Limitation principles bar a winding-up petition when the creditor's claim is time-barred; penal contractual interest needs adjudication.

A winding-up petition cannot be admitted where the creditor's claim is time-barred so that the debt is not a definite recoverable sum at the petition date; instalment-based lease liabilities yield separate causes of action and, absent an express acceleration clause, earlier instalments are barred by limitation, constituting a bona fide dispute that defeats admission. Contractual penal or unascertained compensation under the lease is not an ascertainable debt recoverable in winding-up without prior adjudication. Whether the lease masked an unlawful moneylending transaction remained unresolved on the record and requires fuller evidence.

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Issues: (i) Whether the winding-up petition is maintainable where the creditor's claim is time-barred by limitation; (ii) Whether the compensation/penal interest claimed under the lease agreement constitutes a "debt" for purposes of a winding-up petition; (iii) Whether the transaction prima facie amounts to an unlawful moneylending transaction barring relief under the Bombay Money-lenders Act.

Issue (i): Whether the winding-up petition is maintainable where the creditor's claim is time-barred by limitation.

Analysis: The petition was filed under Section 434 of the Companies Act on the ground under Section 433(e) that the company was unable to pay its debts. The Court examined authorities on whether a debt barred by limitation can support a winding-up petition and applied the Limitation Act Articles to the instalment-based lease liability. Each unpaid instalment gives rise to an independent cause of action; Articles 12, 52 and 55 permit recovery only for the arrears of the last three years or are otherwise inapplicable to this leasing arrangement. The agreement lacked a clause making the whole principal immediately due on any default, so residuary provisions (Article 113) or Articles 36/37 could not be invoked to treat all instalments as a single recoverable debt. Given the filing date, the claim for the bulk of instalments was time-barred and the limitation defence was bona fide and substantial.

Conclusion: In favour of Respondent.

Issue (ii): Whether the compensation/penal interest claimed under Clause 3(b) of the lease agreement constitutes an ascertainable "debt" recoverable in a winding-up petition without prior adjudication.

Analysis: The Court considered Section 74 of the Indian Contract Act and relevant precedents holding that claims for unliquidated or penal damages do not convert into a debt until ascertained by a competent forum. The large aggregate of contractual compensation claimed by the petitioner was unascertained and penal in character; even if the principal might be recoverable, the claimed penal interest required adjudication and could not be treated as a definite debt for immediate winding-up relief. The point was treated as academic in view of the limitation finding but addressed on its merits.

Conclusion: In favour of Respondent.

Issue (iii): Whether the lease transaction is in substance a moneylending transaction barred by the Bombay Money-lenders Act and therefore a defence to the petition.

Analysis: The Court examined the written lease agreement and ancillary documents, including a promissory note. On the material available, the agreement prima facie operated as a lease; the promissory note could represent collateral security rather than proof of a moneylending transaction. The question of moneylending status required fuller evidence and could not be conclusively decided on the record before the Court; therefore the defence was not accepted on the limited material but left open for a proper trial if necessary.

Conclusion: In favour of Petitioner on the prima facie characterisation (defence rejected on the record); however the point remains open for full evidence.

Final Conclusion: The petition for winding up is dismissed because the creditor's claim was, on the record and as filed, barred by limitation; the limitation defence constitutes a bona fide dispute precluding admission of the petition.

Ratio Decidendi: A winding-up petition based on inability to pay debts cannot be admitted where the creditor's claim is time-barred such that the debt is no longer a definite, recoverable sum at the date of the petition; instalment-based liabilities give rise to separate causes of action unless the contract expressly makes the whole principal immediately due on default.

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