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Issues: Whether the petitioner made out a prima facie case for admission of the winding up petition by showing that the respondent-company was unable to pay a debt that was undisputed or not bona fide disputed.
Analysis: A winding up order under section 433(e) of the Companies Act, 1956 is not to be used as a means of enforcing payment of a debt that is genuinely disputed. The creditor must show a definite debt and the company's inability to pay in the commercial sense. Mere non-payment after statutory notice is not enough where the company raises a substantial and bona fide dispute. Here, the respondent relied on a memorandum of understanding and specifically disputed the unit rate and resulting account balance. The materials showed a serious dispute on the very basis of liability, and the claim could not be treated as an admitted debt. In the absence of prima facie proof of commercial insolvency, admission of the winding up petition was not justified.
Conclusion: The petitioner did not establish a prima facie case for admission of the winding up petition, and the petition was liable to be dismissed.
Ratio Decidendi: A winding up petition based on inability to pay debts will be dismissed where the alleged debt is the subject of a bona fide and substantial dispute, and the petitioner fails to show commercial insolvency.
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