Bona fide debt dispute defeats winding-up remedy, which cannot replace a suit for recovery of the alleged claim.

A winding-up petition based on an unpaid supply claim was not maintainable where the company raised a bona fide dispute over the quality and quantity of the goods supplied. The dispute was supported by earlier complaints, references to discussions on discounts, and phased payment of the balance, showing it was genuine and not an afterthought. Winding up could not be used as a substitute for a suit to recover the alleged debt, so the creditor had to pursue the claim through ordinary civil proceedings.

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Issues: Whether a winding-up petition under section 434 of the Companies Act, 1956 was maintainable when the respondent-company raised a bona fide dispute regarding the quality and quantity of the goods supplied.

Analysis: The outstanding claim arose from a supply transaction in which part payment had been made and the balance was asserted to be due with interest. The respondent-company had earlier complained about the quality and quantity of the goods and had referred to prior discussions about discounts and phased payment of the outstanding amount. On these facts, the dispute was found to be genuine and not a mere afterthought. The remedy of winding-up was held not to be a substitute for a suit for recovery of the alleged debt.

Conclusion: The petition was not maintainable as a winding-up proceeding because a bona fide dispute existed; the claim, if any, had to be pursued in a suit.

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