Admitted debt recovery under section 446(2) allowed; cross-set-off and bank restriction defences rejected, with instalment payment permitted.

An admitted debt in winding-up related recovery proceedings can be enforced under section 446(2) of the Companies Act, 1956 when supported by balance-confirmation letters and admissions in the counter. Set-off or adjustment is not available unless there are mutual dealings between the same parties in the same right, so a claim referable to a third company cannot be cross-adjusted against the applicant's demand. Restrictions imposed by the respondent's financing bank do not defeat recovery of an admitted liability, as they cannot override the applicant's independent right. The court declined a broad instalment arrangement but permitted payment of the admitted amount in three equal bi-monthly instalments.

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Issues: (i) Whether the applicant was entitled to a direction under section 446(2) of the Companies Act, 1956 on the admitted liability of the second respondent; (ii) Whether the second respondent could claim set-off or adjustment against amounts allegedly due to a third company; (iii) Whether restrictions imposed by the financing bank defeated the applicant's claim; (iv) Whether the second respondent was entitled to pay the admitted amount in instalments.

Issue (i): Whether the applicant was entitled to a direction under section 446(2) of the Companies Act, 1956 on the admitted liability of the second respondent.

Analysis: The claim stood supported by contemporaneous balance-confirmation letters and by the admissions contained in the counter. The debt was treated as an independent transaction between the parties, and the admitted balance was not effectively controverted.

Conclusion: The applicant was entitled to a direction for payment on the basis of the admitted liability.

Issue (ii): Whether the second respondent could claim set-off or adjustment against amounts allegedly due to a third company.

Analysis: Set-off in insolvency and winding up is available only where there are mutual dealings between the same parties in the same right. The amount sought to be adjusted was not due from the applicant to the second respondent, but was said to be due to another company. The statutory principles governing mutual dealings did not permit such cross-adjustment.

Conclusion: The plea of set-off or adjustment was not maintainable and was rejected.

Issue (iii): Whether restrictions imposed by the financing bank defeated the applicant's claim.

Analysis: Any internal restriction imposed by the respondent's banker could not override the applicant's right to recover an admitted debt. No statutory bar was shown, and contractual or financial restraints between the respondent and its banker could not prejudice third-party rights.

Conclusion: The bank-imposed restriction did not bar recovery by the applicant and was rejected as a defence.

Issue (iv): Whether the second respondent was entitled to pay the admitted amount in instalments.

Analysis: The Court declined the wider instalment arrangement sought by the respondent, but granted a limited time for payment in equal bi-monthly instalments, balancing the admitted debt with the practical position of the respondent.

Conclusion: Limited instalment relief was granted, with payment directed in three equal bi-monthly instalments.

Final Conclusion: The admitted debt was held recoverable, the proposed set-off and banking restriction defence were rejected, and the matter was disposed of by directing payment in instalments with costs.

Ratio Decidendi: In winding-up related recovery proceedings, an admitted debt can be enforced under section 446(2), and set-off is available only for mutual dealings between the same parties in the same right.

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