Bona fide dispute over liability bars winding-up relief where a civil recovery remedy remains available.

A winding-up petition under section 433(e) of the Companies Act, 1956 is not maintainable where the company raises a bona fide and plausible dispute as to liability and the petitioner has an ordinary civil remedy. Winding up is a discretionary and drastic remedy, not a substitute for debt recovery in an isolated commercial transaction. If the alleged debt is disputed, especially on grounds such as quality of goods or non-admission of liability, the proper course is ordinarily a civil suit. The Company Court may refuse winding up under section 443(2) where another remedy is available and the petitioner is acting unreasonably in seeking that course instead.

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Issues: Whether a winding-up petition under section 433(e) of the Companies Act, 1956 could be entertained where the company raised a bona fide and plausible dispute regarding liability and the petitioner had an alternative civil remedy.

Analysis: Winding up is a discretionary and drastic remedy, not one to be used as a means of debt recovery in an isolated commercial transaction. Where the company sets up a bona fide defence and the alleged liability is disputed, the proper course is ordinarily to pursue a civil suit for recovery. Section 443(2) empowers the Company Court to refuse winding up if another remedy is available and the petitioner is acting unreasonably in seeking winding up instead of that remedy. The Court found that the respondent had raised a plausible defence regarding the quality of goods and non-admission of the debt, so the dispute was not fit for adjudication in winding-up proceedings.

Conclusion: The winding-up petition was not maintainable on the facts and was dismissed, leaving the petitioner to work out any other remedy in law.

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