J. K. BISWAS, J. ( 1 ) A winding up petition was filed by one M/s. Shakti Highway Enterprises, the Respondent herein, (hereinafter referred to as 'the creditor'), under sections 433, 434 and 439 of the Companies Act, 1956, (in short ?the Act?), for winding up of M/s. Sayedabad Tea Company Ltd. , the Appellant herein, (hereinafter referred to as 'the company'), on the ground that the company had failed and neglected to pay its debt (principal amount Rs. 2,89,646/- plus interest) to the creditor. ( 2 ) BY an order dated October 7, 1999 a learned Judge of this Court admitted the petition for winding up for a sum of Rs. 2,89,646/- plus interest and granted liberty to the company to pay the dues within a fortnight. It was the further order that in default of payment the creditor would be at liberty to publish advertisement in daily Newspapers for the winding up of the company. ( 3 ) BEING aggrieved, the company has preferred this appeal. By an order dated November 15, 1999 the appeal was admitted and operation of the impugned order was stayed on the condition that the company would furnish security for a sum of Rs. 2,89,646/- by way of Bank guarantee. We are informed that the security was duly furnished. ( 4 ) IN the winding up petition, the creditor made out a case which is to the following effect :- ( 5 ) IT was a distributor of Indian Oil Corporation. On September 16, 1997 it entered into an agreement with the company for supplying on credit basis- H. S. D. , M. oil, lubricants, etc. for the tea garden of the company. The price of products supplied upto march 31, 1998 was Rs. 10,39,775. 80p and the said amount was duly paid in full by the company. During the period from April 30, 1998 to September 21, 1998 it supplied products worth Rs. 11,15,676/ -. Out of that the company paid Rs. 8,26,030/- leaving an unpaid balance of Rs. 2,89,646/ -. By letters dated September 3 and 26, 1998 it demanded the payment from the company. The Manager of the company by a letter dated October 5, 1998 confirmed the dues. As no payment was made, the creditor wrote another letter dated October 21, 1998. Out of that the company paid Rs. 8,26,030/- leaving an unpaid balance of Rs. 2,89,646/ -. By letters dated September 3 and 26, 1998 it demanded the payment from the company. The Manager of the company by a letter dated October 5, 1998 confirmed the dues. As no payment was made, the creditor wrote another letter dated October 21, 1998. Finally it served a statutory notice on the company on April 9, 1999 and in reply to the statutory notice the company raised fictitious and frivolous pleas to avoid payment and illegally made a counter claim. The statements of accounts annexed to the company's reply to statutory notice were full of mistakes and if the mistakes were rectified, then there would remain no difference between the statements. In spite of statutory notice of demand the company had failed and neglected to pay the creditor's dues. The company was a habitual defaulter in making payment of outstanding dues and thereby it became commercially insolvent. Accordingly, it was unable to pay its debts to the petitioning creditor; and, therefore, it should be wound up. ( 6 ) THE company contested the winding up petition by filing an opposition. In its opposition the company stated that some time after commencement of dealings and transactions, the creditor started supplying adulterated and spurious products. By a letter dated August 27, 1998 it had called upon the creditor to take back spurious, mixed and adulterated products worth Rs. 2,59,556/- mentioned in the six bills of the creditors. From its audited accounts for the years 1997-98 and 1998-99 it appeared that while the creditor had submitted total bills for Rs. 18,73,895. 80p, it had received payment to the extent of Rs. 19,07,006. 40p which led to an over payment of Rs. 33,210. 60p. The creditor did not disclose any bill and annexed copies of challans, which were disputed and/or never received by the company. The company by its letter dated October 6, 1998 replied to creditor's letter dated September 26, 1998. The letter dated October 5, 1998 stated to be conformation letter by the company and as relied upon by the creditor, was a fabricated document and the garden Manager's signature appearing thereon was a forged one. The statements of accounts annexed to its reply to the statutory notice were correct. The letter dated October 5, 1998 stated to be conformation letter by the company and as relied upon by the creditor, was a fabricated document and the garden Manager's signature appearing thereon was a forged one. The