Debt must not be disputed for a winding-up petition to be successful.

S. DASARADHARAMA REDDY, J.

( 1 ) THIS is a petition filed for winding up of the respondent-company on the ground that it is unable to pay the debt of Rs. 1,27,339. 79. According to the petitioner, it supplied white duplex board to the respondent-company by lorry on 10/10/1992, and the lorry freight was paid by the respondent-company. The petitioner-company raised its bill No. TLC/fb/1/92-93, dated 23/10/1992, for a sum of Rs. 1,27,339. 79. Either at the time of receiving the goods or after receipt of the goods, no objection was raised about the quality of the goods. The respondent having received the goods did not pay the amount and the petitioner issued statutory notice, exhibit A-8, under section 434 of the Companies Act. To this the respondent replied that the entire material was shown to be not up to the mark as per the quality control check. Subsequently, the respondent paid Rs. 7,500 towards freight charges only. Thereupon, the petitioner filed this company petition.

( 2 ) IN the counter, the respondent, inter alia, contends that the quality of the goods is defective, that it never placed any order on the petitioner for the stocks and that the petitioner has not sent samples along with the material. However, on the assurance of the representative of the petitioner, namely, Mr. Gangooli, the respondent cleared the freight bill for Rs. 7,500. As the goods were defective, it is not liable to pay any amount.

( 3 ) THE petitioner examined one Mr. Arora, P. W.-1 and got marked fifteen documents. The respondent got examined D. Samadder, factory manager, R. W.-1 and another officer in charge and signing authority, R. W.-2 and got marked six documents.

( 4 ) FROM the documents it is seen that immediately after receipt of the goods on 10/10/1992, the respondent-company sent letter, exhibit A-12, dated 10/11/1992, to the petitioner informing it that the goods sent by it have been rejected by their quality control department as old and not up to the mark of the standard quality. Receipt of this letter, however, has been denied by the petitioner, according to which it received only a xerox copy of that alleged letter along with exhibit A-11. Even assuming that this letter has not been received, the fact remains that the respondent has denied its liability on 24/02/1993, and reiterated the same in its letter dated nil (exhibit A-15), which is reply to exhibit A-8, received by the petitioner on 12/04/1993. The questions whether the respondent has placed a written or oral order and whether Mr. Gangooli is the representative of the petitioner or respondent are not relevant. The stand of the respondent is that the goods are defective and not up to the specification. D. Nagarjuna Babu, learned counsel for the respondent, contended that the respondent is denying its liability to pay the amount and that it has raised the dispute as early as on 10/11/1992, or at any rate on 24/02/1993, and, hence, the petitioner cannot seek winding up of the company.

( 5 ) SRI Koka Satyanarayana Rao, learned counsel for the petitioner, relied on Paramount Enterprises v. Reechem P. Ltd. [1985] 57 Comp Cas 200 (AP) where it was held that in determining whether the debt is disputed bona fide, the conduct of the parties, the character of the pleas and the circumstances have to be taken into account. In that case, a bill was sent to the respondent-company and in spite of statutory notice being sent, the company did not make the payment. There was no response to the statutory notice except seeking clarification regarding the payment of Rs. 3,000. Further no evidence was let in by the respondent-company therein to substantiate its solvency or readiness to meet the claim. On these facts, this court held that there is no bona fide dispute regarding the debt. In the instant case, the respondent-company denied its liability even prior to the statutory notice. Exhibit B-2, certificate given by the Central Excise Department shows that amounts of Rs. 1,47,63,213, Rs. 65,04

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