Winding up jurisdiction remains available despite DRT recovery proceedings where a secured creditor's security is not efficacious.

A secured creditor may maintain a winding up petition even though it holds security, because the court's discretion turns on whether that security is efficacious and adequate; on the facts, the security was found insufficient and the petition was maintainable. Pendency of recovery proceedings before the Debt Recovery Tribunal does not oust Company Court jurisdiction, because winding up is an insolvency remedy distinct from debt recovery and the Tribunal cannot order winding up. The admission of the winding up petition was therefore sustained.

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Issues: (i) whether a secured creditor can maintain and pursue a winding up petition against the debtor company when its security is stated to be efficacious, and (ii) whether pendency of recovery proceedings before the Debt Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ousts the jurisdiction of the Company Court to entertain a winding up petition.

Issue (i): whether a secured creditor can maintain and pursue a winding up petition against the debtor company when its security is stated to be efficacious.

Analysis: The appeal challenged the admission of the winding up petition on the footing that the respondent was a secured creditor. The Court noted that the appellant did not dispute the debt or establish a bona fide dispute. It further accepted the earlier division bench view that a secured creditor is not barred from filing a winding up petition merely because it holds security, and that the Court's discretion depends on whether the security is efficacious and adequate. On the facts, the security was found not to be efficacious.

Conclusion: The winding up petition was maintainable and admission of the petition on this ground was upheld.

Issue (ii): whether pendency of recovery proceedings before the Debt Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ousts the jurisdiction of the Company Court to entertain a winding up petition.

Analysis: The Court distinguished the Supreme Court decision concerning the primacy of the Debt Recovery Tribunal in recovery and execution matters. It held that a winding up petition is not a proceeding for recovery of debt but a proceeding to determine whether the company has become commercially insolvent and should be wound up. Since the Debt Recovery Tribunal has no power to order winding up, the statutory bar under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 did not extend to the Company Court's winding up jurisdiction. The Court also relied on the principle that exclusion of jurisdiction must be confined to the extent intended by the legislature.

Conclusion: The Company Court retained jurisdiction to entertain the winding up petition notwithstanding the pending recovery proceedings before the Debt Recovery Tribunal.

Final Conclusion: The order admitting the winding up petition was sustained, and the appeal failed.

Ratio Decidendi: A winding up petition is not barred by the pendency of debt-recovery proceedings before the Tribunal because winding up is an insolvency jurisdiction distinct from debt recovery, and a secured creditor may maintain such a petition if the security is not efficacious and adequate.

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