Winding-up petition disposed, respondent can contest claim in civil court. Deposit ordered to secure petitioner, no prejudice.

The court disposes of the winding-up petition, allowing the respondent to contest the claim in a civil court. A specified amount is ordered to be deposited to secure the petitioner's claim, held in a Fixed Deposit until the suits' outcome. The decision aims to balance protecting the petitioner's interest while granting the respondent a chance to defend in ongoing litigation, emphasizing no prejudice to either party.

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Issues:
Petition seeking winding up of respondent company under sections 439, 433(e), and 434 of the Companies Act, 1956 based on unpaid loan and interest, respondent's denial of liability, allegations of fraud by former director, discrepancy in account entries, and pending suits by both parties.

Detailed Analysis:

1. Unpaid Loan and Interest:
The petitioner extended a loan to the respondent in 2007, which was partially repaid. An oral agreement for interest payment was allegedly made, but the respondent disputes the amount owed. The respondent acknowledged part of the debt in communication with the Income Tax Department. The petitioner filed a suit for recovery of the outstanding amount.

2. Fraud Allegations and Denial of Liability:
The respondent denies liability, attributing the transactions to the former director who allegedly manipulated accounts and disappeared with records. The new management disclaims any acknowledgment of dues to the petitioner and accuses the former director of fraudulent entries. The respondent claims lack of original records for verification.

3. Legal Precedents and Jurisdiction:
Counsel for the petitioner cites legal precedent to support the filing of a winding-up petition despite pending recovery suits. The court refers to a judgment emphasizing the distinction between winding up proceedings and recovery actions, affirming the right to initiate winding up even after recovery proceedings.

4. Court's Decision and Order:
The court acknowledges discrepancies in account entries and the respondent's acknowledgment of dues in certain communications. It grants an opportunity for the respondent to present its case in a civil court but orders a deposit of a specified amount to secure the petitioner's claim. The court directs the deposited amount to be held in a Fixed Deposit pending the outcome of the suits, emphasizing that its decision does not prejudice the parties in the ongoing litigation.

5. Conclusion:
The court disposes of the petition, allowing the respondent to contest the claim in civil court while securing the petitioner's interest through a court-mandated deposit. The decision reflects a balance between protecting the petitioner's claim and affording the respondent an opportunity to defend its position in the pending legal proceedings.

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