M. F. SALDANHA, J. ( 1 ) THE petitioner had presented this petition for winding up of respondent No. 1-company. Briefly stated, it is their contention that they were supplying certain H. DP. E. containers of four sizes to the first respondent-company. It is their case that as per supply made, vide Invoice No. 206 and D. C. Nos. 136 and 137, dated October 28, 1995, an amount of Rs. 85,712. 80 was payable to them. The petitioner's contend that the containers were lifted after proper verification by the respondent-company's staff and transported in their own vehicle on October 28, 1995. Thereafter, there is a long description of what has happened and the petitioner's grievance is that the payment against the consignment was not made despite repeated reminders. According to them, on February 24, 1996, the company sent them a letter, inter alia, stating that there was some defect in the goods and that they have refuted this position by their letter dated March 2, 1996. According to the petitioner, there was also an earlier due of Rs. 10,000 in respect of some supply made on June 12, 1995. Their contention is that this amount was settled by cheque dated april 29, 1997, which was almost two years after the amount was due and they further contend that after repeated reminders, in respect of the payment for the consignment delivered on october 28, 1995, the respondents issued a cheque for Rs. 10,000 on September 25, 1997, towards part payment. This cheque was dishonoured with the bank endorsement stating "insufficient funds". According to the petitioner, they sent a statutory notice dated September 30, 1997, to the respondents to which they gave what the petitioner describes as "a very strange" reply dated October 7, 1997. The two relevant paragraphs of the reply are reproduced below because both the learned advocates have had something to say with regard to the contents of this reply : "we have issued cheque for Rs. 10,000 as advance for the supply of 100 ml. plain bottles. They have not supplied hence we have not honoured the same. Further, they have supplied some printed containers which is not useable. We have rejected and informed by registered post. Now they are playing this drama. Anyhow, please advise your client let them present the cheque under intimation to us. plain bottles. They have not supplied hence we have not honoured the same. Further, they have supplied some printed containers which is not useable. We have rejected and informed by registered post. Now they are playing this drama. Anyhow, please advise your client let them present the cheque under intimation to us. We will honour the cheque and also please advise your client to take back the rejected goods paying our amounts. " ( 2 ) THEREAFTER, the petitioners have presented this petition on November 27, 1997, praying for an order of winding up. Notice was issued to the respondents on January 9, 1998, and the respondents have filed their objections. The contention taken up in defence is briefly that the respondents manufacture and market certain pesticides and it is their case that the containers supplied by the respondents were defective and according to them, they have stated so in their letter to the petitioners dated February 24, 1996, as also in their reply to the notice dated October 7, 1997. In sum and substance, what is contended is that since the goods were defective, the respondents are not liable to pay the amount that is demanded from them and they contend that the petitioners ought to have taken the goods back and that consequently, there is no liability whatsoever that is outstanding from them. ( 3 ) I have heard the learned advocates and after considering their respective submissions and the contentions raised, I record the finding that there neither is a valid nor a convincing defence in this case and that there is sufficient ground to admit the petition. Normally, a court admitting such a petition would have simultaneously issued notice for the advertisement which is something that follows in normal course. It is, however, within the discretion of the court to defer further a step and I exercised that discretion in favour of the respondents in order to test their bona fides. The respondents carried the matter in appeal and the appeal being unsuccessful, the matter has come back to this court for further orders. Mr. It is, however, within the discretion of the court to defer further a step and I exercised that discretion in favour of the respondents in order to test their bona fides. The respondents carried the matter in appeal and the appeal being unsuccessful, the matter has come back to this court for further orders. Mr. Raghavan, learned counsel representing the respondents submitted that even at this stage, he is entitled to convince the court that not there only are no further steps necessary but that the petition should be dismissed and in keeping with his submission, I have heard learned counsel on both sides at considerable length. ( 4 ) IT is the case of the petitioner's learned counsel that the time factor is of some consequence and whereas his contention is that if over a considerable period of time,. e. , more than two years the payment is not forthcoming and if he is able to demonstrate that there has been a history of similar conduct even on an earlier occasion it is a circumstance which goes heavily against the respondents vis-a-vis their capacity to honour their commercial commitments or in other words to meet their debts and liabilities. According" to the petitioner's learned counsel the defects that were pleaded after considerable lapse of time were nothing short