Winding-up jurisdiction cannot be used to recover a bona fide disputed debt absent proof of commercial insolvency.

A winding-up petition is not maintainable where the alleged debt is bona fide disputed and the claimant fails to show that the company is unable to pay its debts. The petition here rested on asserted default under sub-concession agreements and alleged abandonment of premises, but the respondent disputed liability and said the business had closed because the premises were commercially unviable. As no reconciliation details or supporting bills were furnished, the debt was not shown to be admitted or undisputed. Bare assertions of financial weakness also did not establish commercial insolvency, so the winding-up jurisdiction could not be used as a debt-recovery tool or coercive measure.

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Issues: Whether a winding-up petition was maintainable on the basis of the alleged outstanding dues, and whether the respondent company was shown to be unable to pay its debts so as to attract the winding-up jurisdiction.

Analysis: The petition was founded on alleged default under sub-concession agreements and on the assertion that the respondent had abandoned the premises and owed the claimed amount. The respondent disputed the debt, asserted that the business was closed after the premises proved commercially unviable, and maintained that reconciliation details and supporting bills were never furnished. The materials disclosed a genuine dispute regarding liability, and the petitioning party did not establish that the claim was an admitted and undisputed debt. On the question of inability to pay, there was only a bare assertion of financial weakness, while no satisfactory material was produced to show commercial insolvency or the existence of unpaid creditors. In such circumstances, the winding-up jurisdiction could not be used as a substitute for a debt-recovery proceeding or as a means of coercion in respect of a bona fide disputed claim.

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

Ratio Decidendi: A winding-up petition will not lie where the debt is bona fide disputed and the company's inability to pay is not established by material showing commercial insolvency; the company court cannot be used as a debt-collection mechanism.

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