Proved debt in winding-up cannot be defeated by time-barred cross-claims or non-joinder objections.

In winding-up proceedings based on inability to pay debt, a proved and admitted debt cannot be displaced by unascertained, unrecovered, or time-barred cross-claims. The court treated the security deposit under the selling agency agreement as established from the record and the respondent's own admissions, and found objections denying the deposit or the petitioner's capacity to make it unsustainable. It also held that family disputes, alleged trustee disputes, and non-joinder did not undermine the genuineness of the debt, because those objections did not amount to a bona fide or probable defence against admission of the petition.

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Issues: Whether the respondent company was indebted to the petitioner and whether the alleged objections based on set-off, limitation, and non-joinder of parties disclosed a bona fide and probable defence to a petition for winding up.

Analysis: The security deposit of Rs. 6 lakhs under the selling agency agreement was proved by the documentary record and the respondent's own pleadings. The Court found that the respondent's attempt to deny the deposit or to question the petitioner's capacity to make it was unsustainable in view of the express admission in the counter. The alleged cross-claims against the trust and related entities were treated as unascertained and time-barred, and therefore incapable of constituting a legally recoverable set-off. The Court also held that the inter se disputes within the family or among alleged trustees did not defeat the substantive debt claim of the trust, and that the non-joinder objection did not displace the finding that the debt itself was genuine.

Conclusion: The debt was held to be genuine, and the respondent was found not to have a bona fide or probable defence sufficient to resist admission of the winding-up petition. The petition was directed to be advertised, leaving the question of maintainability on non-joinder to be dealt with in accordance with law at the later stage.

Ratio Decidendi: In winding-up proceedings based on inability to pay debt, a proved and admitted debt cannot be defeated by unascertained, unrecovered, or time-barred cross-claims, and objections of non-joinder do not displace the finding where the debt itself is established.

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