Modification of Repayment Schedule for Maheswari Ispat Limited with Enforcement Consequences

The Division Bench allowed Maheswari Ispat Limited some relief by modifying the repayment schedule to continue payments of Rs. 10 lacs per month for six months, with the option for further rescheduling. Failure to comply would lead to the order's recall, enabling Tata Capital Finance Limited to proceed with the winding-up process. The application was disposed of without costs, with both judges concurring on the decision.

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Issues Involved:
1. Winding up petition filed by Tata Capital Finance Limited against Maheswari Ispat Limited.
2. Modification of the repayment schedule ordered by the Division Bench.
3. Competence of the Division Bench to entertain the application post-disposal of the appeal.
4. Legal precedents and statutory provisions relevant to the modification of decrees and installment payments.

Detailed Analysis:

1. Winding Up Petition:
Tata Capital Finance Limited filed a winding up petition against Maheswari Ispat Limited for failing to repay financial assistance amounting to approximately Rs. 5 crore. Maheswari partially secured the claim with a fixed deposit receipt for Rs. 75 lacs, which Tata encashed, recovering Rs. 92.54 lacs. Despite this, a sum of Rs. 2,27,57,975 remained due as confirmed by Maheswari on July 14, 2011. Including interest at 15.5% per annum, the total due at the time of filing the petition was Rs. 4,12,98,703.81. Tata also initiated arbitration proceedings under the Arbitration and Conciliation Act, 1996. The winding up proceeding was admitted, and Maheswari appealed, leading to a re-scheduled repayment program by the Division Bench.

2. Modification of Repayment Schedule:
Maheswari sought modification of the repayment terms, proposing a phased payment plan starting with Rs. 5 lacs per month for six months, increasing incrementally. Tata contested this application, highlighting Maheswari's irregular payments and non-compliance with statutory returns. The Division Bench had initially ordered a structured repayment plan, which Maheswari partially complied with but defaulted subsequently.

3. Competence of the Division Bench:
Tata's counsel argued that the Division Bench became functus officio after disposing of the appeal and thus lacked competence to entertain the modification application. This contention was supported by four legal precedents:
- Chandra Nath & another Vs. Sahadabia Kumarin: A decree for rent payable in installments requires the decree holder's consent.
- Piyaratana Unnanse and another Vs. Wahareke Sonuttara Unnanse and others: A court becomes functus officio post-decree, except for clerical errors.
- Central Bank of India & Ors. Vs. Ashoke Kumar Bose: Amendment of a decree to include interest requires an appeal.
- Badri Prasad Vs. Bhartiya State Bank and others: Installment payments require the decree holder's express consent.

4. Legal Precedents and Statutory Provisions:
The Division Bench analyzed the cited cases, noting that altering a decree's nature and character or granting installments without consent is generally impermissible. However, the High Court, as a Court of record, has inherent powers under Section 151 of the Code of Civil Procedure to correct its records and do substantial justice. The Company (Court) Rules, 1959, particularly Rule 6 and Rule 9, allow the Company Court to apply the Civil Procedure Code where not in conflict and to exercise inherent powers to ensure justice.

The Division Bench concluded that it retained the competence to modify the repayment schedule to meet substantial justice, as recognized under Section 443 of the Companies Act, 1956. The Court emphasized that the re-scheduling of payments did not alter the ultimate decision and was within its jurisdiction.

Conclusion:
The Division Bench decided to allow Maheswari some respite by ordering continued payments of Rs. 10 lacs per month for six months, after which Maheswari could request further re-scheduling. Any default would result in the recall of this order, allowing Tata to proceed with the winding up. The application was disposed of without costs.

Separate Judgments:
Both judges agreed on the judgment, with no separate opinions delivered.

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