Winding-up maintainability turns on legally recoverable debt and statutory money-lending exclusions; collateral objections failed here.

A winding-up petition based on an asserted debt was held maintainable where the petitioner produced contemporaneous documentary evidence of advances and renewals, and the company's objections based on collateral securities, unstamped papers and alleged suppression were found insufficient to displace liability. The Court also held that the Bombay Money-Lenders' Act did not bar enforcement because the transaction fell within statutory exclusions and was not shown to be part of a regular money-lending business. In winding-up jurisdiction, the debt must be legally recoverable; that requirement was satisfied here, so the company was treated as justly indebted and was given time to pay or deposit the quantified amount, failing which the petition would stand admitted.

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Issues: Whether the winding-up petition was maintainable under sections 433(e) and 434(1)(a) of the Companies Act, 1956 on the basis of the asserted debt, and whether the transaction was hit by the Bombay Money-Lenders' Act, 1946 so as to render the debt not legally recoverable.

Analysis: The petitioners produced documentary material showing advances made to the company and their renewal, supported by cheques, acknowledgements and other contemporaneous documents. The objections based on group transactions, alleged suppression, unstamped promissory notes and receipts, and the leave and licence arrangements were found insufficient to displace the company's liability to the petitioners. The Court held that the alleged collateral securities did not negate the debt and that the dispute raised was not credible enough to require the petitioners to be relegated to a suit. On the money-lending objection, the Court examined the statutory definition of loan and the exclusions in section 2(9) of the Bombay Money-Lenders' Act, 1946, and held that the transaction was excluded from the mischief of the Act, including because it was not shown to be a regular money-lending business and because the advance fell within the statutory exclusions. The Court also held that, in winding-up jurisdiction, the debt must be legally recoverable, but that requirement was satisfied here because the Bombay Money-Lenders' Act did not bar enforcement of the claim.

Conclusion: The petition was held maintainable; the company was found justly indebted to the petitioners, and the money-lending objection failed.

Final Conclusion: The Court granted the company an opportunity to pay or deposit the quantified amount within the stipulated time, failing which the winding-up petition would stand admitted.

Ratio Decidendi: For purposes of a winding-up petition based on inability to pay debts, the debt must be legally recoverable, and a statutory money-lending bar will defeat the petition only if the transaction falls within the prohibited definition of loan; where the transaction is excluded by the Act and the debt is otherwise established, the petition is maintainable despite disputed collateral objections.

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