Bona fide debt dispute defeats winding up jurisdiction where liability needs full proof and cross-examination.

A winding up petition is not maintainable where the alleged debt is genuinely and substantially disputed. The High Court noted that the respondent denied liability for interest and service charges, disputed the authority and authenticity of the relied-upon letter, and asserted repayment of the principal. It also held that the dishonoured cheques and consolidated accounts required proof through evidence and supporting records, which could not be resolved in the Company Court's summary jurisdiction. Because the defence was bona fide and not illusory, the creditor was required to pursue ordinary civil remedies rather than winding up proceedings.

---

---

Issues: Whether the winding up petition was maintainable when the respondent raised a bona fide and substantial dispute regarding liability, interest and service charges.

Analysis: The petition was founded on an alleged intercorporate deposit, dishonoured cheques, and a consolidated statement of accounts. The respondent disputed the very basis of the claim, denied any agreement to pay interest or service charges, questioned the authenticity and authority behind the relied-upon letter, and asserted repayment of the principal. The Court found that the claim to interest and service charges was seriously disputed, that the dishonoured cheques issued in favour of a third party required evidence to establish their connection with the alleged liability, and that the consolidated accounts were not proved by supporting books or confirmations. In such circumstances, the defence could not be characterised as illusory or lacking bona fides, and adjudication would require evidence and cross-examination inappropriate for company winding up proceedings.

Conclusion: The dispute was bona fide and substantial, and the winding up petition was not a proper remedy.

Final Conclusion: The petitioner was left to pursue the claim by a civil action rather than by invoking the winding up jurisdiction of the Company Court.

Ratio Decidendi: Where the alleged debt is genuinely and substantially disputed, and determination of liability would require proof of documents and evidence beyond the summary jurisdiction of the Company Court, a winding up petition is not maintainable and the creditor must seek ordinary civil remedies.

---