Winding up petition remains maintainable despite debt recovery proceedings when a crystallized debt is unpaid and no bona fide dispute exists.

Recovery proceedings before the Debt Recovery Tribunal do not, by themselves, bar a winding up petition under the Companies Act, 1956, because the two remedies operate in different fields. Where the debt is crystallized, statutory notice remains unsatisfied, and the company's reply raises no bona fide dispute on substantial grounds, the default supports the statutory inference of inability to pay debts. On those facts, a winding up petition is maintainable and the company may be treated as liable to winding up.

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Issues: (i) whether pendency or resort to recovery proceedings before the Debt Recovery Tribunal barred a winding up petition under the Companies Act, 1956; (ii) whether the company had failed to pay a crystallized debt despite statutory notice and in the absence of a bona fide dispute.

Issue (i): whether pendency or resort to recovery proceedings before the Debt Recovery Tribunal barred a winding up petition under the Companies Act, 1956.

Analysis: The statutory remedy for recovery of debts under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 operates in a different field from winding up proceedings under Section 433(e) of the Companies Act, 1956. Resort to recovery proceedings does not create a legal bar to a petition for winding up where the statutory requirements for winding up are otherwise made out.

Conclusion: The winding up petition was maintainable notwithstanding the recovery proceedings.

Issue (ii): whether the company had failed to pay a crystallized debt despite statutory notice and in the absence of a bona fide dispute.

Analysis: The debt was admitted, the statutory notice remained unsatisfied, and the reply did not raise any bona fide dispute on substantial grounds. On the facts, the company had neglected to discharge its liability, attracting the deeming consequence of inability to pay debts.

Conclusion: The company was found to be unable to pay its debt and liable to winding up.

Final Conclusion: The petition was admitted and directions were issued for publication of citation, with costs to be borne by the petitioner.

Ratio Decidendi: Recovery proceedings under the debt recovery legislation do not bar winding up proceedings, and a company may be wound up where a crystallized debt remains unpaid after statutory notice without any bona fide dispute.

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