Winding-up petition maintainable where substantial debt is undisputed and pending DRT proceedings do not bar company court jurisdiction.

In a winding-up petition, the court may admit the petition where substantial indebtedness is shown and the alleged dispute is not a bona fide defence. The claimed security did not defeat the petition because the mortgage relied on was created by the borrower, not the respondent company, and the realizable value was not shown to cover the debt. Earlier omissions in the pleadings were treated as corrected mistakes, so no disqualifying suppression was made out. The pending DRT proceedings did not oust the company court's jurisdiction, as it only examines indebtedness for winding up and does not decide the debt as a money claim. The company's assertion that it was a profit-making running concern also failed.

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Issues: (i) Whether the petitioner's claim was fully secured so as to negate a winding-up petition under section 434(1)(a) of the Companies Act, 1956; (ii) Whether suppression of facts by the petitioner disentitled it to relief; (iii) Whether there was a bona fide dispute regarding the debt and whether the pending DRT proceedings barred the company court from entertaining the petition; (iv) Whether the respondent company's status as a profit-making running concern justified of winding up.

Issue (i): Whether the petitioner's claim was fully secured so as to negate a winding-up petition under section 434(1)(a) of the Companies Act, 1956.

Analysis: The security relied upon was a mortgage created by the borrower, not by the respondent company. The respondent company was treated as an unsecured creditor relationship for the purpose of its claim against the guarantor company. The court also noted that repeated attempts to sell the mortgaged property yielded bids substantially below even the valuation, indicating that the realizable value was not shown to cover the petitioner's claim. At the admission stage, the sufficiency of security could not be treated as established in favour of the respondent.

Conclusion: The claim was not shown to be adequately secured, and this ground did not bar admission of the petition.

Issue (ii): Whether suppression of facts by the petitioner disentitled it to relief.

Analysis: The omissions regarding the non-guarantee for one loan, the reduced disbursal under another facility, the Rs. 9 crores payment, and the DRT proceedings were later disclosed by a further affidavit before admission was considered. The court treated the omissions as mistakes rather than intentional suppression and noted that the respondent did not controvert the corrected disclosure. The court therefore declined to treat the initial pleading defects as a basis for denying relief.

Conclusion: No disqualifying suppression was made out.

Issue (iii): Whether there was a bona fide dispute regarding the debt and whether the pending DRT proceedings barred the company court from entertaining the petition.

Analysis: The court held that the respondent had no defence in relation to the guarantee for the term loan of Rs. 35 crores, and even after giving credit for disputed items and the Rs. 9 crores payment, substantial liability remained. A winding-up petition is not defeated merely because the exact amount is disputed, where the debt itself is otherwise established. The DRT's jurisdiction under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was held not to exclude the company court's jurisdiction to consider winding up, because the company court does not adjudicate the debt as a money claim but only examines indebtedness for the purpose of winding up.

Conclusion: The dispute was not bona fide so as to defeat the petition, and the DRT proceedings did not oust the company court's jurisdiction.

Issue (iv): Whether the respondent company's status as a profit-making running concern justified refusal of winding up.

Analysis: The assertion that the company was profit-making and possessed assets was unsupported by particulars. In any event, where substantial indebtedness is shown, the mere fact that the company is a running concern does not by itself defeat a winding-up petition.

Conclusion: This contention failed.

Final Conclusion: The petition was held maintainable for admission because a substantial undisputed debt was shown to be due from the respondent company, and none of the defences advanced justified refusing to admit the winding-up petition.

Ratio Decidendi: At the admission stage of a winding-up petition, the company court may admit the petition where the debt is substantially undisputed and the alleged dispute does not amount to a bona fide defence, even if the precise quantum is contested or separate recovery proceedings are pending before the DRT.

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