Time-barred debt cannot support winding-up for inability to pay, since the claim must remain legally recoverable.

For winding-up on the ground of inability to pay debts, the debt relied on must be due and legally recoverable when the court considers the petition. A claim that becomes time-barred during the pendency of proceedings cannot support deemed inability to pay debts, because a winding-up petition is not a suit for recovery and the doctrines of relation back, exclusion of time under the Limitation Act, and section 458A of the Companies Act do not apply in that context. A barred debt therefore provides no legitimate basis for invoking the company court's special jurisdiction.

---

---

Issues: Whether a winding-up petition can be maintained on the basis of a debt that became barred by limitation during the pendency of the proceedings, and whether such a barred claim can support a finding of deemed inability to pay debts.

Analysis: The right and the remedy are distinct, and although a creditor whose claim becomes time-barred does not cease to be a creditor, the debt invoked for winding up must still be one that is due and recoverable in law. The expression "due" in section 434 of the Companies Act was construed to mean a legally recoverable debt, because a contrary view would give company creditors an impermissible advantage over ordinary creditors and would defeat the scheme of limitation. The doctrines of relation back under section 441(2) of the Companies Act and exclusion of time under section 14 of the Limitation Act were held inapplicable, since a winding-up petition is not equivalent to a suit and is not a proceeding for adjudicating a money claim. Section 458A of the Companies Act was also of no assistance because its protection operates in proceedings by or on behalf of a company in winding up, not against the company. A petition founded on a debt barred during its pendency was treated as lacking a legitimate basis for winding up and as an abuse of the special jurisdiction.

Conclusion: A winding-up petition cannot succeed where the debt relied upon has become barred by limitation during the pendency of the proceedings, and such a petition is liable to be dismissed.

Final Conclusion: The petitions for winding up were rejected because the claims on which they were founded were no longer legally recoverable when the court was called upon to act.

Ratio Decidendi: For winding-up on the ground of inability to pay debts, the debt must be both due and legally recoverable at the time the court considers the matter; a time-barred claim cannot support deemed inability to pay.

---