Disputed debt and tenant liability: summary winding up is unsuitable, and SARFAESI protection does not excuse occupation charges.

Winding up proceedings are not suitable for resolving a genuinely disputed debt where the defence raises real factual controversies, such as vacation date, continued possession, rent liability, and adjustment of deposits or advance rent; those matters require evidence and belong before a civil forum. Section 13(13) of the SARFAESI Act protects the secured creditor's interest in the secured asset, but it does not permit a tenant in possession to remain without paying rent or use and occupation charges. Any allocation of payment as between the bank and the mortgagor does not relieve the tenant of that liability.

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Issues: (i) Whether a winding up petition is maintainable where the alleged debt is disputed and the defence is not moonshine. (ii) Whether Section 13(13) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 could be used by the tenant to avoid liability for rent or use and occupation charges.

Issue (i): Whether a winding up petition is maintainable where the alleged debt is disputed and the defence is not moonshine.

Analysis: Winding up proceedings under Sections 433 and 434 of the Companies Act, 1956 are summary in nature and are not intended for adjudication of seriously disputed questions of fact. Where the parties dispute the date of vacation, the continuation of possession, the liability to pay rent, and the extent of amounts adjusted against the security deposit and advance rent, the dispute requires evidence and cannot be resolved in such proceedings. A defence that raises a real dispute cannot be rejected as a mere sham.

Conclusion: The winding up petition was not maintainable and had to be pursued, if so advised, before the appropriate civil forum.

Issue (ii): Whether Section 13(13) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 could be used by the tenant to avoid liability for rent or use and occupation charges.

Analysis: Section 13(13) protects the secured creditor's interest in the secured asset and restrains the borrower from creating third-party interests in a manner defeating that protection. It does not entitle a tenant, once in possession, to occupy the premises without paying rent or mesne profits. Any question whether payment is due to the landlord or the bank is a matter between the bank and the mortgagor and does not absolve the tenant of liability for use and occupation.

Conclusion: The tenant could not rely on Section 13(13) to avoid liability for rent or use and occupation charges.

Final Conclusion: The dispute involved factual controversies unsuitable for summary insolvency jurisdiction, and the petitioner was relegated to civil remedies.

Ratio Decidendi: A winding up petition will not lie where the alleged debt is genuinely disputed on facts and the defence is substantial, and a tenant in possession cannot invoke Section 13(13) of the SARFAESI Act to claim occupation free of rent or charges.

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