Binding compromise and reserved liberty to revive justified restoration of the company petition after default.

A court-recorded compromise was held valid and enforceable despite the absence of prior exchange-control permission because the payment obligation was expressly made subject to Reserve Bank approval or another lawful mode, and later permission was in fact granted. The arrangement was not contrary to public policy or the exchange-control framework. Where the earlier order dismissing the company petition had become final and reserved liberty to revive it on default, revival was also held permissible. The court may use its inherent powers to prevent abuse of process and secure the ends of justice when a party defaults on a binding compromise.

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Issues: (i) Whether the compromise recorded by the Court was void or unenforceable for want of prior permission under exchange-control law. (ii) Whether the company petition could be revived on the respondent's default under the compromise and the Court's inherent powers.

Issue (i): Whether the compromise recorded by the Court was void or unenforceable for want of prior permission under exchange-control law.

Analysis: The compromise expressly made payment of the balance amount subject to approval of the Reserve Bank of India or any alternate lawful mode of payment. The governing exchange-control framework did not prohibit the Reserve Bank of India from granting permission at a later stage, and prior permission was not a legal precondition to recording the compromise. Permission was in fact granted later to receive the balance amount and interest, subject to credit of interest into the prescribed NRO account. The agreement was therefore not against public policy and did not offend the exchange-control provisions.

Conclusion: The compromise was valid and enforceable, and the objection that it was void was rejected.

Issue (ii): Whether the company petition could be revived on the respondent's default under the compromise and the Court's inherent powers.

Analysis: The earlier order dismissing the company petition on the basis of compromise had become final and itself reserved liberty to revive the petition upon default. A compromise recorded under the procedural law binds the parties, and the Court's inherent powers remain available where the statute is silent and their exercise is necessary to prevent abuse of process and to meet the ends of justice. A party who obtained the benefit of the compromise could not subsequently resile from its terms or insist on a fresh proceeding as a condition precedent to revival.

Conclusion: Revival of the company petition was permissible, and the respondent's objection was rejected.

Final Conclusion: The applicant was entitled to restoration of the company petition because the compromise remained binding and the respondent's default justified revival.

Ratio Decidendi: A compromise order recorded by the Court and left unchallenged is binding on both parties, and where liberty to revive is expressly reserved, the Court may enforce that liberty and revive the proceeding upon default, using its inherent powers to secure the ends of justice.

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