Winding up petition and sick company reference: creditor's claim must proceed in liquidation, not by separate petition.

A company petition for winding up on inability to pay debt was declined where the respondent had already been declared a sick industrial company and the matter had been referred for winding up under the special statutory regime. Once the Board found the company non-viable, with net worth fully eroded and no prospect of revival, the creditor's claim had to be pursued in the winding up proceedings before the Official Liquidator alongside other creditors. The Court held that continuing the separate petition served no purpose and would not prejudice the petitioner, whose claim remained protected in those proceedings, so the petition was disposed of.

---

---

Issues: Whether the company petition for winding up on the ground of inability to pay debt should be entertained when the respondent company had already been declared a sick industrial company and the matter stood referred for winding up proceedings.

Analysis: The petition was founded on alleged outstanding dues and statutory notice. During its pendency, the respondent company was declared sick and the Board for Industrial and Financial Reconstruction, having found the company non-viable with its net worth fully eroded and no prospect of revival, referred the matter for winding up under the special statutory regime. In that situation, the Court held that there was no reason to continue the petition separately, because the creditor's claim would have to be established in the winding up proceedings before the Official Liquidator along with the claims of other creditors. The Court also found that disposal of the petition would not prejudice the petitioner, whose claim remained protected in those proceedings.

Conclusion: The company petition was not entertained and was disposed of.

---