2024 (12) TMI 539 - HC - Companies Law

Rejection of appellants application for release of the amounts deposited by the respondent - HELD THAT - The appellants herein did not take any steps at that stage for seeking release of the amount deposited by the Company with the Registry of this Court and in our view rightly so the appellants were not entitled to any preferential payment once the learned Company Court had decided to proceed with the winding up of the company. The contention advanced by the appellants that since their petition was prior in point of time and an amount was deposited during the course of the said petition they would have a right to recover the amount deposited in precedence to other creditors is unmerited. It is necessary to bear in mind that the petition filed by the appellants was for winding up of the Company. In a sense their stand was vindicated and they had effectively succeeded in their petition as the learned Company Court had proceeded to initiate steps for winding up of the Company. Accordingly the appellants would now have to stand with other similarly placed creditors for recovering their dividends in accordance with Section 529 of the Act. The winding up petition that was admitted Company Petition No. 885/2015 ultimately culminated in the order for winding up the Company. Clearly at that stage the petition filed by the appellants would have been rendered infructuous. This is for obvious reason that a company can be wound up only once. In terms of Rule 101 of the Company Court Rules 1959 the appellants also have a right to pursue the Company Petition No. 885/2015 if for any reason the petitioner in that case sought to withdraw from the same. The application filed by the appellants now seeking withdrawal of the amount deposited in this Court in a disposed of company petition is clearly not maintainable. Although the appellants have faulted their counsel for not pursuing their interest with due diligence however it cannot be accepted that the appellants could have any better right with respect to the properties of the Company than other similarly placed creditors of the Company. Appeal disposed off.

Summary

Issues:
1. Exemption application (CM APPL. 65644/2024)
2. Delay in filing appeal (CM APPL. 65645/2024)
3. Appeal against rejection of release of deposited amounts
4. Company petition for winding up
5. Entitlement to preferential payment
6. Withdrawal of winding up petition
7. Maintainability of application for withdrawal of deposited amount
8. Rights of appellants in the winding up process

Exemption Application (CM APPL. 65644/2024):
The exemption application was allowed subject to all just exceptions, and the application was disposed of.

Delay in Filing Appeal (CM APPL. 65645/2024):
The delay of 52 days in filing the appeal was condoned based on the reasons stated in the application, and the application was disposed of.

Appeal Against Rejection of Release of Deposited Amounts:
The appellants appealed against the rejection of their application for release of amounts deposited by the respondent company-in-liquidation. The appellants had deposited an amount for the purchase of a commercial unit but were not paid the entitled amount by the company. The company deposited the amount in court during winding-up proceedings, and the appellants were directed to file their claim with the Official Liquidator for the admitted amount due to them.

Company Petition for Winding Up:
The appellants filed a company petition for winding up the company due to non-payment of debts. Subsequently, the company was wound up, and the Official Liquidator was appointed. The appellants, along with other creditors, were directed to approach the Official Liquidator with their claims.

Entitlement to Preferential Payment:
The court held that once the winding-up process had commenced, the appellants were not entitled to preferential payment over other creditors. The appellants were required to stand with other creditors for recovering their dividends in accordance with the law.

Withdrawal of Winding Up Petition:
The appellants did not withdraw their winding-up petition, but the court found that even if it had remained pending, it would serve little purpose as no funds could have been disbursed to them during the winding-up process. The winding-up petition filed by the appellants became infructuous once the company was wound up.

Maintainability of Application for Withdrawal of Deposited Amount:
The court found that the application filed by the appellants seeking withdrawal of the deposited amount in a disposed of company petition was not maintainable. The appellants were directed to file their claim with the Official Liquidator for the due amount.

Rights of Appellants in the Winding Up Process:
The court held that the appellants were not entitled to any other relief and directed them to file their claim with the Official Liquidator for the admitted amount due to them. The Official Liquidator was directed to proceed with admitting the claim and making disbursements according to the relevant sections of the Companies Act.