Bona fide dispute over debt defeats winding up where the liability is not shown as undisputed.

A winding up petition based on an alleged debt was not maintainable where the record showed a bona fide dispute as to liability. The claim arose from a loan transaction with part-payment already made, and a later settlement fixed a reduced amount subject to return of the respondent-company's properties held by the petitioner. Because that settlement was not refuted and the material indicated a genuine controversy over the amount payable, the debt could not be treated as undisputed. The petition was therefore rejected on the ground that the alleged liability was not established as an unquestioned debt.

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Issues: Whether the winding up petition under sections 433 and 434 of the Companies Act, 1956 was maintainable in view of a bona fide dispute regarding the debt claimed from the respondent-company.

Analysis: The claim arose from a loan transaction in which part-payment had been made by the respondent-company. The record also showed a subsequent settlement fixing a reduced amount subject to return of the respondent-company's properties lying with the petitioner. That settlement was not refuted. On these facts, the claim could not be treated as an undisputed debt, and the material on record showed a genuine controversy as to the amount payable.

Conclusion: The Court held that the respondent-company had raised a bona fide dispute to the claim, and the winding up petition was not maintainable.

Final Conclusion: The petition for winding up was rejected as the alleged debt was not shown to be an undisputed liability.

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