PAWAN KHAITAN Vs. RAHUL COMMERCE PRIVATE LIMITED

JUDGEMENT

(1.) This appeal would raise a short but interesting question as to whether a creditor by virtue of a decree obtained from a civil Court could apply for winding up of its judgment debtor without availing the process of execution. The learned Single Judge held, since the process of winding up was essentially discretionary in nature the creditor should approach the executing Court for execution of the decree. Being aggrieved, the creditor approached us by filing the appeal that we heard on the above mentioned date. Mr. Prantik Garai learned Counsel appearing in support of the appeal would submit, the process of winding up was recognized as an equitable mode of execution as observed by the Apex Court in the case of Harinagar Sugar Mills Company Limited Vs. M.W. Pradhan (now G.V. Dalvi) Court Receiver, Bombay reported in All India Reporter 1966 Volume- 53 Supreme Court Page- 1707, the learned Judge should not have declined to admit the winding up petition.

(2.) Per contra, Mr. Rudraman Bhattacharya learned Counsel appearing for the respondent would rely upon the decision in the case of Manilal Lalubhai and Another Vs. The Bharat Spinning and Weaving Company Limited, 58 Indian Law Reports Page- 162 and contend, the decree holder must follow the procedural law. Once the Code of Civil Procedure would elaborately suggest the process of execution under Order XXI, the decree holder must follow the said process. Winding up was not appropriate remedy and in any event, the same being a discretionary relief, the learned Judge was right in declining to admit the winding up petition. The appeal was not maintainable and liable to be dismissed.

(3.) In the case of United Bank of India Vs. Satyawati Tondon and Others, 2010 8 SCC 110, the Apex Court, while dealing with a case under SARFESI Act, held, the Bank, without making effort for recovery of dues from the borrower, could not have initiated action again the guarantor. We have considered the rival contentions. Before we go into merits, we would first examine the provision of law. To realize a decreetal claim; one has to adopt the process of execution however, if the decree holder feels, the Company is insolvent and unable to pay its debts, it can very well apply for its winding up. The process of winding up could not be used as a tool for debt collection; it is not a debt collecting Court. The Apex Court however, distinguished this view in the case of Harinagar Sugar Mills , the Apex Court observed, a creditor has an option either to execute the decree or pray for winding up as such proceeding was nothing but "equitable mode of execution." Our Court, in a Single Bench decision in the case of Unique Cardboard Box Mfg. Company Private Limited reported in Volume- 48 Company Cases Page- 599, while entertaining an application for winding up at the instance of the decree holder, referred to Harinagar Sugar Mills and held, the petition was maintainable.