Winding up for inability to pay: discretionary remedy refused where a bona fide commercial dispute and alternate remedies exist.

Winding up on ground of inability to pay a commercial debt was refused where the dispute was a bona fide commercial controversy amenable to ordinary civil adjudication; the Court applied the principle that winding up is a discretionary, drastic remedy and may be refused if alternate remedies exist or the petitioner acts unreasonably, noted the respondent's plausible defence and counterclaim, and concluded the prerequisites for invoking winding up were not met on the material before the Court, dismissing the petition and directing the petitioner to pursue alternate recovery remedies.

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Issues: Whether the petitioner's company petition under Section 433(e) of the Companies Act, 1956 seeking winding up of the respondent company on the ground of inability to pay the debt should be entertained or dismissed.

Analysis: The petition seeks winding up for non-payment of a commercial debt of Rs. 1,02,440. Winding up is a discretionary and drastic remedy affecting the existence of a company; the Company Court may refuse winding up under Section 443(2) of the Companies Act, 1956 if an alternate remedy is available or if the petitioner is acting unreasonably. The respondent has filed a detailed return alleging bona fide defences and a counterclaim, denying any admitted debt and asserting losses arising from the petitioner's handling. The facts disclose a commercial dispute susceptible to determination in ordinary civil proceedings and not a clear case for termination of the company's existence. Given the respondent's plausible defence and the availability of alternate remedies for recovery or adjudication of the dispute, the prerequisites for invoking winding up are not met on the material before the Court.

Conclusion: The petition for winding up is dismissed; the petitioner must pursue alternate remedies for recovery of the alleged debt.

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