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2017 (6) TMI 303 - HC - Companies LawWinding up petition - respondent is unable to pay its debts - Held that:- It is held that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bonafide disputed debt. If there is no dispute as to the company's liability, the solvency of the company might not constitute a stand alone ground for setting aside a notice under section 434(1)(a), meaning thereby, if a debt is undisputedly owing, then it has to be paid. If the company refuses to pay on no genuine and substantial grounds, it should not be able to avoid the statutory demand. The law should be allowed to proceed and if demand is not met and an application for liquidation is filed under section 439 in reliance of the presumption under section 434(1)(a) that the company is unable to pay it debts, the law should take its own course and the company of course will have an opportunity on the liquidation application to rebut that presumption. In view thereof, in this case the defence of the respondent is totally spurious, speculative, illusory or misconceived and moonshine and not bonafide dispute on specific ground. The respondent is not able to avoid statutory demand by raising any specific dispute and thus deserves to face consequence of winding up on the ground that the respondent is unable to pay its debts. A perusal of the record clearly indicates that the respondent is unable to pay its debts and deserves to be wound up.
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