Bona Fide Dispute: winding up petition adjourned where counterclaim raises triable issues on affidavit material.

Whether a winding up petition should be admitted turned on whether the petitioning creditor's debt was indisputable or met by a bona fide disputed defence and counter-claim. The HC applied the established test that admission-stage scrutiny requires only a prima facie assessment and that a defendant showing facts from which a defence may be established at trial is entitled to resist summary disposal. The company's counter-claim, supported by delivery records and affidavits, raised triable issues on the affidavit material; the receiving order was therefore unsustainable and the petition was adjourned pending suit resolution.

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Issues: (i) Whether the winding up petition was properly admitted by the Company Court or whether the debt claimed by the petitioning creditor was a bona fide disputed debt such that the winding up petition should be adjourned pending disposal of the suit between the parties.

Analysis: The question turns on whether the company's defence and counter-claim, based primarily on alleged non-supply and claimed damages, disclose facts which, on affidavit material, permit an inference that a defence may be established at trial. The legal framework comprises the distinction between a prima facie finding and a final indisputable debt at the receiving stage of a winding up petition; the established test that a defendant who shows facts from which it may be inferred that a defence could be made at trial is entitled to resist summary disposal; the prohibition on Company Courts calling for security at the admission stage; and the exercise of inherent jurisdiction to stay or restrain parallel proceedings when appropriate. The pleadings and affidavits show admitted outstanding bills but also an asserted counter-claim for substantial non-supply damages supported by delivery orders, challans and supplementary affidavits. The documentary gaps and oral nature of some arrangements make outcome at trial uncertain; on affidavit material alone the defence cannot be declared sham or wholly devoid of reasonable ground. The admission-stage finding must determine whether the debt is indisputable between the parties; where a bona fide dispute is shown the Company Court should not direct advertisements or proceed to equitable execution pending adjudication of the suit.

Conclusion: The defence of the company is bona fide in the sense that, on the affidavit material, it cannot be said that the company's counter-claim is inevitably doomed; the receiving order admitting the winding up petition is not sustainable. The appeal is allowed and the winding up petition is adjourned until disposal of the suit (the company's claim and the petitioning creditor's counter-claim).

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