- (1.) THIS appeal is preferred by a creditor of M/s. Enarai Finance Limited of which the respondent is the Managing Director. In the appellants petition for winding up, consent terms dated 23-5-1998 were recorded and an order was made in terms thereof. Upon the company admitting its liability and agreeing to pay certain instalments, the respondent, who was the Managing Director of the company, agreed to an order guaranteeing the payment of the amounts due. He further agreed for the performance of the consent terms. Upon failure of the company to make payment in accordance with the order of the Company Court recording the consent terms, the appellant applied to this Court on 15-4-1999 for issue of an insolvency notice to the respondent. Upon the Insolvency Register raising an objection to the issue of insolvency notice, the appellant applied on 11-6-1999 to the learned Single Judge of this Court, who rejected the application and upheld the objections of the Insolvency Registrar by an order dated 11-6-1999. This appeal is preferred against that order. Since the original application is for permission to issue a notice of insolvency against the respondent, normally, the proceedings would have been ex parte. However, in this case, the respondent has chosen to appear before the learned Single Judge of this Court to oppose the application for issue of insolvency notice and has been heard there. Likewise, the respondent has also appeared before us. These proceedings are, therefore, not ex parte.
(2.) THE appellant contends that under the consent order of this Court, there is an unequivocal admission of the company of its liability in the sum of Rs. 50. 00 lakhs and that inter alia this Court has ordered the company to pay an amount of Rs. 28,72,315/-, the balance having been paid. Further, the respondent has, in the event of any default by the company, guaranteed payment of all amounts due by the company and also the performance of the consent order. The appellants contention is, therefore, that she is entitled to have an insolvency notice under section 9 of the Presidency Towns Insolvency Act, 1909 (hereinafter referred to as the "act") issued to the respondent. Section 9 of the Act reads as follows :--- "9. Acts of insolvency.- (1) A debtor commits an act of insolvency in each of the following cases, namely :- (a) ------------------- (b) ------------------- (c) ------------------- (d) ------------------- (e) ------------------- (f) ------------------- (g) ------------------- (h) ------------------- STATE AMENDMENT maharashtra : in its application to the State of Maharashtra, after Clause (h) of section 9, insert the following, namely :- " (i) if, after a creditor has served an insolvency notice on him under this Act in respect of a decree or an order for the payment of any amount due to such creditor, the execution of which is not stayed, he does not, within the period specified in the notice which shall not be less than one month, either comply with the requirements of the notice or satisfy the Court that he has a counter claim or set off which equals or exceeds the decretal amount or the amount ordered to be paid by him and which he could not lawfully set up in the suit or proceeding in which the decree or order was made against him" . (Emphasis supplied ). According to the appellant, the consent order of this Court amounts to a decree and is executable against the respondent by virtue of section 634 of the Companies Act, 1956 read with section 145 of the Code of Civil Procedure, 1908. Section 634 of the Companies Act reads as follows :--- "634. Any order made by a Court under this Act may be enforced in the same manner as a decree made by the Court in a suit pending therein. " Section 145 of the Code of Civil Procedure reads as follows :--- "145. Enforcement of liability of surety.---Where any person has furnished security or given a guarantee--- (a) for the performance of any decree or any part thereof, or (b ). . . . . . . . . . (c) for the payment of any money, or for the fulfilment of any condition imposed on any person, under an order of the Court in any suit or in any proceedings consequent thereon, the decree or order may be executed in the manner herein provided for the execution of decrees, namely :--- (i) if he has rendered himself personally liable, against him to that extent ; (ii) if he has furnished any property as security, by sale of such property to the extent of the security; (iii) if the case falls both under Clauses (i) and (ii), then to the extent specified in those clauses, and such person shall be deemed to be a party within the meaning of section 47: provided that such notice as the Court in each case thinks sufficient has been given to the surety. " In short, the appellant contends that she is entitled to serve an insolvency notice under section 9 of the Presidency Towns Insolvency Act, 1909 on the respondent in respect of a consent order which has the force of a decree or an order for payment of an amount due to her as a creditor. The consent order, according to the applicant, is enforceable by virtue of section 634 of the Companies Act in the same manner as a decree in a suit. Since under the said consent order the respondent has became liable as a guarantor for the amount ordered to be paid thereunder, and for the performance of the terms of payment of the sum made payable under the order which has the force of a decree, the consent order is enforceable under section 145 of the C. P. C.
(3.) IN the contention of the respondent that the consent order does not contain any direction or order to the respondent to pay any sum of money to the appellant. Such an order, if any, is only against the company. Even if it is against him, it is in his capacity as the Managing Director and not in his personal capacity. The respondent further contends that there is no jurisdiction vested in the High Court while entertaining a company petition for winding up, and, in any case, prior to the commencement of the winding up process, to pass any order directing the company to make payment to a petitioning creditor. Section 634 of the Companies Act does not confer the status of a decree on an order passed by the Company Court and, therefore, such an order cannot be executed in accordance with section 145 of the Code of Civil Procedure.;