Winding-up jurisdiction cannot replace debt recovery where liability is disputed and a bona fide defence requires trial.

A winding-up petition is not maintainable where the alleged debt is genuinely disputed and the respondent discloses a plausible bona fide defence requiring evidence. The dispute here concerned an employment-related claim supported by a Form 26-AS entry, but the respondent denied liability, alleged manipulation and overbilling, and raised counterclaims in a pending civil suit. As the controversy turned on contested facts and the debt was not clearly admitted, the company court declined to use winding-up jurisdiction as a recovery mechanism and dismissed the petition, leaving the claimant to establish the claim in civil proceedings.

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Issues: Whether a winding-up petition was maintainable when the alleged debt was disputed and the respondent raised a plausible bona fide defence requiring trial in a civil suit.

Analysis: The petition was founded on an alleged unpaid employment-related amount and a Form 26-AS entry, but the respondent denied liability and asserted that the petitioner had manipulated figures, raised over-billed claims, and caused losses. The dispute involved contested facts, including the correctness of the alleged dues and the effect of the tax deduction entry. Since a civil suit for recovery had already been filed and a counterclaim was pending, the controversy required adjudication by evidence. A winding-up petition cannot be used as a substitute for a recovery action where the debt is not clearly admitted and a bona fide defence is disclosed.

Conclusion: The winding-up petition was not maintainable and was dismissed.

Ratio Decidendi: Where the alleged debt is genuinely disputed and the respondent shows a plausible bona fide defence involving questions of fact, the company court should decline winding-up jurisdiction and leave the claimant to establish the debt in civil proceedings.

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