1. This is a petition for winding-up brought by M/s. Castwell Engineering Corporation against Bombay Castwell Engineering Private Limited in respect of a debt of Rs. 92,560.12 together with further interest on the principle amount of Rs. 74,053 at the rate of 15 per cent. per annum to be calculated from 1st December, 1978, till payment and also for the royalty amount of Rs. 9,800.
2. It is not necessary to go into the facts because at the stage of admission of the petition the parties filed consent terms. Under these consent terms, the company acknowledged its debt to the extent of Rs. 74,053 together with interest thereon at the rate of 12 per sent per annum, from 14th September, 1978, till payment and the cost of the petition fixed at Rs. 1,310.64. Under the consent terms, the petitioners also recorded that the company was to pay the cost of the machinery purchased by the petitioners from M/s. Grindwell Engineering Industries as per Invoice No. 15 dated 1st May, 1977. The amount of the invoice was Rs. 20,000 as stated across the Bar. The consent terms provided that in the event of the company failing to pay any installment on its respective due date or the last instalment, the petition was to stand admitted and was to be advertised as mentioned therein.
3. The company paid the installments which fell due on 15th September, 1979, 15th October, 1979, and 15th November, 1979, but committed default in the payment of the installment of Rs. 7,350 which fell due on 15th December, 1979. In view of the said default, the petitioners, acting on the consent terms, had the petition advertised in 'Bombay Samachar', 'Indian Express' and 'Maharashtra Government Gazette' on or about 30th October, 1980. It may be noted that the company had paid in all a sum of Rs. 31,010.64 before the petition was advertised. During the pendency of the petition for hearing and final disposal since 10th December, 1980, the company had made part payments from time to time aggregating to Rs. 37,500. The company has thus paid a sum of Rs. 68,510.64.
4. The matter has been on my board. At the request of the company, the matter was adjourned twice or thrice to enable the company to pay the balance. Ultimately, at the hearing on 11th February, 1982, the company sought to produce four cheques drawn in favour of the petitioners, out of which two cheques were dated 10th February, 1982, one for Rs. 844 and the other for Rs. 9,000. The other two cheques were post dated. One cheque dated 10th March, 1982, was for Rs. 9,000. The fourth cheque dated 10th April, 1982, was for Rs. 9,000. The petitioners, however, refused to accepted the cheque or to agree to any adjournment for realising the cheques and submitted that they were entitled to an order of winding-up being made against the company who indisputably had admitted its liability and was unable to pay the debt. It was also pointed out on behalf of the petitioners that the company has shifted its machinery to Gujarat. The company had disposed of a flat at Andheri on or about 5th August, 1981. In the past, the cheques issued by the company had bounced twice.
5. In these circumstances, the hearing of the petition had to proceed, but before doing so, I desired that the petitioners should deposit in court the said amount of Rs. 68,510.64 realised from the company. To this, Shri Jhunjhunwala, the learned counsel appearing for the petitioners, submitted that the payments were received under the consent terms and, therefore, the petitioners cannot be called upon to deposit the amount. After a winding-up order is made, the official liquidator can call upon the company to bring back the money if the official liquidator considers the payment of Rs. 68,510.64 as a fraudulent preference but not otherwise, as laid down in s. 531 of the Companies Act, 1956. Thus, according to the petitioners, they can obtain an order of winding-up and at the same time retain Rs. 68,510.64 received under the consent terms and the fate of Rs. 68,510.64 will be determined by the official liquidator under s. 531. I am not impressed by this submission.
6. Now, whatever be the mutual arrangement between the parties under the consent terms, the petitions is still pending for hearing and final disposal. The parties have not been able to work out the arrangement. The company court has not gone out of the picture as a result of consent terms, as is normally the case in civil suit disposed of on the basis of the consent terms, in which case the parties are left to work out the arrangement without the intervention of the court except in case like where a receiver remains on the scene. In a winding-up petition, the company court continues to exercise jurisdiction notwithstanding the mutual agreement between the parties. What happens under the consent terms is that the petition is not argued for admission and by virtue of a 'self operating order' incorporated in the consent terms with the approval of the course to the court, the petition simply gets admitted in case of default without recourse to the court. In other words, the winding-up petition is revived and is back on the track of the provisions of the Companies Act, 1956, and the Companies (Court) Rules, 1959. Presently, the petition is at the stage of hearing an final disposal. I think the court can take account of all that has passed under the bridges since the filing of the petitioner in order to pass an appropriate order. In most of the petitions for winding-up, a creditor uses this cheap and expeditious remedy for recovery of his dues and the court normally allows the parties to work out the settlement without pestering itself whether there was a bona fide attempt to wind up a company or whether the attempt was to put pressure on the company to wrest payment from a reluctant debtor, which it would have contested in an ordinary suit but for fear of a winding-up order going against it. However, when settlements do not work out, then the contest reopens. In my opinion, the petitioners cannot heard to say that they will retain the amount collected before the admission of the petition, namely, Rs. 31,010.64, and the amount called during the pendency of the petition for hearing and final disposal, namely, Rs. 37,500, and at the same time press the petition for winding-up. An order for winding-up does not enure for the benefit of an individual credit who obtains the order, but for all creditors. It is not individual right but a representative right. The creditor who first comes to the court and used the process of the court cannot feather his nest and enrich himself by collecting payment on the strength of consent terms. He must be relegated to the same position which he was when he presented the petition for winding-up. Section 531 of the Companies Act, 1956, cannot be used as a shield to retain the money. Section 531 is one of the sections which deals which deals with effect of winding-up on antecedent transactions. The section, so for as it is relevant, makes any payment made by the company six months before the commencement of its winding-up a 'deemed' fraudulent preference of its creditors and further invalidates such transaction of payment. Now, apart from the question of the applicability of s. 531 to the facts of our case, the burden of proving that the transaction is fraudulent preference would be on the official liquidation. He might not be also to establish the motive in making the payment to prefer the petitioners. This is a case of a winding-up and in the event of an order of winding-up being made, the order is to take effect from the date of the presentation of the petition. The payments made by the company to the petitioners are during the petitioners are during the pendency of the petition and, therefore, the payments are not antecedent to the winding-up but made during the course of the winding-up proceedings. The court has, therefore, jurisdiction to pass order for depositing the amount received during the pendency of the petition.
7. The petitioners are, therefore, directed to deposit in court the amount of Rs. 68,510.64 on or before 31st March, 1982. Further hearing of the petition is adjourned to 31st March, 1982, before me.
8. The petitioners have failed to carry out the directions regarding deposit of the money in court. They submit to the orders of the court.
9. I think the end of justice would be met if the petition is dismissed with no order as to costs.
10. Petition dismissed with no order as to costs.