Release of court-deposited funds denied where liquidation intervened and FEMA compliance remained incomplete

Release of money deposited in Court was refused because the petitioners had not completed the required FEMA formalities and had not pursued their claim before the Official Liquidator after winding up intervened. Although the entitlement to refund under the buy-back arrangement had crystallised before the Provisional Liquidator's appointment, the deposit was treated as part of the liquidation estate for administration in the winding up process and for the benefit of secured stakeholders. The petitioners were given liberty to lodge their monetary claim before the Official Liquidator, and the delay in doing so was condoned.

---

---

Issues: Whether the petitioners were entitled to release of the amount deposited in Court, or whether the amount was liable to be reclaimed by the Official Liquidator for the benefit of the company in liquidation.

Analysis: The petitioners' entitlement to refund under the buy-back arrangement had crystallised before appointment of the Provisional Liquidator, but the release could not be ordered because the petitioners had not completed the requisite FEMA formalities and had also not pursued a claim before the Official Liquidator after the winding up proceedings were taken up. The amount had remained deposited in Court for a considerable period, and the petitioners' attempt to attribute the delay wholly to prior counsel was not accepted. In these circumstances, the deposited money was treated as available for the liquidation corpus, to be administered in accordance with the winding up process and the claims of secured stakeholders.

Conclusion: The petition for release of the deposited amount was rejected, and the amount was directed to be taken back by the Official Liquidator with accrued interest for inclusion in the liquidation funds. The petitioners were permitted to file their claim before the Official Liquidator, and the delay in doing so was condoned.

Final Conclusion: The application failed on merits, but the petitioners retained liberty to pursue their monetary claim in liquidation proceedings, subject to the Official Liquidator's administration of the company assets.

Ratio Decidendi: A party seeking release of money deposited in Court must satisfy the procedural and substantive requirements governing entitlement, and once winding up intervenes, the deposited amount may be brought into the liquidation estate for distribution in accordance with law.

---