Umesh Chandra Banerjee, J. - (1.) The basic requirement of the provisions of section 434 of the Companies Act is the existence of a debt due and payable by the company to the petitioning creditor and in the event the petitioning creditor establishes such a claim even though prima facie, question of the maintainability of the petition under the provisions of the Companies Act for winding up of the company cannot be doubted. At this juncture it is to be noted that this burden lies on the company to satisfy the Court as to the existence of a bona fide dispute in regard to the matter in issue and in the event a debt is bona fide disputed, proper Course would be for the Law Courts not to proceed with the winding up proceedings further and leave be given to the petitioning creditor to file a suit for the adjudication of disputes in the matter in issue. While directing filing of the suit, the Court may, however also, direct furnishing of some securities. Incidentally, it is to be noted however that where a debt is disputed, it is the duty of the Court to go into the question of genuineness or otherwise of the dispute and in the event the Court is primarily satisfied as regards its genuineness and bona fides such a liberty ought always to be given to the petitioning creditor and the Court ought not to embark upon itself to detailed adjudication of the disputes between the parties. Conversely, however, in the event the dispute raised by the company does not seem to be genuine, it is a plain exercise of the judicial power to direct winding up of the company.
(2.) The expression bona fide in common English parlance means. genuine: good faith in Om Prakash Mehta vs. Steel Equipment & Construction Co. Ltd. reported in 1967 (1) Company Law Journal 172, bona fide dispute has been ascribed to mean a dispute based on a substantial ground. The English Courts, however, attributed honesty as an equipment of bona fide (R vs. Roll 7 QBD 575) dispute on substantial ground. Considering, however, of the meaning attributed to the phrase by the English Courts bona fide is thus opposed to fraud, that does not, however, necessarily mean and imply that Law Courts will come to the conclusion that in the event the Court is not satisfied as regards the dispute being termed to be a bona fide dispute. The Court will come, to the conclusion the same is fraudulent and lack of bona fide does not necessarily mean fraudulent but it may lead to fraud. There cannot be such a generalisation as bona fide is opposed to fraud as such some further factors are required to make it a fraud though bona fide is opposed to fraud.
(3.) It is to be noted that a growing practice has developed in this Court to allow the company to pay up the debt by instalments. I refrained myself from dealing with the matter in a greater detail as to the legality of such a practice but considering the socio-economic conditions country the practice seems to be a healthy one for at least an opportunity is given to the company to pay up its debts by instalments and survive rather than wind up its business, the resultant effect of which would be total loss of employment opportunities with all other consequences.;