Bona Fide Debt Dispute Bars Winding Up Where liability is contested and interest remains under civil adjudication.

A winding-up petition is maintainable only where the company owes a definite debt and is unable to pay it; a bona fide dispute supported by a substantial defence prevents use of winding up as a debt-enforcement remedy. Here, the alleged liability was genuinely disputed, with substantial payments already made, settlements reached with other creditors, and a large deposit in the connected civil suit. The real controversy concerned pendente lite interest pending adjudication in that suit. On these facts, the debt was not an undisputed liability warranting winding up, so the petition was not maintainable and its dismissal was upheld.

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Issues: Whether the company petition for winding up was maintainable when the alleged debt was said to be genuinely disputed, particularly on the question of interest.

Analysis: A winding-up order under section 433(e) of the Companies Act, 1956 lies only where there is a definite debt and the company is unable to pay it. A bona fide dispute supported by a substantial defence disentitles the creditor from using winding up as a debt-enforcement device. On the facts, the company had made substantial payments, had settled with other creditors, had deposited a large amount in the connected suit, and the real controversy related to pendente lite interest pending adjudication in the civil suit. In these circumstances, the alleged liability was not an undisputed debt warranting winding up.

Conclusion: The winding-up petition was not maintainable and was rightly dismissed; the appeal failed.

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