Winding up petition maintainable despite Debt Recovery Tribunal action; statutory presumption of inability to pay debts supports admission.

A winding up petition is not barred merely because the creditor bank has already initiated recovery proceedings before the Debt Recovery Tribunal, since that tribunal can adjudicate and recover debts but cannot wind up a company. The Company Court retains jurisdiction to examine whether the company should be wound up for inability to pay debts. Admission of the petition does not require prior adjudication of liability; once statutory notice is served and the company fails to pay or secure the debt within the prescribed time, the statutory presumption of inability to pay debts arises. On the facts, there was no basis to displace that presumption, so admission was justified.

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Issues: (i) Whether a winding up petition under the Companies Act is barred or rendered non-maintainable merely because the creditor bank has already invoked the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 before the Debt Recovery Tribunal. (ii) Whether admission of a winding up petition requires prior adjudication of the debt, or whether the statutory deeming provision of inability to pay debts is sufficient.

Issue (i): Whether a winding up petition under the Companies Act is barred or rendered non-maintainable merely because the creditor bank has already invoked the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 before the Debt Recovery Tribunal.

Analysis: The jurisdiction conferred on the Debt Recovery Tribunal is confined to adjudication of liability and recovery of debts in the manner provided by the special Act. The Tribunal has no power to wind up a company. A winding up petition is not the same as a money recovery claim, but a proceeding to determine whether the company should be wound up for inability to pay its debts. The exclusion of civil or other jurisdiction under the Recovery of Debts Due to Banks and Financial Institutions Act operates only to the extent expressly covered by that Act, and the pendency of proceedings before the Tribunal does not take away the Company Court's jurisdiction to entertain a winding up petition.

Conclusion: The winding up petition was not barred by the proceedings before the Debt Recovery Tribunal and was maintainable.

Issue (ii): Whether admission of a winding up petition requires prior adjudication of the debt, or whether the statutory deeming provision of inability to pay debts is sufficient.

Analysis: Admission of a petition under section 433(e) proceeds on inability to pay debts, not on a prior money decree or adjudicated recovery claim. Where the creditor has served the statutory notice and the company fails to pay or secure the debt within the prescribed time, section 434 creates a statutory presumption that the company is unable to pay its debts. Once that statutory fiction operates, the Company Court may admit the petition to examine whether winding up should follow. The absence of material showing a temporary cash crunch or that the company's assets exceeded liabilities justified reliance on the statutory presumption.

Conclusion: Prior adjudication of the debt was not necessary, and the petition was rightly admitted on the statutory presumption of inability to pay debts.

Final Conclusion: The appeal failed because the Company Court retained jurisdiction to admit the winding up petition, and the facts disclosed no basis to displace the statutory presumption supporting admission.

Ratio Decidendi: Invocation of the Debt Recovery Tribunal's jurisdiction for debt recovery does not bar a winding up petition under the Companies Act, and a petition under section 433(e) can be admitted on the statutory presumption of inability to pay debts under section 434 without prior adjudication of liability.

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