of an eye-wash in order to avoid payment and he submits that the petitioners refuted the position immediately on receipt of that letter and that thereafter the respondents not only kept quiet but that they retained the goods with them. Learned counsel relies heavily on the fact that a cheque for Rs. 10,000 was issued against part payment and that even this small cheque came to be dishonoured due to insufficiency of funds. Lastly, his submission is that apart from merely repeating the earlier contention, namely, that the goods are defective and that the respondents are not liable to pay for the same. Even in the reply filed before this court that the respondents have not come forward with any valid material as far as facts are concerned that would justify their being able to resist an order for winding up. ( 5 ) AS against this position, Mr. Even in the reply filed before this court that the respondents have not come forward with any valid material as far as facts are concerned that would justify their being able to resist an order for winding up. ( 5 ) AS against this position, Mr. Raghavan learned counsel who represents the respondents stated that as far as the factual aspect goes, his clients have recorded the fact that the goods were defective in their letter dated February 24, 1996. He has also drawn my attention to the statements made in the reply filed before this court wherein the respondents have contended that the printing was defective and according to them there were certain other defects that would render the containers totally unfit for use by the respondents. Learned counsel submitted that his client's obligation ends when they record these facts and call upon the petitioners to take the goods back and he states that thereafter for one year the petitioner did not take the goods back and that once again when the legal notice was served on the respondents they have reiterated the earlier position and he repeated the submission that if the petitioners have supplied defective material there is absolutely no obligation in law on the part of the respondents to pay for it. With regard to the cheque for Rs. 10,000 which came to be dishonoured, learned counsel contended that this cheque has nothing to do whatsoever with the earlier consignment as it was an advance against certain other material which the petitioners did not supply and, therefore, there was no obligation on the part of the respondents to honour this cheque. ( 6 ) I shall briefly deal with the second aspect of the matter because the respondents contend that it is an issue that is separate and foreign to the main dispute and that the petitioners are wrongly seeking to link it up and support their case through this circumstance. The petitioners have contended that pursuant to repeated requests to the respondents they issued the cheque for Rs. 10,000 against part payment and that the cheque came to be dishonoured. They denied that there were any further transactions between the parties or that there was any further order placed on them. The respondents' contention is that the cheque was issued by way of advance against a further order. 10,000 against part payment and that the cheque came to be dishonoured. They denied that there were any further transactions between the parties or that there was any further order placed on them. The respondents' contention is that the cheque was issued by way of advance against a further order. Had this been the position, the respondents ought to have produced before the court documents in support of their contention that there were further transactions or that there was a further order. Such documents are not forthcoming. Furthermore, it is very significant that the cheque in question came to be dishonoured due to insufficiency of funds. If the cheque had been issued as advance against some further order and the petitioners had failed to honour that commitment then I could have understood a situation whereby the respondents had stopped payment of the cheque after notice to the petitioners and there would have been some documents and some record to support this plea. As the record stands, it is very clear that the contention taken up is not only an afterthought but that it is an impossible attempt to cover up a situation whereby the respondents could not even honour a cheque for Rs. 10,000. The inability to honour the cheque is compounded by the fact that a patently false defence has been taken up by pleading that it related to some subsequent order. What establishes the utter faultiness of the defence is the fact that the respondents have themselves offered to honour the cheque which conclusively indicates that it was a part payment. As matters stand, there can be no doubt about the fact that the petitioners are absolutely justified in contending that the cheque was issued against payments of the outstanding dues and that the same came to be dishonoured. Under these circumstances, I have no hesitation in holding that as far as the defence is concerned, where this aspect of the case goes, it is inherently and totally false. ( 7 ) AS regards the first issue, the contention raised is that the goods in question are supposed to have been defective. Under these circumstances, I have no hesitation in holding that as far as the defence is concerned, where this aspect of the case goes, it is inherently and totally false. ( 7 ) AS regards the first issue, the contention raised is that the goods in question are supposed to have been defective. This is not a stage where all the evidence is required to be examined threadbare and final and conclusive findings are required