Bona fide debt dispute in winding-up proceedings: manufactured objections do not bar relief where liability and inability to pay are shown.

A winding-up petition is maintainable only if the creditor shows an existing debt and the company's inability to pay it; a genuinely disputed debt cannot be used to force payment through winding-up proceedings. Mere denial is not enough, but a dispute must be bona fide and real. On the stated facts, the company's objections were treated as manufactured, while correspondence indicated admission of liability and the financial material showed continuing losses and commercial inability to meet debts.

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Issues: Whether the company was liable to be wound up on the ground that it was unable to pay its debts, and whether the alleged debt was genuinely disputed so as to bar winding-up proceedings.

Analysis: A winding-up order under the governing provisions can be made only where the creditor establishes an existing debt and the company's inability to pay it. The statutory presumption arising from non-payment after notice does not apply where the debt is bona fide disputed. A petition for winding up cannot be used as a means of enforcing payment of a genuinely disputed claim, but a mere denial by the company is insufficient if the dispute is not real. On the facts, the company's alleged objections were found to be a manufactured dispute, especially in view of the letters virtually admitting liability and the financial material showing continuing losses and commercial inability to meet debts.

Conclusion: The debt was not shown to be the subject of a bona fide dispute, the company was commercially unable to pay its debts, and the winding-up petition was maintainable.

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