Pre-deposit relief on financial hardship where sickness and losses were shown, but partial payment capacity remained evident.

Financial hardship was relied on to seek modification of an earlier stay order and variation of the pre-deposit condition. The applicants produced material showing reference to the Board for Industrial and Financial Reconstruction, an audit report describing the company as a sick industrial company, and financial statements reflecting substantial losses. However, the record also showed sales income and receivables, so complete inability to make any pre-deposit was not established. Partial modification was therefore considered justified, and the pre-deposit was revised to be met partly through reversal in the Modvat account and partly by cash payment.

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Issues: Whether the applicants had made out a case for modification of the earlier stay order on the ground of financial hardship, and whether the pre-deposit condition should be varied.

Analysis: The applicants placed material showing reference to the Board for Industrial and Financial Reconstruction, an audit report indicating that the company was a sick industrial company, and financial statements evidencing substantial losses. At the same time, the record also indicated sales income and amounts receivable, so complete inability to make any pre-deposit was not established. On this material, partial modification of the stay condition was considered justified.

Conclusion: The pre-deposit requirement was modified to a total of Rs. 15 lakhs, with Rs. 7 lakhs by reversal in Modvat account and Rs. 8 lakhs by cash, and compliance would result in modification of the earlier stay order.

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