Bona fide debt dispute bars winding-up where liability and quantification require fuller examination under tenancy law.

A winding-up petition based on alleged rent and municipal surcharge was rejected because the company raised a bona fide and substantial dispute over both liability and quantification. The company court does not act as a debt-recovery forum and will not resolve contested claims in summary proceedings where entitlement, adjustment, and the impact of the special tenancy regime require fuller examination. The defence was found to be neither sham nor illusory, and the refusal to wind up the company was upheld as a proper exercise of discretion.

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Issues: Whether the company petition for winding up was maintainable in view of a bona fide and substantial dispute regarding the alleged debt.

Analysis: The petition was founded on an alleged liability for rent and municipal surcharge, but the company disputed both the existence and the quantification of the claim. In winding-up proceedings, the company court does not adjudicate a disputed claim as a debt-recovery forum; it only examines whether the debt is bona fide disputed on substantial grounds. Where the liability depends upon questions of entitlement, adjustment, and the effect of the special tenancy regime governing landlord-tenant disputes, the matter is not fit for summary determination in company jurisdiction. The Court found that the defence raised was not sham or illusory and that the learned company judge had properly exercised discretion in declining to wind up the company.

Conclusion: The dispute was held to be bona fide and substantial, and the winding-up petition was not maintainable.

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