Bona fide dispute and SARFAESI remedy principles bar collateral challenge, sustaining winding up and rejecting writ jurisdiction.

A debtor cannot resist winding up on the basis of a plea of disputed debt that has already been rejected and is inconsistent with admitted settlement liabilities, rehabilitation terms, and payment records; the defence was found not bona fide and winding up was sustained. A writ challenge to measures taken under the SARFAESI Act was not maintainable because the secured creditors had already proceeded under Section 13, leaving the borrower to the statutory remedy under Section 17 before the Debts Recovery Tribunal. Repeated collateral proceedings on the same grievance were treated as an abuse of process, so the writ petition failed.

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Issues: (i) Whether the company's defence to the winding-up petition disclosed a bona fide dispute so as to prevent winding up. (ii) Whether the writ petition challenging action under the SARFAESI Act was maintainable in view of the statutory remedy under the Act.

Issue (i): Whether the company's defence to the winding-up petition disclosed a bona fide dispute so as to prevent winding up.

Analysis: The company had earlier failed to contest the petition at the pre-admission stage, and the order admitting the winding-up petition, along with connected orders, had already been carried in appeal and unsuccessfully challenged. The company's claim that only a small amount remained payable was found inconsistent with its own rehabilitation package under the Sick Industries (Special Provisions) Act, 1985, the admitted payments reflected in its accounts, and the obligation to pay interest on the settled liability. The Court held that the plea of disputed debt could not be re-agitated after the earlier orders, and in any event the defence was not bona fide because it ignored the contractual and settlement liabilities.

Conclusion: The defence was not bona fide and the company was liable to be wound up.

Issue (ii): Whether the writ petition challenging action under the SARFAESI Act was maintainable in view of the statutory remedy under the Act.

Analysis: The secured creditors had already taken measures under Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, including issuance of notice under Section 13(2) and action under Section 13(4). Once such measures were taken, the borrower's remedy lay under Section 17 of the Act before the Debts Recovery Tribunal. The Court also noted that the company had pursued multiple proceedings on substantially the same grievance, including withdrawn or dismissed proceedings, which amounted to abuse of process. The availability of an efficacious statutory remedy, coupled with the company's repeated collateral challenges, made the writ petition untenable.

Conclusion: The writ petition was not maintainable and was liable to be dismissed.

Final Conclusion: The company failed to establish any legally sustainable defence against the secured creditors' claims, and the challenge to SARFAESI action had to be pursued before the statutory forum rather than in writ jurisdiction. The winding-up petition succeeded and the writ petition failed.

Ratio Decidendi: A debtor cannot resist winding up on the basis of a previously rejected and non-bona fide dispute, and once SARFAESI measures under Section 13(4) are taken, the borrower's remedy ordinarily lies under Section 17 of the Act before the Debts Recovery Tribunal.

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