Res judicata and winding up petitions: withdrawal with liberty permits a fresh petition, and an undisputed debt supports admission.

A second winding up petition was held not barred by res judicata because the earlier petition had been withdrawn without a final adjudication and with liberty to proceed in accordance with law; any restraint arose only under Order XXIII Rule 1 CPC where a fresh proceeding is filed after withdrawal without permission. On merits, the petitions were found fit for admission because the record showed supply of goods, part-payment, non-payment of the balance and no plausible bona fide dispute or substantial defence by the respondent. The dismissal of the winding up petitions was set aside and the petitions were admitted, with directions for advertisement and a stay arrangement subject to payment.

---

---

Issues: (i) Whether the second winding up petition was barred by res judicata or by the rule against a subsequent proceeding after withdrawal of the earlier petition. (ii) Whether the winding up petitions were liable to be admitted on merits in view of the nature of the debt and the respondent's defence.

Issue (i): Whether the second winding up petition was barred by res judicata or by the rule against a subsequent proceeding after withdrawal of the earlier petition.

Analysis: A subsequent proceeding is barred only where there has been a final adjudication on the same issue between the same parties. Where the earlier proceeding was withdrawn and liberty to proceed in accordance with law was granted, the bar of res judicata does not apply. If any restraint exists, it is under the principle embodied in Order XXIII Rule 1 of the Code of Civil Procedure, and that too only when a fresh proceeding is instituted after withdrawal without the requisite permission. On the facts, the earlier petition was withdrawn without a final decision on merits and the withdrawal order was treated as permitting a fresh proceeding.

Conclusion: The second winding up petition was not barred by res judicata and was maintainable.

Issue (ii): Whether the winding up petitions were liable to be admitted on merits in view of the nature of the debt and the respondent's defence.

Analysis: The record showed supply of goods, part-payment, non-payment of the balance and an additional claim for sales tax declaration dues. The correspondence did not disclose any real dispute, and the respondent was unable to show a plausible defence or even establish readiness to secure the claim. In a winding up matter, the court may decline relief where the debt is bona fide disputed, but where no substantial defence is shown and the debt appears just, admission is warranted.

Conclusion: The petitions were liable to be admitted on merits.

Final Conclusion: The appeals succeeded, the dismissal of the winding up petitions was set aside, and the petitions were admitted with directions for advertisement and a stay arrangement subject to payment.

Ratio Decidendi: A withdrawn proceeding without a final adjudication, coupled with liberty to proceed in accordance with law, does not attract res judicata, and a winding up petition may be admitted where the debt is not shown to be bona fide disputed and no substantial defence is made out.

---