Bona fide dispute in contractual debt defence prevents winding up petition where alternate civil remedy exists, leading to dismissal.

When a winding up petition rests on alleged unpaid advances and contractual non performance, the presence of substantive disputes over existence of debt, novation, change of site and claimed variations negates an undisputed debt and indicates availability of alternate civil remedies; where the respondent promptly contested the statutory notice and asserted factual and legal defences, winding up jurisdiction is inappropriate and the petition is not maintainable, with the petition dismissed.

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Issues: Whether the winding up petition under Sections 433 and 434 of the Companies Act, 1956 is maintainable where the respondent raises a substantive dispute regarding the debt and performance of the contract, including novation and change of site, and where relief may be sought by ordinary civil proceedings.

Analysis: The petition concerns alleged unpaid advances and failure to supply equipment under a contract which underwent changes including extension of time, alleged novation and change of site from Jammu to Delhi. The respondent promptly replied to the statutory notice and asserted facts and contentions denying an acknowledged debt, relied on continued readiness to perform subject to approvals and variations, and pointed to delivery in respect of another project. These factual disputes and contested pleas as to contractual terms, site change and alleged variations bear directly on liability and are not confined to a simple admitted debt. Winding up jurisdiction requires either an undisputed debt or absence of bona fide dispute; where substantial contested factual and legal issues exist and an alternate remedy by civil suit is available, the matter is not amenable to winding up proceedings.

Conclusion: The respondent has raised a bona fide dispute and the winding up petition under Sections 433 and 434 of the Companies Act, 1956 is not maintainable; the petition is dismissed.

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