Winding-up petition failed where the alleged debt was genuinely disputed and the defence was not shown to be sham or moonshine.

Winding-up jurisdiction under the Companies Act, 1956 is not available as a substitute for debt recovery where the existence of an admitted debt is genuinely disputed. Disputes about completeness of supplies, shipping documents, required accessories, and product quality meant the alleged liability could not be resolved summarily in winding-up proceedings. On the material presented, the respondent's defence could not be treated at that stage as sham, moonshine, or dishonest, and the liability remained a matter for evidence in the pending civil suit. The petition was dismissed because inability to pay debts and the basis for winding up were not established.

---

---

Issues: Whether the respondent company's defence was a sham or moonshine and whether an admitted and undisputed debt was established so as to justify winding up under the Companies Act, 1956.

Analysis: The petition for winding up required proof of an undisputed debt and the respondent's inability to pay, and the winding-up jurisdiction could not be used as a mere debt-recovery mechanism. The materials showed disputes regarding the completeness of supplies, the accompanying documentation, and the quality of the goods, including whether the required accessories were supplied along with the cables and whether the shipping documents were in order. The Court found that these controversies could not be resolved summarily in winding-up proceedings and that the respondent's defence could not be characterised at this stage as dishonest, sham, or moonshine. The alleged liability therefore remained disputed and required evidence in the pending civil suit.

Conclusion: The petitioner failed to establish that the respondent was unable to pay its debts or that winding up was warranted; the petition was dismissed.

---