statements of accounts annexed to its reply to the statutory notice were correct. The company was not unable to pay its debts to any of its creditors, nor was it commercially insolvent, as alleged. ( 7 ) BY filing a reply, the creditor stated that company's letter dated August 27, 1998 had not been served on it and the signature of one Ram Singh appearing thereon on behalf of the creditor was fabricated. The company had never made excess payment and that the creditor had not supplied adulterated products. The letter of the company dated October 6, 1998 had also not been served and the creditor's seal as also the signature of one Ram Singh appearing thereon were fabricated. The company had sought intervention of 'north Bengal Dealers' Association to resolve the dispute. The said association after thorough investigation had opined that the claim of the creditor for a sum of Rs. 2,89,646/- was legitimate. The association by its letters dated December 18, 1998 and January 7, 1999 directed all suppliers not to supply any product to the company even against cheques. ( 8 ) BY a supplementary affidavit date July 19, 1999 the company stated that it had sent to the creditor a letter dated September 7, 1998 under registered post with acknowledgement due. Copies of the said letter and a letter dated July 7, 1999 stated to be written by the company to the postal department regarding non-receipt of the acknowledgement card, were annexed to the said supplementary affidavit. By a supplementary reply the creditor denied the receipt of the said letter and also disputed the genuineness thereof. ( 9 ) AS noted herein earlier, the learned Company Judge, by the impugned order admitted the winding up petition subject to certain conditions as indicated herein earlier. By a supplementary reply the creditor denied the receipt of the said letter and also disputed the genuineness thereof. ( 9 ) AS noted herein earlier, the learned Company Judge, by the impugned order admitted the winding up petition subject to certain conditions as indicated herein earlier. ( 10 ) IN the impugned order, the learned Judge held that he was not satisfied that the two letters dated August 27, 1998 and October 6, 1998 of the company had at all been served on the creditor and that for the company's failure to make the acknowledgement card available he was unable to rely upon the company's registered letter dated September 7, 1998 addressed to the creditor. It was further held that the counter claim of the company in its reply to creditor's statutory notice was afterthought and without any basis whatsoever and that without making any objection the company had received the materials supplied by the creditor. The learned Company Judge further held that the claim of the Company that the creditor had supplied the products to the company's tea garden was baseless. ( 11 ) THE two letters dated August 27, 1998 and October 6, 1998 of the company were held to have not been served on the creditor for the reasons that the creditor in its affidavit-in-reply denied receipt thereof and disputed the genuineness of the marks of receipt appearing thereon. The letter of the company dated September 7, 1998 was not taken into consideration for the reasons that the company did not mention about it in its affidavit-in-opposition, and wrote letter to the Post-Master of the concerned post office wherefrom it was registered instead of writing to the Post-Master General for supplying information about delivery of the registered letter addressed to the creditor and that the company could not make the acknowledgement card available before the Court. The counter claim raised by the company was held to be afterthought and without any basis whatsoever for the reasons that in its earlier letters dated August 27, 1998; September 7, 1998 and October 6, 1998 the company had not included such counter claim and that it made such counter claim only in its reply to the creditor's statutory notice of demand. ( 12 ) THE case of the company that the products supplied by the creditor were mixed, spurious and adulterated was apparently turned down by the learned Company Judge on the basis of the letter of the creditor dated August 11, 1998 wherein it was mentioned that once products were received and taken away from the pump it would be assumed that quality and quantity were perfect and the creditor would not remain responsible in any way. The case of the company that the creditor had supplied the products at its garden was also not accepted by the learned Company Judge on the ground that such claim was made without any particulars. The failure