Memo of compromise not violative of any order.

In this application, the applicant has sought for revival and restoration of Company Petition No.76 of 1997 to file, as per the order, dated 23.11.2001.

2.The applicant filed Company Petition No.76 of 1997 for winding up of the respondent company by reason of its inability to pay their debts. According to the applicant, while the company petition was pending, a memo of compromise was entered into between the parties on 25.3.1998, in which, the respondent admitted their liability to the extent of Rs.1,70,70,080/- and agreed to pay the same in instalments. The respondent failed to make payment as per the compromise and the Division Bench directed admission of the company petition and publication of notice of the same on 28.3.2000. The respondent filed an affidavit of undertaking to pay the above said sum in instalments and it again defaulted. The petition was heard and order was reserved and at the time of pronouncement of the order, the respondent once again offered to effect payment of the amount in instalments and based on that, a further memo of compromise was entered into between the applicant and the respondent on 23.11.2001, whereby it is provided that out of the total amount of Rs.1,70,70,080/-, a sum of Rs.1.06 crores had been paid and the balance amount would be paid in instalments and if the respondent committed default in the payment of even one of the instalment, it would be open to the applicant to revive the company petition and in such circumstances, the respondent would waive all defences and such default would be a clear admission of respondent's inability to pay its debts. Once again the respondent failed and neglected to effect payment in terms of memo of compromise. The respondent has no intention of carrying out the assurance. Therefore the present application is filed.

3.The respondent in its counter has stated that the application is misconceived, without sanction of law and is liable to be dismissed in limini. The winding up petition was dismissed based on memorandum of compromise on 23.11.2001. The application to revive the dismissed petition on the alleged ground of non adherence by the respondent cannot be sustained in law. The petition for winding up affects not only the company but the creditors, shareholders, employees and others and hence due process of law has to be complied with. The order, dated 23.11.2001, although provides for revival, it cannot be considered as restoration of the petition and the applicant should follow the procedure afresh. It is true that a memorandum of compromise was entered into between the parties on 23.11.2001. The respondent had already paid Rs.1.06 crores out of Rs.1.20 crores owed to the petitioner. The respondent has paid a sum of Rs.5,00,000/- in the month of November, 2001, a sum of Rs.4,00,000/- on 3.12.2001, a sum of Rs.2,50,000/- on 15.2.2002, a sum of Rs.1,50,000/- on 5.3.2002 and a sum of Rs.1,00,000/- on 17.6.2002. Thus the respondent has liquidated the entire money owed to the petitioner by way of principal amount. The memorandum of compromise provides for payment of interest by the respondent. The petitioner has received Rs.1.20 crores from the respondent for subscription in its shares on the express stipulation of the Reserve Bank of India that no person of foreign origin and financial transaction with it need the prior approval of Reserve Bank of India. The payment of interest is barred by the Reserve Bank of India vide their letter, dated 16.2.1996. The respondent has no knowledge of any subsequent authorisation by Reserve Bank of India to pay any sum by way of interest. The applicant had produced a letter purportedly written by Reserve Bank of India, Mumbai, permitting the applicant to receive interest due from the respondent company and according to it, the interest amounts were to be credited to an NRO Account opened by the applicant. The condition stipulated by Reserve Bank of India is not complied with. The respondent is willing to hono