to be given but on the basis of the material, it is equally necessary for the court to evaluate it for the purposes of arriving at a conclusion as to whether it is prima facie tenable, whether it is plausible and whether the chances of success are fair and reasonable. In this context, learned counsel Mr. Raghavan drew my attention to the principles which a court is required to follow which have been set out in the decision of this court reported in ILR 1990 KAR 1610, wherein the court has drawn a simile between the approach in summary suits. Learned counsel submitted that if a triable issue arises and if the defence is reasonable and fair it would have to be adjudicated in a trial. In such situations, a relief cannot be granted in a winding up proceeding. Learned counsel is right as far as the principle is concerned but what it needs to take into account is that it is equally necessary for a court evaluating the record in a winding up proceeding to find out as to whether the defence is tenable or in other words the defence is such as could reasonably be upheld in a trial. The record before me consists of very little material in so far as admittedly the respondents placed an order for the goods, the petitioners supplied the goods, the respondents took delivery of them in the month of October, 1995. It is not as though the consignment was an abnormally large one and it is not as though the respondents are a very big concern. The petitioners have averred on oath that the respondents examined the goods, checked them and took them in their own transport. It is not as though the consignment was an abnormally large one and it is not as though the respondents are a very big concern. The petitioners have averred on oath that the respondents examined the goods, checked them and took them in their own transport. The receipt of the goods is also not disputed and it is only after the lapse of over four months that there is some cryptic reference in letter dated February 24, 1996, to the effect that there are some defects in the goods. Again, what I need to note is that the petitioners have replied to this letter and refuted the correctness of this complaint and the respondents have accepted that position thereafter. No further steps were taken by them and they have coolly retained the goods at all points of time. I do not dispute the fact that when the statutory notices were sent more than one year later the respondents have once again pleaded the so-called defects. The question is as to whether on the basis of this slender material any court could attach credibility to the defence on these facts and I am constrained to observe that it would be impossible to hold that the respondents have made out even a prima facie defence worthy of even the least credibility. This then is the factual position and having regard to the long lapse of time and the fact that even the cheque given for a meagre amount of Rs, 10,000 was dishonoured and no attempt was made to pay up that amount, it is clear evidence of the fact that the respondents are unable to discharge their debts and that they have given sufficient cause for an action of winding up. ( 8 ) AT the hearing today, learned counsel Mr. Raghavan cited a number of decisions and he took me in detail through the observations of the various courts particularly the Supreme Court and our High Court with regard to the various principles applicable in cases of the present type. I am in respectful agreement with those principles which cull out the well-settled law on the point and there can be no dispute with regard to the same. I am in respectful agreement with those principles which cull out the well-settled law on the point and there can be no dispute with regard to the same. A reference was made to an old decision of this court in [1981] 1 Kar LJ 145 wherein the court even recorded some evidence at the time of the enquiry and in that case came to the conclusion that a triable issue had arisen. To my mind, that decision has no bearing on the facts of the present case. Mr. Raghavan dealt in detail with the division Bench judgment of our High Court in Airwings Pvt. Ltd. v. Viktoria Air Cargo Gmbh AIR1995 Kant 69 , AIR1995 KAR 69 , ILR1994 KAR 2560 , wherein the Division Bench has reiterated the various principles and the procedures which a court must observe in relation to winding up proceedings. In particular, his submission was that an order of winding up could only follow where an insolvency in the true sense of the term is evident. It is true that the courts have adopted various tests and one of the tests that has often been applied is a situation whereby a company wilfully refuses to pay. It is not only a situation in which total bankruptcy has to be pleaded but there could be a small category of cases wherein wilful refusal could also be equated with a situation of commercial insolvency because regardless of the status that is pleaded, if the petitioners are not forthcoming in relation to discharge of a debt then an adverse inference must arise. Mr. Raghavan is right when he points out that the principles which the Supreme Court had laid down in the leading case on the point in Pradeshiya Industrial and investment Corporation of Uttar Pradesh v. North India Petro Chemical Ltd. [1994] 79 Comp cas 835 (SC) still hold good. In support of his submissions, he sought to place reliance on exhibit R-1 which is the balance-sheet of the company for the years 1996 and 1997 and he submitted that a perusal of this balance-sheet would indicate that the company has substantial assets. Exhibit R-1 is the balance-sheet as on March 31, 1997, and there