A winding up petition is not a legitimate means of seeking to enforce payment of debt which is bona fide disputed.

1. This is a petition under Sec.439 read with Sec.433 and Sec.434 of the Companies Act, 1956 (for short "the Act" ). Brief facts : The respondent-company had been purchasing steel ingots and flats of various specifications from the petitioner. A running account was maintained.

2. A sum of Rs.2,38,910 became due from the respondent which was not paid after service of statutory notice. The petitioner filed C. P. No.166 of 1983, for winding up the respondent-company for non-payment of the debt due. The petition was disposed of by the learned company judge with the following observations : "the parties have entered into a compromise. In view of the same, learned counsel for the petitioner prays that this petition may be dismissed as withdrawn. I order accordingly. It is further prayed that the whole of the amount compromised has not been paid so far, so the petitioner may be allowed permission to file a fresh petition if the amount is not paid according to the compromise. The prayer is allowed and the petition is dismissed with permission to file a fresh petition in case the compromise falls through. "

3. The respondent-company paid a sum of Rs.35,000 in August, 1985, and a sum of Rs.10,000 by cheque dated July 13, 1985. All the payments made by the respondent were duly credited in its accounts and after accounting for these payments, a sum of Rs.2,25,886 is due from the respondent. The petitioner also filed a statement of accounts of the respondent. The petitioner claimed interest at the rate of 18 per cent per annum with effect from April 1, 1986. Thus, the total amount inclusive of interest comes to Rs.3,09,636 which is payable by the respondent.

4. The respondent controverted the plea of the petitioner and pleaded that C. P. No.166 of 1983 was disposed of after a settlement was arrived at between the parties and according to the settlement, Rs.2,70,300 stood paid out of the total amount payable which comes to Rs.2,38,795.50 and thus the respondent company is liable to pay Rs.68,495.50. It was further pleaded that the petitioner company supplied some material which was found defective and was accepted as scrap. It was also pleaded that the petitioner company is liable to pay Rs.23,527.25 to the sister concern of the respondent-company, namely, M/s. Jindal Alloy Cast Pvt. Ltd.

5. It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of debt which is bona fide disputed. If the debt is bona fide disputed, there cannot be neglect to pay within the meaning of Sec.433 (1) (a) of the Act. The principles on which the court acts are : (1) that the defence of the company is in good faith and one of substance ; (2) the defence is likely to succeed in point of law, and (3) the company produces prime facie proof of the facts on which the defence depends. The petitioner has led prima facie proof that the amount claimed in the petition is due from the respondent. The statement of accounts appended as annexure P-3 to the petition vouchsafed the assertion made in the petition. The correctness of the statement of accounts, which is part and parcel of the petition, is not doubted in the written statement filed by the respondent. The petitioner served statutory notice. The respondent sent a reply to it. The demand made through the statutory notice was not disputed, but the respondent-company suggested that the petitioner may allow it time to make payment in easy terms as it was facing some financial difficulties. The defence which is now sought to be taken up appears to be an afterthought The respondent-company would not have hesitated in informing the petitioner company that the amount demanded is not due and the payments now alleged in the written statement were not alluded to in the reply to the statutory notice. As observed earlier, the petitioner will not be entitled to an order of winding up if the debt is bona fide disputed and the defence is a substantial one and prima facie proof is