One Time Settlement enforcement in winding up sustained where the agreement was concluded and substantially performed.

A One Time Settlement that had been acted upon, executed as an agreement, and substantially performed could not be unilaterally revoked after cancellation of the proposal and expiry of the stipulated time, so the settlement remained enforceable. In winding-up proceedings, the Company Court's jurisdiction under the Companies Act, 1956 extended to questions arising in liquidation, including enforcement of a concluded settlement, so it had competence to act on the arrangement. A conditional direction for release of sale proceeds to the bank was also sustained because it was limited to a secured creditor finding and protected other creditors through refund safeguards.

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Issues: (i) Whether the One Time Settlement and the connected agreement could be enforced after the proposal had been cancelled and the stipulated time had expired; (ii) whether the Company Court had jurisdiction in winding-up proceedings to enforce the settlement under the Companies Act, 1956; (iii) whether the conditional direction for release of sale proceeds to the bank called for interference.

Issue (i): Whether the One Time Settlement and the connected agreement could be enforced after the proposal had been cancelled and the stipulated time had expired.

Analysis: The settlement was not treated as a mere revocable proposal. The parties had acted upon it, the agreement had been executed, and the borrower had substantially complied by paying the agreed amount with penal interest. Once the proposal had matured into a concluded arrangement and performance had substantially taken place, unilateral cancellation could not defeat the settlement. The Court also treated the appellant as bound by its conduct after receiving the benefit of the arrangement.

Conclusion: The settlement and agreement were held to be enforceable, against the appellant's objection.

Issue (ii): Whether the Company Court had jurisdiction in winding-up proceedings to enforce the settlement under the Companies Act, 1956.

Analysis: In view of the winding-up order and the appointment of the Official Liquidator, the Company Court's jurisdiction under Section 446 of the Companies Act, 1956 extended to questions arising in the winding up, including claims and allied questions of law and fact. The enforcement of the settlement was therefore within the court's competence. The reliance on authorities denying enforcement of non-statutory schemes was held inapplicable on the facts, particularly because the governing context involved a concluded agreement and the winding-up jurisdiction.

Conclusion: The Company Court was held to have jurisdiction to enforce the settlement.

Issue (iii): Whether the conditional direction for release of sale proceeds to the bank called for interference.

Analysis: The direction was made only if the bank was found to be a secured creditor and was coupled with safeguards requiring an undertaking to refund any amount found not payable, together with interest, after final adjudication. The arrangement protected the rights of other creditors and preserved the Official Liquidator's control over final distribution.

Conclusion: The conditional release order was upheld and no interference was warranted.

Final Conclusion: The appeals were found to be without merit because the settlement could be implemented, the Company Court had jurisdiction to enforce it, and the protective directions regarding disbursement to the bank were legally sustainable.

Ratio Decidendi: A One Time Settlement that has matured into an executed agreement and has been substantially performed cannot be unilaterally revoked, and in winding-up proceedings the Company Court may enforce such an arrangement under its jurisdiction over questions arising in the liquidation.

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