Bona fide dispute and inability to pay debt are central to resisting a winding-up petition under company law.

A winding-up petition under the Companies Act, 1956 may proceed where the company fails to pay an admitted debt and its defence is not shown to be bona fide. The asserted cash settlement and adjustment for sub-standard goods was rejected because no receipt, correspondence, or other reliable documentary support was produced, and the ledger entries did not substantiate the claim. A dispute raised without prima facie material was treated as an afterthought, so the company's inability to pay the outstanding amount was prima facie established and further winding-up steps could follow if payment was not made within the time granted.

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Issues: (i) Whether the debt claimed by the petitioner was bona fide disputed so as to defeat a winding-up petition under the Companies Act, 1956. (ii) Whether the respondent-company's failure to pay the admitted outstanding amount established inability to pay its debt and justified winding-up proceedings.

Issue (i): Whether the debt claimed by the petitioner was bona fide disputed so as to defeat a winding-up petition under the Companies Act, 1956.

Analysis: The respondent relied on an alleged cash settlement and adjustment for sub-standard goods, but no supporting receipt, correspondence, or reliable documentary proof was produced. The ledger entries also did not substantiate the alleged settlement, and the defence was treated as an afterthought raised only in reply.

Conclusion: The alleged dispute was not shown to be bona fide, and the defence was not accepted.

Issue (ii): Whether the respondent-company's failure to pay the admitted outstanding amount established inability to pay its debt and justified winding-up proceedings.

Analysis: The material on record showed persistent demands and a legal notice without payment, while the respondent failed to prima facie establish a credible defence. In company winding-up law, relief may be declined only where the debt is bona fide disputed in good faith and the defence is supported by prima facie material.

Conclusion: The respondent-company was found liable to pay the outstanding sum, and its inability to pay the debt was prima facie established.

Final Conclusion: The petitioner succeeded on the issue of debt and disputed liability, and the respondent-company was directed to pay the adjudged amount within the time granted, failing which further winding-up steps would follow.

Ratio Decidendi: A winding-up petition may be maintained where the company fails to pay an undisputed debt, and a defence raised to resist such petition must be bona fide, supported by prima facie material, and likely to succeed in law.

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