Winding-up petition cannot be revived after acted-upon settlement; later instalment default gives only a fresh cause of action.

A winding-up petition under the Companies Act is based on a company's inability to pay debts, not as a debt-recovery mechanism. Where the creditor voluntarily settles the matter through consent terms, accepts payment by instalments, and the parties act upon that settlement, the original cause of action is extinguished. A later default in instalments does not revive the withdrawn petition, though it may at most support a fresh cause of action. Revival was also resisted because it could prejudice third parties who had dealt with the company in the meantime. The application for revival and restoration of the withdrawn company petition was rejected as not maintainable.

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Issues: Whether a withdrawn company petition under the Companies Act could be revived on the ground that the respondent defaulted in paying instalments under consent terms, despite the earlier settlement and partial performance of those terms.

Analysis: A winding-up petition under Section 433 of the Companies Act, 1956 is not a proceeding for recovery of debt but one founded on the company's inability to pay its debts. Once the creditor voluntarily enters into consent terms and agrees to accept payment by instalments, the original basis of the winding-up petition ceases to survive. Mere subsequent default in instalments does not revive the original cause of action, though it may at best give rise to a fresh cause of action. The fact that both sides acted upon the settlement by payment of one instalment and withdrawal of related proceedings also supported the conclusion that the earlier petition had been effectively concluded. The Court further noted that revival would prejudice third parties who may have dealt with the company in the intervening period.

Conclusion: The application for revival and restoration of the withdrawn company petition was not maintainable and was rejected.

Final Conclusion: A company petition withdrawn after settlement and acted-upon consent terms cannot be revived merely because the debtor later defaults in payment.

Ratio Decidendi: Once a winding-up petition is withdrawn pursuant to consent terms and those terms are acted upon, the original cause of action is extinguished and cannot be revived solely on the basis of later default in instalment payments.

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