Bona fide dispute in winding-up: withholding admitted debt without a real defence can justify advertisement of the petition.

A winding-up petition may be advertised where a company, after statutory demand, withholds an admitted contractual debt without showing a genuine dispute or reasonable excuse. The court applied Sections 433 and 434 of the Companies Act, 1956 and held that a mere refusal to pay is insufficient; the defence must disclose a real and substantial dispute. On the correspondence and conduct, the delay in completion was attributable to the company, the deductions from bills were not supported by a bona fide basis, and no unresolved dispute or arbitration issue justified non-payment. The defence was treated as moonshine, and the petition was found fit for advertisement.

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Issues: Whether the respondent-company had raised a bona fide dispute or reasonable excuse for non-payment so as to defeat the winding-up petition and whether the company petition should be advertised under the Companies (Court) Rules.

Analysis: The statutory scheme under Sections 433 and 434 of the Companies Act, 1956 requires the court to see whether the debt is genuinely disputed or whether the company is commercially unable to pay its debts. A mere refusal to pay after service of statutory notice is not enough by itself, but a defence must disclose a real and substantial dispute. On the correspondence and conduct of the parties, the delay in completion was found attributable to the respondent-company because the civil works necessary for execution were not completed and handed over within time. The respondent-company did not establish any bona fide basis for the deductions made from the bills, and no real unresolved dispute was shown to justify non-payment or to require arbitration.

Conclusion: The respondent-company failed to show a bona fide defence or reasonable excuse for withholding the admitted dues, and the company petition was held fit for advertisement.

Ratio Decidendi: Where a company, after statutory demand, withholds payment of an admitted contractual debt without establishing a bona fide dispute or reasonable excuse, the court may treat the defence as moonshine and direct advertisement of the winding-up petition.

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