Winding up cannot enforce a bona fide disputed debt, and a genuine liability dispute makes the remedy inappropriate.

A winding up petition cannot be used as a means of enforcing payment of a debt that is bona fide disputed. Where liability is seriously contested and deciding the dispute would require detailed examination of correspondence, accounts, and the parties' dealings, the Companies Act remedy is inappropriate as a substitute for a civil suit. If the dispute is genuine on its face, the company cannot be treated as having neglected to pay within the meaning of the provision. The winding up order was therefore not sustainable and was liable to be set aside.

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Issues: Whether an order for winding up could be sustained where the alleged debt was bona fide disputed and the inquiry required a detailed adjudication more appropriate to a civil suit.

Analysis: A winding up petition is not meant to be used as machinery for enforcing payment of a disputed debt. Where liability is seriously contested and determination would require a prolonged examination of correspondence, accounts, and the respective dealings of the parties, the remedy under the Companies Act should not be invoked as a substitute for a suit. If the dispute is genuine on its face, the company cannot be treated as having neglected to pay within the meaning of the section.

Conclusion: The winding up order could not be sustained and was liable to be set aside.

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