Bona fide debt dispute bars winding-up proceedings where the company raises a substantial defence and counter-claim.

A winding-up petition is not a substitute for ordinary civil adjudication where the alleged debt is genuinely disputed on substantial grounds. If the company does not admit liability and produces material showing a bona fide defence, the Company Court should not undertake a summary determination, especially where resolving the dispute would require detailed evidence. The existence of a counter-claim and contested questions of fact reinforced that the debt was not indisputable. In such circumstances, the creditor must pursue the claim in the appropriate forum, and winding-up proceedings are not maintainable where the defence is not shown to be sham, mala fide, or moonshine.

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Issues: Whether a winding-up petition is maintainable when the alleged debt is bona fide disputed and the company raises a substantial defence with counter-claim.

Analysis: A winding-up petition is not to be used as a substitute for ordinary civil adjudication. Where the company does not admit liability and raises a defence supported by materials suggesting disputed questions of fact, the Company Court should not embark upon a summary determination. If the defence is bona fide, substantial, and not shown to be sham, mala fide, or moonshine, the creditor must pursue the claim in the appropriate forum. The existence of a counter-claim and the need for detailed evidence reinforced that the debt was not indisputable and that the dispute could not be resolved in winding-up proceedings.

Conclusion: The petition for winding up was rightly refused, as the debt was bona fide disputed and the company had a substantial defence.

Ratio Decidendi: A winding-up petition will not be admitted where the debt is genuinely disputed on substantial grounds and the company raises a bona fide defence, since such proceedings are not meant for resolving contested claims requiring evidence.

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