Winding-up petition admitted where admitted debt lacked a bona fide defence and settlement disputes did not justify non-payment.

The Delhi High Court held that a winding-up petition could be admitted where the debt was admitted, the company failed to show a bona fide or substantial defence, and its conduct showed unwillingness to pay the liability. The respondent's balance-sheet admission, failure to honour repeated settlement opportunities, and rejection of unilateral payment appropriation showed that the debt was not genuinely disputed. The Court further held that a creditor could not be compelled to accept a reduced one-time settlement amount or a particular mode of appropriation. The petition was admitted, a provisional liquidator was appointed, and the order was kept in abeyance for six weeks to permit payment.

---

---

Issues: Whether the winding-up petition was maintainable on the basis of the admitted debt and whether the respondent had a bona fide defence or could be treated as unwilling and unable to pay the admitted liability.

Analysis: The admitted liability in the respondent's balance sheet, the failure to honour repeated opportunities for settlement, and the rejection of the respondent's unilateral adjustment of payments showed that the debt was not genuinely disputed. The Court held that in company winding-up proceedings the creditor is not a mere recovery claimant, but where the debt is admitted and the company's defence is neither substantial nor in good faith, the petition can be admitted. The Court also held that it could not dictate the creditor's one-time settlement policy or require acceptance of a reduced amount or a particular appropriation of payments. The respondent's continued resistance to paying the determined settlement amount demonstrated unwillingness to pay the admitted liability.

Conclusion: The respondent had no bona fide defence and was unwilling and therefore unable to pay the admitted debt; the winding-up petition was admitted and a provisional liquidator was appointed, with the order kept in abeyance for six weeks to permit payment.

Ratio Decidendi: In a winding-up petition, if the debt is admitted and the company fails to show a bona fide, substantial defence or a real willingness to pay, the Court may admit the petition and appoint a provisional liquidator; disputes over one-time settlement terms do not bar such relief.

---