Winding-up on admitted debt: belated breach of warranty and goods rejection defence failed to show a substantial dispute.

An admitted debt supported by balance confirmation and contemporaneous correspondence will justify admission of winding-up proceedings unless the company raises a bona fide, substantial and credible dispute. A delayed plea of breach of warranty and alleged rejection of goods was found insufficient, because the alleged non-conformity was raised late and did not displace the acknowledged liability. The Court noted that even an assumed breach of warranty would ordinarily sound in diminution of price or damages, not repudiation of the contract. On the material before it, the dispute was not substantial enough to require the petitioner to pursue a civil suit, and the winding-up petition was admitted.

---

---

Issues: Whether the winding-up petition should be admitted in the face of the respondent's plea of breach of warranty and alleged rejection of goods, and whether the balance confirmation and surrounding correspondence established a prima facie debt justifying relief.

Analysis: The petition rested on a confirmed outstanding balance and correspondence showing acknowledgement of liability. The respondent sought to resist the petition by invoking section 12 of the Sale of Goods Act, 1930 and asserting that the goods were not of the contracted grade, but the alleged rejection was raised after a considerable delay. In winding-up jurisdiction, a bona fide and substantial dispute can defeat the petition, but a defence that is late, weak, or lacking in credibility does not do so. A breach of warranty, even if assumed, would not entitle the buyer to repudiate the contract; the remedy would ordinarily lie in diminution of price or damages. On the material before the Court, the balance confirmation and contemporaneous record outweighed the belated defence, and the dispute was not of such substance as to require relegating the petitioner to a civil suit.

Conclusion: The defence was not accepted as a bona fide substantial dispute, and the winding-up petition was admitted with directions for deposit of the quantified amount.

Final Conclusion: The petitioner obtained admission of the winding-up proceedings on the footing of an acknowledged debt, while the respondent was left to pursue any substantive defence in appropriate civil proceedings concerning the disputed balance.

Ratio Decidendi: In winding-up proceedings, an admitted debt supported by contemporaneous confirmation will prevail unless the company raises a bona fide, substantial, and credible defence; a delayed plea of breach of warranty or rejection of goods is insufficient to defeat admission.

---