is a general summary but I do find that even though this is a relatively small private limited company with capital and reserves aggregating to about Rs. Exhibit R-1 is the balance-sheet as on March 31, 1997, and there is a general summary but I do find that even though this is a relatively small private limited company with capital and reserves aggregating to about Rs. 30 lakhs the outstandings to the creditors in the two years are to the tune of about Rs. 62 lakhs and about Rs. 51 lakhs. An over view of these figures does not at all indicate a healthy or solvent state of affairs. Mr. Raghavan did emphasise one point whereby he submitted that it is not as though this is a company which is devoid of assets and he pointed out to me that for the two years in question the net current assets were of the order of approximately Rs. 54 lakhs and Rs. 57 lakhs that is not the real income because this document does not indicate anything with regard to the turnover and financial health of the company and to my mind, therefore, not much reliance can be placed on this document. ( 9 ) THE general submission advanced by learned counsel was that in a case of the present type, the court would have to assess as to whether an order of winding up is justified on an over all consideration and learned counsel put forward the familiar example of a situation whereby a disputing creditor may claim winding up of a perfectly healthy company merely because that creditor has not received his money. In other words, he pointed out to me that the courts have been deprecating the use of this machinery for purposes of recovery of debts and that is the reason why whenever a defence for non-payment is pleaded and found to be genuine the court will refuse to wind up the company and direct the creditor to some other legal forum for redressal of its grievance. Again I am wholly in agreement with the well-settled principle that these proceedings cannot be used either directly or indirectly as recovery proceedings. The only very limited aspect which a court would look into is as to whether even if wrongly an outstanding debt has not been discharged, amends have been made prior to the court having recorded a finding in the winding up proceedings. As far as the present case is concerned, Mr. The only very limited aspect which a court would look into is as to whether even if wrongly an outstanding debt has not been discharged, amends have been made prior to the court having recorded a finding in the winding up proceedings. As far as the present case is concerned, Mr. Raghavan further pointed out that the court is required to record a finding as to whether the defence is illusory and sham and the courts have used the expression "moonshine" or in other words, whether it appears to the court that the defence is an afterthought and devoid of merit or whether it is necessary for the court to determine whether the liability comes within the category of disputed or undisputed,. e. , whether there is a genuine and a valid dispute. On facts, I have already examined the position and held that in this case the defence pleaded is totally and completely devoid of any merit or substance. Having regard to this position, I do not see any reason why this court should reconsider the order dated November 5, 1998, whereby the petition was admitted. ( 10 ) ADVERTING here, it is necessary to settle the position in law vis-a-vis the misnomer that whenever a dispute is pleaded a winding up petition must fail. In every such proceeding a defence will always be put up and the liability will be disputed. With a bit of legal ingenuity, a colour and garb is invariably attributed to the defence in order to make it appear very solid and profound. Like the old maxim which required a court to "lift the veil" the court has to examine, sift and evaluate the credibility of the defence and if it is an afterthought, sham or hollow it will have to be discarded. ( 11 ) AT the conclusion of the arguments, the respondents' learned counsel submitted that in order to prove his creditworthiness he is willing to deposit the principal amount in the court and that the court should dismiss the petition thereafter and refer the petitioners to the civil court if they so desire and that if the petitioners succeed before the civil court it is open to them to claim the amount lying in the court. To my mind, it is extremely late in the day for such an offer to be made particularly on the dismal record of the present case. I have referred repeatedly to the time factor, the date of the transactions when the liabilities arose and how much time has elapsed since that particular date and having regard to these facts, I see no reason why at this late point of time such an offer should be accepted particularly when the cause of action has virtually reached a stage of conclusion. Is a court obliged, virtually at the zero hour, to accept such a belated offer ? The answer is an emphatic no, because a party who pleads a false and sham defence, litigates on the merits, loses and then tries to play with the court by making a hopelessly belated offer deserves no indulgence. It is well-settled law that a court will only permit corrective action if it is bona fide,. e. , carried out at the earliest and not the latest point of time. Having regard to this position, it is directed that the petitioners shall advertise in the local edition of the Times of India not earlier than January 8, 1999, and file a copy of the advertisement with the office of this court. The next returnable date in this case shall be February 10, 1999, when the petition to be relisted for further orders.