Disputed intra-group debt cannot support winding-up jurisdiction when the company raises a bona fide defence and remains commercially solvent.

A winding-up petition was held not maintainable where the alleged debt arose from intra-group family settlement transactions and arbitration proceedings, and the liability remained disputed. The court treated the pending awards and challenge proceedings as showing that the claim was not an undisputed admitted debt suitable for winding-up jurisdiction. It also noted that the company was commercially solvent and a going concern, and the defence was bona fide rather than sham or mala fide. The claim therefore had to be adjudicated before the proper forum, and could not justify admission or advertisement of the petition.

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Issues: Whether a winding-up petition under sections 433 and 434 of the Companies Act, 1956 was maintainable where the alleged debt was disputed, arose out of intra-group family settlement and arbitration proceedings, and the company raised a bona fide defence.

Analysis: The dispute related to pre-settlement inter se group transactions between closely connected family-controlled companies. The record showed that the accounts and liabilities of the group companies were the subject of a family arrangement and reference to arbitration, with awards having been made and challenge proceedings pending. The claimed amounts were not shown to be an undisputed admitted debt capable of being enforced through winding-up jurisdiction. The company's financial position also showed that it was commercially solvent and a going concern. In these circumstances, the defence could not be characterised as sham or mala fide, and the claim required adjudication before the appropriate forum.

Conclusion: The winding-up petition was not maintainable and the claim could not be the basis for admission or advertisement.

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