Winding up on admitted debt: belated quality dispute and temporary financial difficulty were not a bona fide defence.

A winding up petition based on debt is maintainable where the liability is admitted or otherwise established and the company is unable to pay in a commercial sense. A defence will defeat such a petition only if it is bona fide, substantial, and supported by prima facie material. On the facts, the debt was evidenced by the export contract, acceptance of goods, repeated requests for rescheduling, and the company's own acknowledgments. The alleged quality dispute was raised belatedly and was not treated as a genuine defence. Temporary financial difficulty, without a substantial dispute on principal liability, did not prevent winding up proceedings, and the petition was admitted for further steps.

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Issues: Whether the company petition for winding up was maintainable on the ground that the respondent had admitted liability but had failed to pay the debt, and whether the defence based on quality dispute and temporary financial difficulty was a bona fide and substantial defence.

Analysis: The debt was evidenced by the export contract, acceptance of the goods, repeated requests for rescheduling, and the respondent's own acknowledgments of liability. The Court treated the respondent's inability to pay as established in commercial sense, and found that the asserted dispute regarding quality of goods was raised belatedly and lacked bona fides. The principles governing winding up petitions based on debt were applied: winding up is discretionary, a determined debt must be due, and a petition will be defeated only where the defence is bona fide, substantial, and supported by prima facie material. The Court also noted that mere inability to pay at a given time, without a substantial dispute as to the principal liability, does not prevent winding up proceedings.

Conclusion: The winding up petition was maintainable and the respondent's defence was not a bona fide substantial defence; the debt and inability to pay were established, so the petitioner succeeded in having the petition admitted for further proceedings.

Final Conclusion: The Court accepted the petitioner's case that the respondent had admitted and failed to discharge its liability, and directed admission of the winding up petition with publication and notice, leaving the matter pending for further steps.

Ratio Decidendi: A winding up petition based on debt will be entertained where the debt is admitted or otherwise established and the company is unable to pay, unless the company raises a bona fide, substantial, and prima facie sustainable dispute as to liability.

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