Genuine debt dispute bars winding-up proceedings when insolvency is used only as leverage for contested recovery.

A winding-up petition cannot be used as a pressure tactic where the alleged debt is genuinely disputed and the debtor's inability to pay is not established. The court found that the company's dispute had substance, was not a mere cloak for non-payment, and that insolvency proceedings were being used to compel payment of a claim meant to be contested in civil proceedings. Because winding up depends on proof of true inability to satisfy just debts, the petition was held not maintainable on these facts and the refusal to entertain it was upheld.

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Issues: Whether a winding-up petition should be entertained where the alleged debt is genuinely disputed and the proceedings are sought to be used as a pressure tactic for recovery of a contested claim.

Analysis: The dispute put forward by the company was found to have substance and was not a mere cloak for inability to pay its debts. The facts showed that the petitioner did not establish that the company was unable to satisfy the debt, and the use of insolvency proceedings appeared to be directed at compelling payment of a claim intended to be contested in the civil courts. A winding-up proceeding must turn on true inability to pay just debts, and a genuine dispute of debt cannot be converted into a basis for winding up merely to obtain leverage.

Conclusion: The petition was not maintainable on these facts, and the refusal to entertain it was upheld. The appeal was dismissed with costs.

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