Winding up cannot enforce a bona fide disputed debt when the same liability is already under arbitration.

A winding up petition was held not maintainable where the underlying monetary claim was bona fide disputed on substantial grounds. The respondent denied liability for the second construction bill, asserted prior payment, and relied on correspondence showing an existing dispute. The court applied the principle that winding up is a discretionary remedy and cannot be used to enforce payment of an uncertain debt. The petitioner had already invoked arbitration under section 11(6) of the Arbitration and Conciliation Act, 1996, so arbitral proceedings had commenced under section 21. Because the liability itself remained unresolved and was already before arbitration, the claim could not be treated as a determined debt for winding up purposes.

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Issues: Whether a company petition seeking winding up was maintainable when the underlying monetary claim was genuinely disputed and arbitration proceedings had already been commenced in respect of the same claim.

Analysis: The petitioner's claim arose from a disputed second bill for alleged additional construction. The respondent denied liability, asserted that the contractual amount had already been paid, and relied on prior notice exchange showing an existing dispute. The petitioner had itself invoked arbitration by seeking appointment of an arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996, which meant that arbitral proceedings had commenced under section 21 of that Act. The governing principle applied was that winding up is a discretionary remedy and will not be used to enforce payment of a debt that is bona fide disputed on substantial grounds. Where the liability itself is unresolved and is already the subject of arbitration, the debt cannot be treated as a definite or determined debt for winding up purposes.

Conclusion: The winding up petition was not maintainable and was liable to be dismissed.

Final Conclusion: A creditor cannot invoke company winding up jurisdiction to press for payment of a disputed claim that is already pending adjudication in arbitration, especially where the defence is bona fide and substantial.

Ratio Decidendi: Winding up will not be ordered on a claim that is bona fide disputed on substantial grounds, and the pendency or commencement of arbitration concerning the same liability reinforces the absence of a determined debt.

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