2022 (8) TMI 659 - HC - Companies Law

Distribution of proceeds - winding up proceedings - whether the appellant-company had received amounts in excess of Rs.1,43,05,661/-, and furthermore, as to how the said amount(s) were distributed? - HELD THAT - The S.A. seems to suggest that Rs.77,00,000/-, received in the first instance, was accounted for, and after adjusting the expenses that had been incurred by the appellant-company, was distributed equally between the parties. 24.5. Insofar as the balance amount i.e., Rs.66,05,661/- is concerned, the figures given in the winding up petition show that the respondent received, if not, Rs.22,22,000/-, it surely did receive Rs.20,22,000/- - It does appear that there is a typographical error vis- -vis the figure shown against the date set forth in the table, which is 25.06.2009. The respondent clearly did not place any material before the Learned Single Judge, to demonstrate that the appellant had received monies in excess of Rs.1,43,05,661/-. Distribution of Rs.9,99,894.50/- - HELD THAT - Although Ms Altaf says that the respondent is required to bear the burden of expenses incurred in the arbitration proceedings, there is no material to demonstrate, at least presently, that the respondent was called upon to share the expenses. The impugned order dated 07.01.2019 is set aside - The appellant-company will deposit 50% of Rs.9,99,894.50/-. with the Registry of this Court - Appeal disposed off.

Issues Involved:
1. Admittance of the winding-up petition under Sections 433(e), 434, and 439 of the Companies Act, 1956.
2. Appointment of the Official Liquidator as the Provisional Liquidator.
3. Distribution of proceeds from Webel Technology Ltd. (WTL).
4. Execution and compliance with the Settlement Agreement (SA) dated 13.06.2009.
5. Calculation and distribution of payments received from WTL.
6. Alleged non-response to additional affidavit dated 21.02.2015.
7. Need for arbitration to resolve disputes.

Issue-Wise Detailed Analysis:

1. Admittance of the Winding-Up Petition:
The Learned Single Judge admitted the winding-up petition under Sections 433(e), 434, and 439 of the Companies Act, 1956. The appellant challenged this order, arguing that the respondent had not established a statable case for winding up. The appellant contended that the sums received from WTL were fairly distributed according to the Settlement Agreement (SA).

2. Appointment of Official Liquidator:
The Learned Single Judge appointed the Official Liquidator (OL) as the Provisional Liquidator, directing the OL to take over the assets, books of accounts, and records of the appellant-company immediately. The appellant was also directed to deposit Rs.75,000/- towards publication costs for citations in newspapers.

3. Distribution of Proceeds from WTL:
Disputes arose between the parties regarding the distribution of proceeds from WTL. The 2008 Agreement and the Settlement Agreement (SA) dated 13.06.2009 outlined that the proceeds were to be distributed in a 50:50 ratio. The appellant argued that the sums received from WTL were distributed as per the SA, and the respondent had received its share.

4. Execution and Compliance with the Settlement Agreement (SA):
The SA recognized amounts spent by both parties and stipulated that payments from WTL would be distributed equally after deducting specific expenses. The appellant presented tables showing detailed calculations of expenses and payments, arguing that the sums were distributed according to the SA.

5. Calculation and Distribution of Payments:
The appellant provided detailed tables showing the distribution of Rs.77,00,000/- received from WTL, with Rs.12,50,000/- falling to each party's share after expenses. The appellant also acknowledged receiving an additional Rs.66,05,661/- from WTL, which was to be divided equally after adjusting Rs.1,61,872/-. The appellant contended that the respondent received Rs.20,22,000/- (or Rs.22,22,000/- if a typographical error was corrected) as its share.

6. Alleged Non-Response to Additional Affidavit:
The respondent argued that the appellant did not respond to the additional affidavit dated 21.02.2015. The appellant countered that despite this, it could still demonstrate fair distribution of sums received from WTL according to the SA.

7. Need for Arbitration:
The appellant highlighted that it was pursuing arbitration against WTL and that the respondent was required to share the financial burden of these proceedings as per the SA. However, there was no material evidence showing that the respondent was asked to share these expenses.

Judgment and Directions:
1. The impugned order dated 07.01.2019 was set aside.
2. The appellant-company was directed to deposit 50% of Rs.9,99,894.50/- with the Registry of the Court.
3. The Registry was instructed to invest the deposited amount in an interest-bearing Fixed Deposit Receipt (FDR) with a nationalized bank.
4. The deposited amount would abide by the decision in the arbitration proceedings initiated by the appellant-company against WTL.
5. If the OL had not incurred expenses towards citation, the Rs.75,000/- deposited by the respondent was to be refunded by the OL.

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