Court orders release of Rs. 50,00,000/- to petitioner despite solvency concerns. Obligation to pay debts emphasized.

The Court directed the release of Rs. 50,00,000/- along with interest to the petitioner by the respondent company. Despite opposition based on solvency, the Court emphasized the obligation to pay undisputed debts. The matter was scheduled for the handing over of the cheque, with the petitioner allowed to pursue a civil suit for interest recovery. The petition was disposed of, highlighting the significance of honoring debts irrespective of solvency concerns, with rights and contentions left for the trial court's determination.

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Issues involved:
The issues involved in the judgment include the appointment of a Provisional Liquidator and the release of a sum of money by the respondent company to the petitioner.

Appointment of Provisional Liquidator:
The Court had previously concluded that the sum of Rs. 50,00,000/- not refunded by the respondent constituted a debt in praesenti, making it an unsecured debt due and payable to the petitioner. Consequently, the Court directed the release of this amount along with any accrued interest to the petitioner by way of an account payee cheque.

Opposition to Release of Amount:
The respondent's counsel opposed the release of the amount, citing the company's solvency as a reason to not proceed with further orders. However, referencing a Supreme Court judgment, it was highlighted that if a debt is undisputedly owing, it must be paid regardless of the company's solvency status. Solvency should not be a standalone ground for setting aside a notice under Section 434(1)(a).

Judicial Direction:
In light of the above, the Court directed the matter to be listed before the Registrar General for the handing over of the cheque to the petitioner's counsel against a receipt. The petitioner was also granted liberty to file a civil suit for the recovery of any interest, with a clarification that the rights and contentions of both parties are left open for the trial court to decide without being influenced by any observations made by the High Court.

Conclusion:
With the observations and liberty granted, the petition was disposed of, and the next hearing date was cancelled. The judgment emphasized the importance of paying undisputed debts and clarified the role of solvency in such matters based on legal precedents.

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