JUDGMENT Mahavir Singh, J. - This is an appeal by the petitioners against the order of the Hon'ble Company Judge dismissing their application under Section 433(e) read with Section 434 of the Indian Companies Act, 1956. 2. The respondent firm is engaged in manufacture of autocycles. The petitioner-appellants firm was its distributor firstly for Lucknow and later for the whole of U.P. The case of the appellant was that a sum of Rs. 90,291.12 was due from the respondent company and the same had not been paid in spite of demand by disputing its liability altogether by letter dated 28-12-1977. 3. The respondent company contested the claim. It was alleged that no sum was due to the appellant and that actually it had its claim of about Rs. 2 lacs from the appellant ; it is also alleged that the appellants have taken other legal proceedings for determination of their claim, They filed a suit for accounts and invoked arbitration clause contained therein. It was further alleged that as there was a bona fide dispute between the parties as to the existence of the debt due to the petitioners appellants, the petition was not maintainable. 4. The learned Company Judge held that there was a bona fide dispute about the existence of the debt itself and so the petition by appellant for winding it up for non-payment of such a disputed debt was not maintainable. 5. In appeal it has been contended by the learned counsel for the appellants that the learned Company Judge was wrong in taking the view and that Section 433(e) of the Companies Act is limited by any such consideration. It is contended that if there is a dispute about the existence of a debt, the court must decide that point and if the debt was found due, the petition should be allowed. 6. The relevant part of Section 433 of the Companies Act is as follows : "433. Circumstances in which company may be wounded up by Court-A company may be wound up by the court- (a) to (d) .................. (e) if the company is unable to pay its bebts........... 7. Section 434 specifies as to when the company shall be deemed to be unable to pay its debts. It is as follows : "434. Circumstances in which company may be wounded up by Court-A company may be wound up by the court- (a) to (d) .................. (e) if the company is unable to pay its bebts........... 7. Section 434 specifies as to when the company shall be deemed to be unable to pay its debts. It is as follows : "434. (I) A company shall be deemed to be unable to pay its debts- (a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by measuring it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor : (b) & (c) ................. 8. The learned counsel for the petitioner-appellants contends that this section nowhere excludes the jurisdiction of the Company Judge to determine question of existence of a debt if the same is disputed by the company and that it is a part of the jurisdiction of the Company Judge to decide such a point if it arises on an application moved under this provision. 9. Of course there is no such specific provision in this section which excludes the jurisdiction of the Company Judge to decide such a question but the trend of rulings both here and abroad has been that where there is a bona fide dispute about the existence of a debt the applicant cannot he said to be a creditor for the purpose of Section 433 of the Companies Act for claiming the relief of winding (up) of the company for non-payment of such a claim. 10. We need not refer to the earlier rulings on this point. The Supreme Court in Amalgamated Commercial Traders Pvt Ltd. v Krishna Swami (1965) 35 Com Cas 456 has approved the dictum of Buckley's Company Act where it was laid down that it was a well settled principle that a winding up petition was not a legitimate means to seek to enforce payment of debt which was bona fide disputed by the company. 11. 11. A Division Bench of this Court also recently in Company Appeal No, 1 of 1978 (Messrs Jiwan Builders v U.P. Asbestos Ltd. decided on 29-2-1980) has followed the same. 12. In order, however, to judge whether the dispute is bona fide or not, the court has to see whether the dispute has not been raised merely as a cloak for the company's real inability to pay just debts vide : In re : British India General Insurance Co. Ltd. (AIR 19/1 Bom 102). 13. In Ofu Lynx Ltd. v Simon Carves India Ltd 41 Corn Cas 174 : ( AIR 1970 Cal 418 ) also it was pointed out that merely seeking to raise certain dispute for putting off liability for payment of the debt or creating a kind of defence to the claim would not make the debt a disputed one and disputes which appear to have been created or manufactured for the purpose of creating pleas to cover up the liability for payment of the debt could never be considered to be bona fide and would be of no avail in resisting a winding up petition. It was, therefore, observed that in considering the question whether a dispute with regard to any debt was bona fide or not, the court would, not only consider the nature of the dispute raised but also should consider all the facts and circumstances of the case including the conduct of the parties. 14. In Alfred Crompton v Customs & Excise Commr. (1972) 2 All ER 353, it was held that where the debt is disputed on substantial ground, it could be said to be bona fide dispute for the pupose of such a petition. So the principle laid down in the above case is that merely raising a dispute by a company would not take away the jurisdiction of the Company Judge and that the Court has to see whether the dispute is being raised on substantial ground and not on a frivolous ground. 15. In the present case, the circumstances as brought on record from the two sides clearly show that the dispute is being raised on a substantial ground and has not frivolously been made for the purpose of taking away a jurisdiction of the Company Court. 16. 15. In the present case, the circumstances as brought on record from the two sides clearly show that the dispute is being raised on a substantial ground and has not frivolously been made for the purpose of taking away a jurisdiction of the Company Court. 16. At a meeting held between the representatives of the petitioners' firm and the respondent company on 25-6-1977 at the office of the latter company, vide minutes exhibit-10, it was agreed to by the two sides that a sum of Rs. 56,286.72 was still due from the petitioner-appellant to the respondent company. 17. Of course, the petitioner later on backed out of this agreement by its representative. They contend that this admission was made by there representative without having advantage of their own account books and that on proper accounting a sum of Rs. 71000/- was due from the respondent company on 31st August, 1977. They rely for this upon their own account books which are said to be maintained in the regular course of business. 18. So the question would be whether the accounts maintained by the petitioner company or the accounts maintained by the respondent company are reliable. Both sides claimed to have maintained accounts in the regular course of their business. The claim of the respondent company was accepted by the appellants' representative at one stage. It could not, therefore, be said that the claim made by the respondent company was not based on a substantial ground. The dispute could be resolved only by detailed examination of the account books which could better be decided in a regular suit. 19. The conduct of the petitioner-appellants is also relevant in this connection. They have already filed a suit for accounts in the regular court for the same. It is only afterwards that they filed the present petition giving rise to this appeal. It could not, therefore, be said that it was a bona fide action on their part. If they were really so sure in their case, there was no question for them to have sued for accounts. Hence the petition filed by them could only be said to be to put pressure on the respondent company to accept their claim. Thus the dispute raised by the respondent company about the debt alleged by the petitioner-appellant was based on a substantial ground and therefore a bona fide one. Hence the petition filed by them could only be said to be to put pressure on the respondent company to accept their claim. Thus the dispute raised by the respondent company about the debt alleged by the petitioner-appellant was based on a substantial ground and therefore a bona fide one. Therefore, the proceedings in this case were rightly held to be an abuse of the process of law, and were thus rightly rejected. We are making it clear that any observation made by us be not taken to be observation regarding merits of claim made by the parties. 20. The appeal has, therefore, no force and it is dismissed with costs.