2017 (6) TMI 27 - HC - Companies Law

Applications for revival of the liquidation proceedings - Held that - Since the petitioner company has accepted the payments in the extended period and that too with interest on the default installments, then simply because there was delay in making the payments under the settlement agreement, it would not be justifiable to take recourse to clause 4 of the Settlement Agreement and thus vitiating the efforts made by the Court to conclude the settlement. After receiving huge payments with interest and yet again making the respondent suffer liquidation proceedings would be asking too much. The conditional offer made by the learned counsel for the petitioner to deposit the amount so received only once a liquidator is appointed is not acceptable and such a plea cannot be allowed. In view of above, the applications for revival of the liquidation proceedings are dismissed.

Summary

Issues:
1. Revival of Company Petitions for liquidation due to default in payment under settlement agreement.

Analysis:
The petitioner moved applications under Rule 6 & 9 of the Companies (Court) Rules, 1959 seeking revival of Company Petitions 584 and 585 of 2014 for the liquidation of the respondent company. The parties had entered into a settlement agreement where the respondent agreed to pay USD 30,379,115.60 in 12 installments. However, the respondent defaulted on payments after the first six installments, leading to the petitioner seeking revival of the liquidation proceedings.

The respondent argued that they had cleared the entire payment by a certain date and paid interest for the delayed amount. The Court had extended the time for payment multiple times, and the respondent eventually cleared the outstanding amount by a specified date. The respondent contended that the liquidation proceedings should not be revived as they had fulfilled their obligations under the settlement agreement.

The Court considered the provisions of the settlement agreement and the extensions granted for payment. It was noted that the petitioner had received a substantial sum under the settlement agreement and accepted payments with interest even after delays. The Court referred to legal precedents emphasizing that even in cases of automatic or self-operative orders based on consent, the Court retains the power to extend time for payments in the interest of justice.

Based on the above analysis, the Court dismissed the applications for revival of liquidation proceedings. The Court found that since the petitioner had accepted payments with interest within the extended period, resorting to clause 4 of the Settlement Agreement to seek liquidation would be unjustifiable. The Court concluded that the petitioner's conditional offer to deposit the received amount only after a liquidator is appointed was not acceptable. Consequently, the applications for revival were dismissed, and no costs were awarded.

Therefore, the Court's decision focused on the fulfillment of payment obligations by the respondent within extended timelines, the acceptance of payments by the petitioner, and the overarching principle of upholding settlements in the interest of justice. The Court's ruling highlighted the importance of honoring agreements and the discretion of the Court to extend time for compliance with settlement terms.