Bona fide debt dispute and arbitration clause do not bar winding-up where liability is not genuinely contested.

A winding-up petition is maintainable where the alleged debt is not shown to be bona fide disputed on substantial grounds. The court examined the correspondence and found that the company had acknowledged receipt of the transformer and had repeatedly sought time for payment, while its plea of further payments was unsubstantiated; the denial of liability was therefore not bona fide. The existence of an arbitration clause does not oust the company court's statutory power to entertain a winding-up petition, because an arbitrator cannot order winding up. On these principles, the petition was admitted.

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Issues: (i) Whether the respondent-company had raised a bona fide and substantial dispute as to the debt so as to defeat a winding-up petition on the ground of inability to pay debts; (ii) whether the existence of an arbitration clause ousted the company court's jurisdiction to entertain the winding-up petition.

Issue (i): Whether the respondent-company had raised a bona fide and substantial dispute as to the debt so as to defeat a winding-up petition on the ground of inability to pay debts

Analysis: A winding-up petition cannot be used as a means to enforce payment of a debt that is bona fide disputed. The Court examined whether the defence was substantial or merely a moonshine defence. The exchange of e-mails showed that the respondent-company acknowledged receipt of the transformer and repeatedly sought time for payment, and the meeting minutes and correspondence did not establish that the liability was genuinely disputed. The respondent-company also failed to substantiate the plea of further payments beyond the admitted sum. On the materials placed, the denial of liability was held to be not bona fide.

Conclusion: The debt was not shown to be bona fide disputed, and the petitioner was entitled to maintain the winding-up petition.

Issue (ii): Whether the existence of an arbitration clause ousted the company court's jurisdiction to entertain the winding-up petition

Analysis: The Court applied the principle that an arbitrator has no jurisdiction to order winding up of a company, since that power vests only in the company court under the Companies Act. The existence of an arbitration clause may govern contractual disputes, but it does not bar a winding-up petition where the statutory requirements are otherwise made out.

Conclusion: The arbitration clause did not bar the winding-up petition.

Final Conclusion: The company petition was admitted on the footing that the respondent-company had not established a bona fide dispute and the arbitration clause did not oust the court's winding-up jurisdiction.

Ratio Decidendi: A winding-up petition is maintainable where the alleged debt is not shown to be bona fide disputed on substantial grounds, and an arbitration clause does not exclude the company court's statutory power to wind up a company.

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