Appeals dismissed, affirming winding up order. Secured creditor's claim to be proved. Failure to comply with settlement cited.

The Appeals were dismissed, affirming the Company Judge's decision to admit the Company Petition for winding up. The Respondent's claim, as a secured creditor, would be proved during the winding up proceedings, and the company's inability to pay its debts justified the winding up order. The Court emphasized that a secured creditor has the option to enforce security outside the winding up proceedings or prove the debt balance in winding up. The Appellant's failure to comply with a mediated settlement and consistent refusal to adhere to repayment schedules supported the decision.

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Issues Involved:
1. Admissibility of the Company Petition for winding up.
2. Obligations of a secured creditor in winding up proceedings.
3. Compliance with the mediated settlement.
4. Company's inability to pay its debts.

Issue-wise Detailed Analysis:

1. Admissibility of the Company Petition for Winding Up:
The Appeals arose from orders admitting and allowing a Company Petition for winding up. The Respondent advanced a loan of Rs. 50 lakhs to the Appellant, secured by a mortgage of immovable property and post-dated cheques. When the cheques were dishonored, a statutory notice of winding up was issued, and the Company Petition was filed on the grounds of the company's inability to pay its debts. The Company Judge admitted the petition, citing a precedent that a Company Petition for winding up could not be dismissed at the admission stage merely because the debt was secured.

2. Obligations of a Secured Creditor in Winding Up Proceedings:
The Appellant contended that the Respondent, as a secured creditor, needed to disclose whether she wished to stand outside the winding up proceedings and realize her security or specify the extent of the claim not covered by the security. However, it was established that a Petition for winding up is maintainable by both secured and unsecured creditors. The secured creditor has the option to enforce the security outside the winding up proceedings or prove the balance of the debt in the winding up. The Court noted that the Respondent had stated that her dues could not be fully recovered by the sale of the secured property, and the claim would be proved during the winding up proceedings.

3. Compliance with the Mediated Settlement:
A mediated settlement was reached in the Delhi High Court, where the Appellant agreed to pay Rs. 60 lakhs within 120 days. The Respondent fulfilled her obligation by depositing the title deeds with the Registrar General of the Delhi High Court. However, the Appellant failed to make the payment within the stipulated time. Despite multiple opportunities and adjournments, the Appellant did not comply with the settlement terms or present a bona fide offer to settle the dues.

4. Company's Inability to Pay Its Debts:
The Company Judge concluded that the company was unable to pay its debts, noting the consistent refusal to adhere to the repayment schedule and the cessation of business operations. The Appellant's modus operandi was to seek adjournments, and there were several other petitions against the company. The Court emphasized that the law does not require a secured creditor to forsake their security before asserting the right to wind up a company unable to pay its debts.

Conclusion:
The learned Company Judge was not in error in admitting the Petition and making the winding up order absolute. The Appeals were dismissed, affirming that the Respondent's claim would be proved in the course of the winding up proceedings, and the secured creditor's rights were appropriately considered. The company's inability to pay its debts justified the winding up order.

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