Time-barred debt cannot sustain winding-up; lease defaults remain separate claims, and money-lending bar was not established.

A winding-up petition cannot be maintained on a debt that is already barred by limitation, because a time-barred claim is not a presently payable debt under Sections 433(e) and 434 of the Companies Act. The Court also held that instalment defaults under the lease gave rise to separate causes of action, so limitation ran from each default and the contractual compensation clause did not convert all future instalments into one recoverable debt. The proposed money-lending objection failed because the arrangement was treated as a leasing transaction, with no sufficient basis to apply the licensing bar under the Bombay Money Lending Act.

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Issues: (i) Whether a winding-up petition based on a debt barred by limitation could be admitted. (ii) Whether the amounts claimed as compensation and interest under the lease agreement constituted a debt capable of founding a winding-up petition. (iii) Whether the transaction was in substance a money-lending transaction barred for want of a licence.

Issue (i): Whether a winding-up petition based on a debt barred by limitation could be admitted.

Analysis: For a petition under Section 433(e) read with Section 434 of the Companies Act, the debt must be due and payable at the date of the petition. A claim already barred by limitation ceases to be a payable debt, and a bona fide defence based on limitation is a substantial defence. The Court held that the creditor could not keep the debt alive by delaying a winding-up petition and that limitation directly affected the maintainability of the petition.

Conclusion: The petition was not maintainable if the claim was time-barred, and the objection on limitation succeeded.

Issue (ii): Whether the amounts claimed as compensation and interest under the lease agreement constituted a debt capable of founding a winding-up petition.

Analysis: The agreement required periodic instalment payments, and each default gave rise to a separate cause of action. The Court held that the limitation period ran from each default and that the clauses providing 3% monthly compensation did not convert all future instalments into one recoverable sum. The claim for the large compensation component was treated as a penal or unascertained claim and, in any event, could not rescue a petition founded on a time-barred debt.

Conclusion: The principal claim could not be treated as a recoverable debt for the full amount claimed, and the petition failed on that basis as well.

Issue (iii): Whether the transaction was in substance a money-lending transaction barred for want of a licence.

Analysis: On the material before the Court, the arrangement remained a leasing transaction and the promissory note could be viewed as collateral security. The Court found no sufficient basis to characterise the transaction as a money-lending transaction so as to attract the bar under the Bombay Money Lending Act.

Conclusion: The money-lending defence was rejected.

Final Conclusion: The winding-up petition was dismissed because the underlying recovery claim was barred by limitation, while the alternative defence based on money-lending was not established.

Ratio Decidendi: For a winding-up petition based on inability to pay debts, the debt must be a presently enforceable and payable claim at the date of the petition, and a time-barred claim cannot sustain admission of the petition.

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