Inconsistent defence to winding-up petition rejected where written documents, tax records, and public policy barred the contrary claim.

A defence to a winding-up petition was rejected as illusory where the alleged alternative arrangement conflicted with the lease documents, contemporaneous records, and the party's own accounting and tax position. The court applied Sections 91 and 92 of the Indian Evidence Act, holding that written instruments cannot be contradicted by inconsistent oral assertions. It also stated that a litigant cannot adopt one stand for tax and accounting purposes and a contrary stand before the court, and that a case founded on concealment or illegality cannot be assisted by the court. The defence was therefore treated as moonshine and legally untenable, and the winding-up order was sustained.

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Issues: Whether the defence set up by the appellant against the winding-up petition was bona fide and legally sustainable, or a moonshine defence barred by the written documents and public policy considerations.

Analysis: The alleged alternative arrangement, by which amounts reflected in the lease documentation were claimed to be a payment to the appellant's director, was found to be inconsistent with the contemporaneous documents and the appellant's own accounting and tax position. The Court held that a litigant cannot be permitted to take one stand for tax and accounting purposes and a contrary stand before the Court. It further held that a case founded on concealment or illegality cannot be assisted by the Court, and that Sections 91 and 92 of the Indian Evidence Act, 1872 prevent evidence contradicting written instruments.

Conclusion: The defence was rejected as illusory, moonshine, and legally untenable, and the winding-up order was sustained.

Final Conclusion: The appeal failed and the admission of the winding-up petition was upheld.

Ratio Decidendi: A party cannot resist a claim by relying on a defence that is inconsistent with its own written documents and contemporaneous conduct, especially where the asserted case depends on illegality or tax evasion.

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