Bona fide dispute bars winding up where debt is contested and facts require full trial, not summary affidavits.

A winding up petition for inability to pay debts requires a clear, ascertained and undisputed liability. Where the company raises a bona fide dispute supported by material suggesting repayment, settlement, forgery, lack of authority, or disputed banking transactions, the controversy cannot be resolved in summary company court proceedings on affidavits alone. Issues such as repayment, genuineness of settlement, authority to sign, and alleged document manipulation require regular trial and evidence. In the absence of proof of insolvency or loss of substratum, a bona fide dispute negatives neglect to pay and the petition was not fit for admission or advertisement.

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Issues: Whether the winding up petition under Sections 433 and 434 of the Companies Act, 1956 should be admitted and advertised when the alleged debt was seriously disputed and the defence raised issues requiring detailed evidence.

Analysis: For a winding up order on the ground of inability to pay debts, the debt must be clear, ascertained and undisputed. Where the company raises a bona fide defence supported by materials suggesting repayment, settlement, forgery, lack of authority and disputed bank transactions, the court cannot resolve such controversies in summary proceedings on affidavits alone. Questions whether the loan was repaid, whether the settlement was genuine, whether the persons signing for the petitioner were authorised, and whether the documents were forged or manipulated were all found to be issues requiring a regular trial and not suitable for company winding up jurisdiction. The petition also failed to show insolvency or loss of substratum, and a bona fide dispute negatives neglect to pay within Section 433(e).

Conclusion: The winding up petition was not fit to be admitted or advertised and was liable to be dismissed.

Ratio Decidendi: A winding up petition will not be entertained where the alleged debt is bona fide disputed and the controversy turns on facts requiring evidence, because company court jurisdiction cannot be used as a summary debt recovery process.

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