The court can go behind a compromise decree to ascertain the enforceability of a debt, and a bona fide dispute in respect of the debt can be raised notwithstanding the existence of a compromise decree.

Badar Durrez Ahmed, J.

1. These appeals arise out of a common judgment dated 09.05.2005 delivered by the learned Company Judge in C.P. Nos. 40/2004 and 41/2004, whereby the Appellants' petitions seeking winding up of the Respondents (Bhushan Limited in C.P. No. 40/2004 and Bhushan Steel and Stripes Limited in C.P. No. 41/2004) on the ground that the Respondent companies were unable to pay their debts, were dismissed. The company petitions were founded on the basis of a compromise decree dated 19.12.1997 passed by a learned single Judge of this Court, whereunder the Respondents had agreed to make payments of recurring charges which included maintenance charges in respect of the common areas and common facilities. The plea of the Appellant was that since the charges specified in the decree were not being paid by the Respondents, it was apparent that they were unable or had neglected to pay their debts.

2. On the other hand, the Respondents had taken the plea that though they had initially made payments of recurring charges in terms of the compromise decree, they had stopped making the payments at the rates demanded by the Appellant inasmuch as the maintenance charges were contrary to the provisions of the Delhi Apartment Ownership Act, 1986 as well as against public policy. It was claimed by the Respondent companies that the compromise decree was a nullity and could not be enforced and, therefore, the non-payment of any amount thereunder could not be regarded as a debt payable by the Respondent companies.

3. The learned Company Judge dismissed the winding up petitions after concluding that the Respondent companies had raised a bona fide dispute with regard to the so-called debt, particularly in view of the mandatory provisions of the Delhi Apartment Ownership Act, 1986. The learned Company Judge has also taken the view that even though there was a compromise decree, the company court was entitled to go into the question as to whether there was or was not a bona fide dispute with regard to the debt which had allegedly remained unpaid. The learned Company Judge, thus, held that these were not cases where discretionary jurisdiction of winding up ought to be exercised. However, at the same time, it was observed that:

.... to balance the equities it would be proper to give certain directions to the company inasmuch the company cannot be allowed to create a situation where it does not pay any maintenance charges at all. No doubt the Petitioner is to render the accounts as well.

Consequently, the learned Company Judge disposed of the company petitions as under:

42. These petitions are, therefore, disposed of with the following directions:

(i) The company shall pay maintenance charges at the rate of Rs. 29.03 per sq.ft. which were the charges agreed to in July, 1997. I am conscious of the fact that the company even thereafter paid increased maintenance charges after adding 8%/9% every year till 2003, still I am restricting the payments, for time being, at Rs. 29.03 per sq.ft. as the company claims that it has already paid huge amount in excess and the accounts are to be rendered by the Petitioner.

(ii) The Petitioner, if rendition of accounts, is able to show that amount payable is more than Rs. 29.03 per sq.ft.it would be entitled to make claim of further maintenance charges for the period in question.

(iii) Both the parties would be at liberty to seek their civil remedies, namely, the Petitioner for claiming the maintenance charges at enhanced rate, if justified on actual basis and the company for claiming rendition of accounts.

4. The questions which arise for consideration in these appeals are:

a) Whether the company court can go behind a compromise decree in order to ascertain as to whether a debt based on the same is legally enforceable or not and whether a bona fide dispute in respect of the debt can be raised notwithstanding the existence of a compromise decree ?

b) Whether the recurring maintenance charges agreed to be paid by the