and pay the balance within a specified period. Despite this, the company failed to honor the commitments, leading to the petition being admitted.
5. The court noted that the company did not comply with the undertakings made before the Supreme Court and defaulted on the payment schedule outlined in the consent terms. The court found the company's actions as a misuse of the settlement process and ordered the petition to be advertised for winding up proceedings.
6. Given the company's history of non-compliance and default, the court deemed the renewed attempt at settlement as not bona fide. The court directed the petitioner to advertise the admission of the petition and extended the returnable date for further proceedings.