Bona fide dispute defeats winding-up petition where liability is genuinely contested despite no reply to statutory notice.

Winding-up proceedings are not a substitute for ordinary civil recovery, and a petition should not proceed where the company shows a bona fide and substantial dispute as to liability. Failure to reply to a statutory notice may create an initial presumption of indebtedness and support admission, but that presumption is displaced by a genuine dispute. The disputed authorisation of advertisements was treated as a real factual controversy, supported by prior correspondence, and controverted questions of fact are not to be finally decided in summary proceedings. The petition was therefore not fit to proceed on the merits.

---

---

Issues: Whether a winding-up petition should be entertained where the respondent has disclosed a bona fide dispute as to liability and no reply was sent to the statutory notice.

Analysis: Winding-up is not a substitute for an ordinary civil action for recovery of dues. Even though failure to answer the statutory notice may justify an initial presumption of indebtedness and may support admission of the petition, that consequence is not automatic where the company otherwise shows a bona fide and substantial dispute. The Court also treated the controversy regarding authorisation for the disputed advertisements as a genuine factual dispute, including material correspondence indicating that the issue had arisen earlier and was not an afterthought. In such summary proceedings, controverted questions of fact should not be decided finally.

Conclusion: The petition was not fit to proceed on the merits because a bona fide dispute existed.

---