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Issues: (i) Whether a winding-up petition based on an unpaid trade debt was maintainable when the debt was pleaded to be time-barred and a civil suit on the same claim was already pending; (ii) whether the recommendation of the Board for Industrial and Financial Reconstruction to wind up the company could, by itself, justify winding up at the instance of the creditor.
Issue (i): Whether a winding-up petition based on an unpaid trade debt was maintainable when the debt was pleaded to be time-barred and a civil suit on the same claim was already pending.
Analysis: The debt arose from supplies made in 1984 and part-payments extended limitation only up to 17 June 1988. The petition filed in September 1992 was therefore beyond limitation. A debt that has become time-barred cannot be enforced through winding-up proceedings, because the creditor cannot treat a stale and legally unrecoverable claim as a subsisting debt for company liquidation. The pendency of an independent suit on the same claim did not preserve the debt for the winding-up proceeding, and parallel proceedings over the same matter were impermissible.
Conclusion: The issue was answered against the petitioner and in favour of the respondent company.
Issue (ii): Whether the recommendation of the Board for Industrial and Financial Reconstruction to wind up the company could, by itself, justify winding up at the instance of the creditor.
Analysis: The record showed only a recommendation by the Board for winding up, while appeals against that recommendation were stated to be pending. In the absence of a final and operative outcome on those appeals, the recommendation could not be acted upon in the present proceeding as a sufficient basis for winding up at the creditor's instance.
Conclusion: The issue was answered against the petitioner and in favour of the respondent company.
Final Conclusion: The company petition was not maintainable on the merits pleaded before the Court and was dismissed, leaving the parties to pursue any available remedies in the appropriate proceedings.
Ratio Decidendi: A creditor cannot maintain a winding-up petition on the basis of a debt that has become time-barred, and a pending civil suit on the same claim does not revive or preserve the debt for liquidation proceedings.
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