Winding-up petitions and corporate veil lifting survive RBI Act objections where depositors' funds remain unpaid and diverted through sister concerns.

Chapter III-B of the RBI Act did not exclude a creditor's right to present a winding-up petition under the Companies Act where the company was unable to pay its debts. A repayment scheme before the Company Law Board also did not bar winding up, because the decisive question was whether the scheme had been bona fide implemented; persistent non-payment established inability to pay. Technical objections to statutory notice and petition procedure were treated as irregularities that did not defeat maintainability. The Court further applied lifting of the corporate veil where depositors' funds were routed through controlled sister concerns, allowing connected assets to be proceeded against to prevent misuse of separate corporate personality.

---

---

Issues: (i) Whether Chapter III-B of the Reserve Bank of India Act, 1934 barred creditors from presenting a winding-up petition under the Companies Act, 1956 despite the special machinery under sections 45-QA and 45-MC; (ii) Whether pendency or approval of a repayment scheme before the Company Law Board prevented winding up for inability to pay debts; (iii) Whether alleged defects in the statutory notice and company-petition procedure defeated maintainability; and (iv) Whether the assets of an associated company could be proceeded against and auctioned in aid of winding up by lifting the corporate veil.

Issue (i): Whether Chapter III-B of the Reserve Bank of India Act, 1934 barred creditors from presenting a winding-up petition under the Companies Act, 1956 despite the special machinery under sections 45-QA and 45-MC.

Analysis: Chapter III-B was held to operate in a different field from the Companies Act provisions governing winding up. Section 45-MC conferred a specific power on the Reserve Bank of India to seek winding up on stated grounds, but it did not create any exclusive bar against a creditor's statutory right under section 439 to present a petition where the company was unable to pay its debts. The non obstante clause in section 45-Q was read as overriding only inconsistent provisions, and no inconsistency was found between the RBI Act and the Companies Act on the creditor's right to seek winding up.

Conclusion: The winding-up petition by creditors was maintainable and the objection based on Chapter III-B failed.

Issue (ii): Whether pendency or approval of a repayment scheme before the Company Law Board prevented winding up for inability to pay debts.

Analysis: The repayment scheme under section 45-QA did not extinguish the independent remedy of winding up under section 433(e). The decisive consideration was whether the company had actually honoured the scheme and made repayment. The record showed prolonged non-payment, absence of effective steps, and no bona fide implementation of the approved scheme. The Court treated the company's conduct as demonstrating inability to pay its debts, and held that section 443(2) did not apply where the petition was founded on section 433(e) and not merely on the "just and equitable" ground.

Conclusion: The approved scheme did not bar winding up, and the company was liable to be wound up for inability to pay its debts.

Issue (iii): Whether alleged defects in the statutory notice and company-petition procedure defeated maintainability.

Analysis: The notice under section 434 was found substantially sufficient, and in any event it was not a condition precedent for maintaining a petition under section 433. The objections regarding the notice being addressed to the Managing Director, the mode of service, the affidavit describing the petition as a writ petition, and non-framing of issues were treated as technical or irregular defects that did not go to the root of the matter. The Court held that the evidence otherwise established debt, default, and inability to pay.

Conclusion: The procedural objections did not invalidate the winding-up order.

Issue (iv): Whether the assets of an associated company could be proceeded against and auctioned in aid of winding up by lifting the corporate veil.

Analysis: The Court found that the funds collected from depositors had been routed into sister concerns through loan arrangements that were largely formal and sham in character, and that the associated companies were under common control. In these circumstances, the doctrine of lifting the corporate veil was applied to ascertain the real entity behind the transactions and to prevent misuse of separate corporate personality. The inclusion of the managing director of the associated company in the petition and the hypothecation of assets in favour of the lending company were also relied upon to justify proceeding against those assets.

Conclusion: The associated company's assets could be proceeded against and the objection to auction failed.

Final Conclusion: The appeals were found to be without merit because the company had collected public deposits, failed to repay them, and had no bona fide basis to resist winding up or the consequential action against connected assets.

Ratio Decidendi: Where a company receiving public deposits persistently fails to repay, a creditor's winding-up petition under section 433(e) remains maintainable notwithstanding a separate statutory scheme under the RBI Act, and the corporate veil may be pierced to prevent diversion of depositors' funds through controlled sister concerns.

---