Winding up petitions require a clear debt default; a bona fide triable dispute and cross-transactions can block summary liquidation.

A winding up petition is not suitable where the company raises a substantial, bona fide, and triable dispute supported by prima facie material. Although unpaid invoices and non-response to statutory notice may ordinarily indicate inability to pay debts, that presumption was displaced by affidavit evidence of cross-transactions, alleged mutual adjustment of liabilities, and a claimed common commercial arrangement between the groups. The court treated the defence as real enough to require trial, held that summary liquidation could not be used to resolve contested commercial claims, and left equitable set-off for determination in civil proceedings.

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Issues: Whether the winding up petitions were maintainable in the face of a substantial defence based on cross-transactions, alleged set-off, and the claim that the companies formed a single business entity under common control.

Analysis: The applications were founded on unpaid invoices and non-reply to statutory notice, which ordinarily raise a presumption of inability to pay debts. However, the respondent placed material on affidavit showing earlier and later transactions between the groups, alleged adjustment of mutual liabilities, and circumstances suggesting that the Concast companies and the Ram Swarup companies were being treated in practice as interlinked commercial entities. The governing principle in winding up matters is that the company must be shown to be in a defenceless position; if a bona fide and substantial dispute or triable issue exists, the petition should not be used as a substitute for a civil suit. Applying that standard, the defence was found to be substantial enough to require trial and not summary liquidation. The plea of equitable set-off was left for scrutiny at trial, but the materials already disclosed were sufficient to show a real dispute.

Conclusion: The winding up petitions were not admitted and the petitioning creditor was relegated to a civil remedy.

Final Conclusion: The dispute was held to be unsuitable for summary winding up jurisdiction because the respondent raised a substantial and bona fide defence supported by prima facie material.

Ratio Decidendi: A winding up petition will not be admitted where the company raises a substantial, bona fide, and triable dispute showing a real defence to the debt; such proceedings cannot be used to resolve contested commercial claims better suited to a civil forum.

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