Winding-up proceedings: Court moulded a deposit direction into part payment, security for the balance, and joint inspection of disputed equipment.

In a winding-up related interlocutory matter, the Delhi High Court considered whether an earlier deposit direction should be adjusted in light of the parties' undertakings, the alleged value of equipment supplied, and complaints of defects. The Court balanced the respondent's liability to secure the amount received against the need for joint inspection of the equipment in the presence of the Delhi Jal Board and rectification of any defects. It accordingly moulded the prior direction by requiring a part deposit, security for the balance, and coordinated inspection and rectification arrangements, while keeping the matter pending until compliance.

---

---

Issues: Whether the earlier direction requiring the respondent to deposit Rs. 50 lakhs in winding-up proceedings called for modification, and what consequential directions should be issued regarding deposit, security, and inspection of the supplied equipment.

Analysis: The dispute arose in a winding-up petition based on alleged inability to pay debts. The Court noted that the respondent had received Rs. 50 lakhs from the Delhi Jal Board against the work executed through the petitioner, while the petitioner had supplied equipment of substantial value. The Court also noticed that defects had been pointed out in the equipment and that inspection by representatives of both sides in the presence of the Delhi Jal Board was necessary. In view of the respondent's undertaking and the need to balance the parties' positions pending rectification of any defects, the Court moulded the earlier direction instead of fully modifying or vacating it.

Conclusion: The respondent was directed to deposit Rs. 25 lakhs within three weeks, furnish security for the balance Rs. 25 lakhs, and facilitate joint inspection and rectification of defects, after which the application stood disposed of.

Final Conclusion: The earlier deposit direction was partly varied by substituting a phased payment and security arrangement, while preserving the petitioner's obligation to rectify any defects and the respondent's liability to secure the remaining amount.

Ratio Decidendi: In winding-up related interlocutory proceedings, the Court may, on the basis of undertakings and the equities of the parties, mould an existing monetary direction by requiring part deposit and security for the balance while also directing inspection and rectification of disputed defects.

---