1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. COMPANY APPLICATION NO. 723 OF 2009 WITH COMPANY APPLICATION (L) NO.1280 OF 2009 IN CONEMPT PETITION NO.1 OF 2007 IN COMPANY PETITION NO.298 OF 1997 Wall Street Finance Ltd. ...Applicant. Vs. M/s.Corporate Couriers Ltd. & Ors. ...Respondents. .... Ms.Shilpa Kapil for the Petitioner/Applicant. Mr.Abhishek Khare i/b.Khare Legal Chambers for the Respondents. ..... CORAM : DR.D.Y.CHANDRACHUD, J. December 18, 2009. P.C. In a Company Petition under Section 433 of the Companies' Act, 1956, Consent Terms were arrived at between the parties. In terms thereof, an order was passed by this Court on 8th July 1999. Under the Consent Terms, the Company admitted and acknowledged its liability to pay to the Petitioner, a total sum of Rs. 77,50,800/- in the manner indicated in Annexure-A to the Consent Terms. Clause 4 of the Consent Terms provided that in the event that 2 the Company committed default in the payment of any two consecutive installments, the Official Liquidator shall stand appointed and will forthwith take possession of the properties, registered office and books of account as the petition has already been admitted on 12th April 1999. Thereupon, the petition was to be advertised. Clause 7 stipulated that until complete payment was effected, the Company undertakes not to dispose of its assets. There was admittedly a breach on the part of the Company in complying with the obligation to pay under the Consent Terms and an amount of Rs.33,93,501/- was still due and payable. Subsequently, on 24th August 2005, a Memorandum of Understanding was arrived at between the parties under which in clause (1), it was recorded that an amount of Rs.33,93,501/- was still due and payable. However, the Company issued a post dated cheque in the amount of Rs.15 lakhs and the entire outstanding was settled at the aforesaid amount. However, clause (5) of the Memorandum of Understanding provided that if there was any breach on the part of the Company in fulfilling the conditions of the Memorandum of Understanding, the original Petitioner would be entitled to call upon the Company to repay the entire outstanding of Rs.77,50,800/- 3 together with interest in terms of the Consent Terms filed in Company Petition 298 of 1997. 2. Admittedly there has been a breach of the obligation to pay the amount of Rs.15 lakhs under the Memorandum of Understanding. A cheque was issued by the Company which was dishonoured on presentation. A proceeding has been initiated under Section 138 of the Negotiable Instruments Act, 1881. 3. Company Application (L) No.1280 of 2009 has been taken out for a formal order for the restoration of Company Petition 298 of 1997. If the Consent Terms that were arrived at between the parties are properly construed, it is evident that under clause 4, upon any two consecutive defaults, the Official Liquidator shall stand appointed and the Company Petition was liable to be advertised. Moreover, under clause 7, the Company agreed not to dispose of its property until the entire payment under the Consent Terms was made. However, the order of the Court dated 8th July 1999 records that the Petition is disposed of in terms of the Consent Terms. The Consent Terms 4 envisaged that in the event of default, the Liquidator shall stand appointed. The Company also bound itself to an injunction against the disposal of its assets until full payment was made. Obviously, therefore, until full payment was made, the Company would be bound by the conditions imposed in the Consent Terms. Even the Memorandum of Understanding that is arrived at between the parties subsequently, clearly stipulates that if the Company committed any breach of its terms, the Company would be liable to pay the entire amount due under the Consent Terms. In these circumstances, there is no reason why the formal order as sought for the restoration of the Company Petition should not be granted. Company Application (Lodging) 1280 of 2009 is made absolute in terms of prayer clause (a). 4. Company Application 723 of 2009 has been taken out for the appointment of a Provisional Liquidator. There is admittedly a breach, both in compliance with the obligation in the Consent Terms and the subsequent Memorandum of Understanding dated 24th April 2005. In view of the breach of the Memorandum of Understanding, 5 the original Petitioner is entitled to the benefit of the agreed terms as recorded in the Consent Terms that were accepted by this Court. Clause 4 provides for the appointment of the Liquidator in the event of any two consecutive defaults. Admittedly, there has been a default far in excess of two. In the circumstances, Company Application 723 of 2009 is made absolute in terms of prayer clause (a). ...