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Petition for winding up under Companies Act, 1956 due to failure of loan repayment and interest by respondent company. Analysis: The petitioner approached the High Court seeking winding up of the respondent company under the Companies Act, 1956, due to non-repayment of a loan and interest. The petitioner advanced a loan of Rs. 5 lakhs to the respondent company, which was duly acknowledged through a cheque encashed by the company. The company defaulted in paying interest from September 1997, leading the petitioner to send statutory notices demanding payment. The respondent company disputed the debt, raising various contentions including misjoinder of parties, lack of documentary proof, and the absence of authorization for the loan transaction. The respondent also argued that the winding up petition was filed with an oblique motive to pressurize payment and that the company was financially sound and profitable, hence not unable to pay its debts. The court considered the submissions and referred to legal precedents to determine the validity of the winding up petition. Citing the Supreme Court's rulings, the court emphasized that a debt must be determined and the company must genuinely be unable to pay for a winding up order to be justified. The court highlighted that if a debt is bona fide disputed with substantial grounds, the court should not order winding up. In this case, the court found that the debt was genuinely disputed, as the terms and conditions of the loan were not adequately documented, and the respondent company's director, who had assisted in the transaction, was absconding. Additionally, the lack of evidence regarding interest payments further supported the conclusion that the debt was disputed in good faith. Therefore, the court held that the winding up petition was not maintainable as a legitimate means to enforce payment of a disputed debt. In conclusion, the court dismissed the petition for winding up, finding no merit in the petitioner's claims. The judgment was made without any order as to costs, emphasizing the importance of genuine disputes in matters of debt repayment and winding up petitions under the Companies Act, 1956.
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