Bona fide debt dispute defeats winding up where material facts are suppressed and financial inability is not shown.

A winding up petition for non-payment of debt is not maintainable where the alleged liability is the subject of a bona fide and substantial dispute. The High Court found that the respondent company had raised a genuine defence based on an arbitration award, prior payments, and the petitioners' connection with the settlement group, and that these material facts were not fairly disclosed. It held that the petitioners had not approached the Court with clean hands. The Court also noted that the company was profit-making and that its financial substratum had not been shown to have collapsed, so inability to pay debts was not established. The petitions were therefore dismissed.

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Issues: Whether the winding up petitions were maintainable on the ground of inability to pay debts when the respondent company raised a bona fide dispute regarding liability and the petitioners had not disclosed material facts.

Analysis: The petitions were founded on alleged unpaid deposits, but the respondent company produced a detailed defence based on an arbitration award, prior payments, and the relationship of the petitioners with the group that had participated in the settlement. The Court found that these facts had not been fairly disclosed in the petitions, and that the petitioners had not approached the Court with clean hands. It also found that the respondent company had raised a genuine and bona fide dispute as to the debt. In a winding up proceeding based on inability to pay debts, a disputed debt that is bona fide and substantial is not a proper basis for winding up. The material on record further showed that the company was profit-making and that its financial substratum was not shown to have collapsed.

Conclusion: The winding up petitions were not maintainable and were dismissed.

Ratio Decidendi: A winding up petition for non-payment of debt will fail where the alleged debt is bona fide disputed, material facts are suppressed, and the company's financial inability is not established.

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