Company faces winding up for default in repayment of Inter-Corporate Deposit

The court admitted the petition for winding up the respondent company due to default in repayment of an Inter-Corporate Deposit (ICD). Despite the respondent's objections, including a limitation defense and disputing the balance confirmation, the court found the petitioner's claims valid. An Official Liquidator was appointed as Provisional Liquidator to oversee the company's assets, with a grace period of four weeks for the respondent to settle the outstanding amount and avoid winding up. The court emphasized the importance of producing evidence and cooperation in legal proceedings.

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Issues:
Petition filed seeking winding up of respondent Company under Sections 433(e) and 434(f) of the Companies Act, 1956 based on default in repayment of Inter-Corporate Deposit (ICD) transactions.

Analysis:

1. Default in Repayment of ICD:
The petitioner provided an ICD of Rs. 50 lakhs to the respondent with interest and repayment terms. Despite multiple extensions requested by the respondent, a significant amount remained outstanding. The respondent issued post-dated cheques and promissory notes but failed to repay the full amount, leading to the petitioner's claim for winding up.

2. Dispute over Balance Confirmation:
The petitioner relied on a communication and ledger account sent by the respondent in 2013 showing an outstanding balance of Rs. 7,29,905. The respondent denied sending such confirmation, alleging forgery. However, the respondent failed to provide evidence to counter the petitioner's claim, raising doubts about the authenticity of their defense.

3. Limitation Defense and Bona Fide Defense:
The respondent claimed the petitioner's suit was time-barred and raised objections regarding the authenticity of the communication and ledger accounts. The court noted the lack of a bona fide defense by the respondent, emphasizing the importance of producing relevant documents and information to support their claims.

4. Legal Notice and Acknowledgment of Liability:
The court found that the legal notice sent by the petitioner was duly delivered, and the respondent's evasiveness indicated a lack of cooperation. The court invoked Section 18 of the Limitation Act, stating that the entries in the balance sheet extended the period of limitation, thereby validating the petitioner's claim.

5. Appointment of Provisional Liquidator:
Considering the merits of the case, the court admitted the petition for winding up the respondent company. The Official Liquidator was appointed as the Provisional Liquidator to take over assets, books of accounts, and records. The court ordered the publication of citations and directed the petitioner to deposit costs for publication. The Official Liquidator was tasked with safeguarding the assets and bank accounts of the respondent company.

6. Suspension of Order and Payment Deadline:
In a gesture of fairness, the court suspended the order appointing the Official Liquidator as Provisional Liquidator for four weeks. If the respondent paid the outstanding amount within this period, the order for winding up would be revoked. The case was listed for further proceedings on a specified date.

This detailed analysis highlights the key legal aspects of the judgment, including the default in repayment, dispute over balance confirmation, limitation defense, acknowledgment of liability, and the court's decision to appoint a Provisional Liquidator while allowing a grace period for settlement.

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