Winding up petition maintainable despite DRT recovery proceedings, and secured creditor need not surrender security before filing.

A winding up petition under the Companies Act is not barred by the Recovery of Debts Due to Banks and Financial Institutions Act because the two remedies operate in different fields; the creditor may pursue winding up even after obtaining a DRT decree and recovery certificate. A secured creditor need not relinquish its security before filing the petition, since the choice between realising security and proving in winding up arises only at the claims stage after a winding up order. The petition was also properly founded on Section 434(1)(a), because no recovery certificate existed when it was filed and the later certificate did not change its character.

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Issues: (i) Whether the jurisdiction conferred on the Debts Recovery Tribunal bars a secured creditor from maintaining a winding up petition under the Companies Act after obtaining a DRT decree and recovery certificate. (ii) Whether a secured creditor must relinquish or give up its security before presenting a winding up petition. (iii) Whether the winding up petition was not maintainable because it was really a petition under Section 434(1)(b) of the Companies Act, 1956 rather than under Section 434(1)(a).

Issue (i): Whether the jurisdiction conferred on the Debts Recovery Tribunal bars a secured creditor from maintaining a winding up petition under the Companies Act after obtaining a DRT decree and recovery certificate.

Analysis: The jurisdiction under Sections 17 and 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is exclusive for adjudication and recovery of debts due to banks and financial institutions. However, a winding up proceeding under the Companies Act is not a proceeding for recovery of debt in the sense contemplated by the Recovery of Debts Act. The two remedies operate in different fields, and the bar in the Recovery of Debts Act does not extend to winding up proceedings. The Court approved the view that both remedies may proceed in parallel streams.

Conclusion: The Recovery of Debts Act does not bar a secured creditor from filing and pursuing a winding up petition under the Companies Act.

Issue (ii): Whether a secured creditor must relinquish or give up its security before presenting a winding up petition.

Analysis: Section 439 of the Companies Act, 1956 permits a secured creditor to present a winding up petition, and the statute contains no requirement equivalent to Section 9(2) of the Provincial Insolvency Act, 1920. The obligation to elect between realising security and proving in winding up arises at the stage of proof of claims after a winding up order, not at the stage of filing the petition. Section 529 of the Companies Act, read with Section 47 of the Provincial Insolvency Act, is attracted at that later stage and does not condition maintainability of the petition itself.

Conclusion: A secured creditor need not relinquish its security before filing a winding up petition.

Issue (iii): Whether the winding up petition was not maintainable because it was really a petition under Section 434(1)(b) of the Companies Act, 1956 rather than under Section 434(1)(a).

Analysis: Section 434(1) contains distinct situations of deemed inability to pay debts. At the time the petition was filed, no recovery certificate had yet been issued, so the factual basis for Section 434(1)(b) was absent. The petition was founded on notice of demand and non-payment under Section 434(1)(a), and the later issuance of a recovery certificate did not alter its character.

Conclusion: The petition was properly maintainable under Section 434(1)(a) and was not defeated by Section 434(1)(b).

Final Conclusion: The Court held that a secured creditor may pursue winding up notwithstanding parallel recovery proceedings before the DRT, and that the absence of prior relinquishment of security does not bar maintainability of the petition.

Ratio Decidendi: A winding up petition under the Companies Act is not a debt recovery proceeding barred by the Recovery of Debts Due to Banks and Financial Institutions Act, and a secured creditor's election to realise or relinquish security arises only at the stage of proving claims in winding up, not at the stage of presenting the petition.

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