Limitation under sick industrial proceedings and just and equitable winding up turned on admitted liability and missing records.

A limitation defence was considered in light of proceedings before the Board for Industrial and Financial Reconstruction, with the period under such protection excluded from computation; on the material noted, only part of the creditor's claim was time-barred and the balance remained live. The company's failure to produce records, together with its admission of occupation of premises and related facilities, was treated as relevant to just and equitable winding up and prima facie inability to pay the admitted sum. The larger disputed monetary claim was left for separate adjudication in a suit, while the admitted liability supported admission of the winding-up petition.

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Issues: (i) Whether the petitioning creditor's claim was barred by limitation in view of the proceedings before the Board for Industrial and Financial Reconstruction; (ii) whether the company should be wound up on just and equitable grounds and for prima facie inability to pay debts.

Issue (i): Whether the petitioning creditor's claim was barred by limitation in view of the proceedings before the Board for Industrial and Financial Reconstruction.

Analysis: The claim arose from services and accommodation provided before the company entered the protection of the Sick Industrial Companies (Special Provisions) Act, 1985. The pendency of proceedings before the Board suspended the running of limitation, and the period spent under such protection had to be excluded for limitation purposes. On the material before the Court, a part of the claim was held to be time-barred, while the remaining part survived.

Conclusion: The claim was barred only to the extent found time-barred, and the balance claim remained for consideration.

Issue (ii): Whether the company should be wound up on just and equitable grounds and for prima facie inability to pay debts.

Analysis: The company admitted occupation of premises and receipt of connected facilities, but failed to produce records or make any meaningful response to the asserted liability. The Court held that non-production of records, coupled with the surrounding conduct, was a relevant circumstance for just and equitable winding up. Although the larger money claim required adjudication in a suit, the admitted amount for occupation was found prima facie payable, which supported admission of the petition.

Conclusion: The winding-up petition was admitted on just and equitable grounds and on the ground of prima facie inability to pay the admitted sum.

Final Conclusion: The petition was admitted, advertisement was directed, and the major monetary claim was relegated to a suit, with a conditional window provided to the company to seek dismissal upon payment and furnishing of security.

Ratio Decidendi: Where a company fails to maintain or produce relevant records and admits receipt of facilities for which an admitted sum is prima facie payable, the Court may admit a winding-up petition on just and equitable grounds even though the larger disputed claim must be established separately in a suit.

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