Bona fide dispute to debt rejected, as acknowledgments and dishonoured cheques supported maintainability of the winding up petition.

A factoring agreement imposed recourse liability on the client if the approved debtor defaulted. The respondent's repeated acknowledgments of liability, requests for more time, and dishonoured cheques supported the creditor's claim. Applying the principle that a bona fide and substantial dispute to the debt can defeat winding up, but an undisputed debt must be paid and winding up cannot be used merely as debt recovery, the Court found the defence neither bona fide nor substantial. The winding up petition was therefore maintainable and was admitted, with a provisional liquidator appointed.

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Issues: Whether the respondent had raised a bona fide and substantial dispute to the debt so as to defeat the winding up petition.

Analysis: The factoring agreement created recourse liability on the client upon default by the approved debtor. The respondent's correspondence repeatedly acknowledged the liability and sought time for payment, and the dishonour of the cheques further supported the creditor's claim. Applying the settled principle that a bona fide disputed debt cannot found a winding up petition, but an undisputed debt must be paid and winding up jurisdiction cannot be used merely as a debt recovery device, the Court found that the respondent's defence was neither bona fide nor substantial.

Conclusion: The debt was not bona fide disputed, and the winding up petition was maintainable; the petition was admitted and a provisional liquidator was appointed.

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