Bona fide dispute in winding up fails where a company's own admissions and inconsistent defence negate the debt.

A winding up petition may be admitted where the company's defence to the creditor's claim is internally inconsistent, unsupported by evidence, and contradicted by its own admissions. The text notes that allegations of defective goods were undermined by the company's pleaded admission that the goods had been consumed, while the claimed rejection letters and assurance against payment were not proved. A written promise to clear the dues was treated as an unqualified admission of liability. On that basis, the defence was treated as mala fide, the debt as undisputed, and the company as unable to pay its debts, with interest and costs also payable.

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Issues: Whether the company had raised a bona fide dispute to the creditor's claim so as to defeat the winding up petition, and whether the company was liable to pay the admitted balance with interest and costs.

Analysis: The company's defence was found to be self-contradictory. On one hand, it alleged that the goods supplied were defective and rejected through letters whose receipt was not proved; on the other hand, its own plaint in the money suit contained an unequivocal admission that the goods had been consumed. The alleged complaints about quality were inconsistent with the admitted consumption of the goods, and the further assertion that the goods were consumed on an assurance that payment would not be required if defects were found was unsupported by evidence. The company's written promise to clear the dues was treated as an unqualified admission of liability, and the explanation that it was a routine form letter was rejected.

Conclusion: The defence was held to be mala fide and not a bona fide dispute. The company was held liable to pay the balance amount with interest at 14% per annum and costs, and it was deemed unable to pay its debts, warranting admission of the winding up petition.

Ratio Decidendi: A winding up petition may be admitted where the debtor's defence is internally inconsistent, unsupported by evidence, and contradicted by its own admissions, showing that the debt is undisputed and the company is unable to pay its debts.

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