Case Note & Summary
The respondent, Wall Street Finance Ltd., filed Company Petition No.298 of 1997 against M/s. Corporate Couriers Ltd. and others (the appellants) for winding up on the ground that the company owed Rs.77,50,800/- and was unable to pay its debts. The petition was admitted on 12th April 1999 but not advertised. On 8th November 1999, consent terms were filed between the parties, wherein the company acknowledged the debt and agreed to pay in installments. Clause 4 of the consent terms provided that if the company defaulted in two consecutive installments, the Official Liquidator would stand appointed and the petition would be advertised. The company defaulted, and a Memorandum of Understanding (MoU) was entered into on 21st August 2005, recording that Rs.33,93,501/- was still due. The company agreed to settle for Rs.15 lacs and issued a cheque, which was dishonoured. The respondent filed a criminal complaint and later filed Company Application (L) No.1280 of 2009 for restoration of the winding up petition and Company Application No.723 of 2009 for appointment of a provisional liquidator. The learned Company Judge allowed both applications, restoring the petition and appointing the Official Liquidator. The appellants appealed, arguing that the MoU superseded the consent terms. The High Court dismissed the appeal, holding that the MoU did not supersede the consent terms, as there was no express or implied term to that effect. The default under the consent terms entitled the respondent to restoration and appointment of the Official Liquidator. The court found no infirmity in the impugned order and dismissed the appeal.
Headnote
A) Company Law - Winding Up - Consent Terms - Default - Clause 4 of consent terms provided that on two consecutive defaults, the Official Liquidator stands appointed and the petition shall be advertised. The court held that the consent terms were not superseded by the subsequent MoU, as the MoU did not expressly or impliedly supersede the consent terms. The default under the consent terms entitled the petitioner to restoration of the petition and appointment of Official Liquidator. (Paras 1-6) B) Company Law - Winding Up - Restoration of Petition - The court held that once the consent terms were filed and the petition was disposed of in terms thereof, the petition could be restored upon default as per the terms of the consent terms. The learned Company Judge correctly restored the petition and appointed the Official Liquidator. (Paras 4-6)
Issue of Consideration
Whether the Company Petition could be restored and Official Liquidator appointed under Clause 4 of the consent terms despite a subsequent Memorandum of Understanding (MoU) and whether the consent terms stood superseded by the MoU.
Final Decision
The appeal is dismissed. The order of the learned Company Judge restoring the Company Petition and appointing the Official Liquidator is upheld.
Law Points
- Consent terms
- winding up
- default
- automatic appointment of Official Liquidator
- restoration of petition
- supersession of consent terms by MoU
