Winding up petition maintainability upheld for bond trustee, but admission refused where the company remained a viable going concern.

A trustee expressly empowered to enforce bondholder rights was treated as a deemed creditor and could maintain and issue a winding up petition despite a trust deed clause referring interpretation to English law and English jurisdiction. The statutory remedy under the Companies Act, 1956 was not excluded, and the trustee's locus was upheld. However, admission of the petition was refused because winding up is discretionary, not automatic on admitted debt and default. Given that the company was a functioning concern with substantial assets, employees, operating profits and revival prospects, the Court preferred restructuring and payment arrangements over liquidation.

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Issues: (i) Whether the trustee for bondholders was a deemed creditor and entitled to maintain and issue a winding up petition under the Companies Act, 1956 notwithstanding the governing-law and jurisdiction clauses in the trust deed; (ii) Whether, in the facts of the case, the winding up petition should be admitted where the debt and default were admitted but the company was a going concern with substantial assets, workers and revival prospects.

Issue (i): Whether the trustee for bondholders was a deemed creditor and entitled to maintain and issue a winding up petition under the Companies Act, 1956 notwithstanding the governing-law and jurisdiction clauses in the trust deed.

Analysis: The trust deed and offering circular showed that the company undertook to pay the redemption amount to the trustee, the trustee held the benefit of the covenants for itself and the bondholders, and enforcement rights after default were specifically vested in the trustee. The Court read the deed as a whole and held that the English law clause governed interpretation of the deed, but did not exclude the statutory jurisdiction of the Company Court where no factual adjudication was required. Section 439(2) of the Companies Act, 1956 treated a trustee for debenture holders as a deemed creditor, and that status supported issuance of notice and maintenance of the petition. The clause conferring jurisdiction on English courts was not exclusive, and the statutory winding up remedy remained available in the court where the company had its registered office.

Conclusion: The trustee had locus to maintain the petition and to serve the winding up notice; the preliminary objection to maintainability failed.

Issue (ii): Whether, in the facts of the case, the winding up petition should be admitted where the debt and default were admitted but the company was a going concern with substantial assets, workers and revival prospects.

Analysis: Although the default in payment of the bond redemption amount was admitted, the Court treated admission of a winding up petition as a matter of discretion and not as an automatic consequence of debt and default. The company was functioning, employing a large workforce, generating operating profits, and its assets were found to exceed liabilities. The Court also noted the wider consequences of publishing admission of a winding up petition against a running unit, including damage to creditworthiness and employment. On the totality of circumstances, the Court held that the larger public interest favoured allowing time for revival, debt restructuring and payment arrangements instead of initiating winding up proceedings.

Conclusion: The petition was not admitted and the request for winding up was declined.

Final Conclusion: The trustee's petition was held maintainable, but the Court refused to admit the winding up proceedings in view of the company's continuing business, workforce interests, asset position and revival prospects, while restraining creation of further charge on the assets to protect the petitioner's unsecured claim.

Ratio Decidendi: A trustee expressly empowered to enforce bondholder rights is a deemed creditor for winding up purposes, and even where debt and default are admitted, the Company Court may refuse admission if the company is a viable going concern and winding up would be contrary to the larger public interest.

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