Bona fide defence bars winding-up where disputed debts and deposit-term limitation make claims prima facie time-barred; civil suit remains available.

Winding-up petitions should not be used to enforce disputed debts; where the company establishes a bona fide defence supported by prima facie evidence the petition is non-maintainable and the petitioner must pursue civil remedies. Claims founded on fixed-term deposit receipts are time-barred if limitation runs from the expiry of the deposit term; where admitted payments and proof of interest payments pre-date the limitation cut-off, the remaining claim is prima facie barred. Operatively, a petition based on such disputed, time-barred debt will be dismissed and the petitioners directed to seek relief by ordinary suit.

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Issues: (i) Whether the winding up petition under sections 435, 433 and 434 of the Companies Act, 1956 is maintainable where the company pleads a bona fide defence, limitation and lack of statutory notice.

Analysis: The Court examined whether the petitioners' claims were barred by limitation and whether the respondent-company had established a defence that was bona fide and of substance. The Court applied the established principles that winding up jurisdiction should not be used as a method of enforcing disputed debts and that a company must show a defence in good faith, likely to succeed in law, supported by prima facie proof. The Court considered authority holding that deposit receipts specifying a term fix the date when the debt becomes due and that limitation runs from the expiry of that term. The respondent proved payment of interest only up to a date before October 1, 1982, and the petitioners admitted earlier payments and settlement by some creditors; the claim as to remaining amounts was prima facie time-barred and the respondent's defence was shown to be in good faith and likely to succeed.

Conclusion: The winding up petition is dismissed and the petitioners may pursue their remedy by way of a civil suit.

Ratio Decidendi: A company petition for winding up will be rejected where the debt is bona fide disputed and the company shows a defence in good faith with prima facie evidence, and where claims based on fixed-term deposit receipts are prima facie barred by limitation measured from the expiry of the deposit term.

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