Winding-up petition refused where restructuring, rehabilitation, and an alternative recovery remedy made admission inappropriate.

A winding-up petition for inability to pay debts failed at the admission stage because, although the debt was not seriously disputed, the respondent showed a bona fide defence founded on loan restructuring, payments under a rehabilitation package, and a corporate debt restructuring arrangement with major lenders. The secured creditor also had an effective alternative remedy under recovery legislation, so the court could refuse winding up under section 443(2) where another remedy existed and winding up was being pursued unreasonably. Admitting the petition would have prejudiced the company's rehabilitation, employees, and other lenders. The petition was therefore not maintainable for winding up.

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Issues: Whether a prima facie case was made out for admission of the winding-up petition on the ground of inability to pay debts.

Analysis: The debt was not seriously in dispute, but the respondent had shown a bona fide defence based on the restructuring of the loan, payments made under the rehabilitation package, and the existence of a corporate debt restructuring mechanism involving the major lenders. The petitioner, being a secured creditor, also had an effective alternative remedy under the recovery legislation. In these circumstances, the statutory discretion under section 443(2) of the Companies Act, 1956 could be exercised to refuse winding up where another remedy was available and the petitioner was acting unreasonably in seeking winding up instead of pursuing that remedy. The Court also noted that admitting the petition would prejudice the ongoing rehabilitation of the company and affect employees and other lenders.

Conclusion: The petitioner failed to establish a prima facie case for admission of the winding-up petition, and the company petition was not maintainable for winding up.

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