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Dismissal of winding up application based on pending civil suit for recovery of amount. Interpretation of liability to pay in the context of winding up application. Analysis: The High Court of Himachal Pradesh, comprising V.K. Gupta and Deepak Gupta, JJ., heard the appeal concerning the dismissal of a winding up application by a learned Single Judge. The impugned judgment dated 15-3-2004 was based on the ground that the appellant had already initiated a civil suit for the recovery of the amount in question, which was pending disposal in the Civil Court. The learned Single Judge referred to a previous judgment in the case of Azeet International (P.) Ltd. v. Himachal Pradesh Horticultural Produce Marketing & Processing Corpn. Ltd., where it was held that the machinery for winding up could not be used solely to realize a disputed debt subject to a pending civil suit. In the case of Azeet International (P.) Ltd., the Single Judge had emphasized that if a civil suit for recovery of the disputed amount was already filed and pending adjudication, the winding up application could not be utilized as a means to recover the debt. The High Court of Punjab and Haryana had also declined to exercise power under section 433 of the Act in a similar scenario. The principle established was that unless the liability to pay is acknowledged by the company, a winding up application cannot be maintained if a civil suit has been filed regarding the disputed liability. The High Court, in its analysis, reiterated that the learned Single Judge had correctly dismissed the winding up application based on the disputed liability and the pending civil suit for recovery of the amount. The judgment highlighted the principle that the liability to pay must be acknowledged by the company for a winding up application to be valid in cases where a civil suit has already been filed concerning the disputed debt. Consequently, the appeal was found to lack merit and was dismissed by the High Court of Himachal Pradesh.
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