Bona fide dispute as to debt bars winding-up relief where the company raises a genuine contest on existence or quantum.

Petitioner sought a winding-up order for non-payment; respondent raised a bona fide dispute as to existence and quantum of the debt supported by its statement of account and documents, including contested debit entries and excise-related records. Legal principle applied: winding-up is not a mode of debt recovery and should be refused where a company raises a genuine dispute on existence or amount of debt. The petitioner's failure to file its own statement of account and to satisfactorily explain cheque-related circumstances weakened its case. Outcome: the respondent's dispute is prima facie genuine and the petitioner is not entitled to a winding-up order.

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Issues: Whether the petitioner is entitled to a winding-up order under Section 433 of the Companies Act, 1956 on the ground of non-payment where the respondent-company has raised a bona fide dispute as to the debt.

Analysis: The petition alleges a balance due established from the petitioner's books and a statutory notice was issued. The respondent produced its own statement of account and documents (including excise-related documents) and asserted a counterposition including disputed debit entries and a bounced cheque/criminal proceedings, thereby raising a running account dispute. The petitioner's failure to file its statement of account with the petition and to satisfactorily explain circumstances surrounding the issuance of its cheques weakens the petitioner's claim. Established principles require that winding-up is not a mode of debt recovery and that where a company raises a genuine and bona fide dispute on the existence or quantum of debt, a winding-up order should not be granted. Applying this framework, the respondent's dispute is prima facie genuine.

Conclusion: The dispute raised by the respondent is bona fide and genuine; the petitioner is not entitled to a winding-up order. Decision in favour of the respondent.

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