on the part of the company to reply to two letters dated December 18, 1998 and January 7, 1999 of the association also persuaded the learned company Judge to turn down the case of the company. Lack of particulars in the company's affidavit-in-opposition about the point of time of its knowledge that the materials were spurious, was also noticed by the learned Company Judge. ( 13 ) MR. Lahiri appearing for the appellant company submitted at the first instance that having regard to the position of law and the facts and circumstances of the case, the learned Company Judge was wrong in admitting the creditor's winding up petition. He had extensively taken us through the pleadings of the parties and the documents relied on by the parties in support of their respective cases. He submitted that the materials on record would go to show that the company raised a bona fide dispute about the genuineness of creditors claim; and that the counter claim made by the company was neither afterthought nor baseless, as would be evident from the audited accounts of the company. ( 14 ) MR. Lahiri further submitted, as the creditor had not produced the bills, the forum was not appropriate for adjudicating the disputed questions, which had arisen. As the association was a stranger, therefore, no adverse inference could be drawn for not replying to its letters. In this connection, Mr. Lahiri had placed reliance on the Apex Court decisions reported in (1972) 42 Comp. Cas. 125 (SC) (Madhusudan Gordhandas and Co. v. Madhu Wollen Industries Pvt. Ltd.), and (1994) 79 Comp. Cas. 835 (SC) (Pradeshiya Industrial and Investment Corporation of Uttar Pradesh v. North India Petro Chemical Ltd. and Anr ). In this connection, Mr. Lahiri had placed reliance on the Apex Court decisions reported in (1972) 42 Comp. Cas. 125 (SC) (Madhusudan Gordhandas and Co. v. Madhu Wollen Industries Pvt. Ltd.), and (1994) 79 Comp. Cas. 835 (SC) (Pradeshiya Industrial and Investment Corporation of Uttar Pradesh v. North India Petro Chemical Ltd. and Anr ). ( 15 ) APPEARING for the respondent creditor Mr. Utpal Bose learned Advocate disputed the submissions so made by Mr. Lahiri. He submitted that the company's contention that bills were not produced before the Court was not correct, as it would be evident form the winding up petition itself that the bills were annexed thereto. The company's contention that it chose not to reply to the two letters written by the association since the association was a stranger was also not correct as the company on its own had approached the association in December 1998, even before the winding up petition was filed in May, 1999. The company's defence regarding quality of the products supplied was not a bona fide defence, as in the reply to the statutory notice the company had not mentioned about its earlier letters written to the creditor so as to question the quality of products. It was further submitted by Mr. Bose that the plea regarding the quality raised for the first time by the company in its affidavit-in-opposition would not constitute a bona fide defence, and that in any event the winding up petition was at the admission stage only and the learned Judge having exercised discretion in favour of admission, the findings, unless patently erroneous, were not open to interference by the appellate Court. ( 16 ) IN support of his contention that a plea not taken in the reply to the statutory notice by taken for the first time in affidavit filed in Court does not constitute a bona fide dispute, Mr. Bose has relied on the decisions reported in (1985) 57 Comp. Cas. 200 (A. P.) (In re: Reechem Pvt. Ltd.); (1982) 52 Comp. Cas. 479 (Cal) (In re: Wastinghouse Sexby Farmer Ltd.); and (1978) 48 Comp. Cas. Bose has relied on the decisions reported in (1985) 57 Comp. Cas. 200 (A. P.) (In re: Reechem Pvt. Ltd.); (1982) 52 Comp. Cas. 479 (Cal) (In re: Wastinghouse Sexby Farmer Ltd.); and (1978) 48 Comp. Cas. 378 (Bom) (In re: United Western Bank Ltd.) ( 17 ) THE Apex Court of our country held in Madhusudan Gobordhandas's case that while dealing with a petition for winding up by a creditor the principles on which the Court acts are first that the defence of the company is in good faith and one of substance, and secondly, the defence is likely to succeed in point of law, and, thirdly, the company adduces prima facie proof of the facts on which the defence depends. Again while dealing with the scope of section 433 (e) of the Act the Supreme Court held ( in the case of : Pradeshiya Industrial and Investment Corporation of Uttar Pradesh v. North India Petro Chemical Ltd. and Anr. , (1994) 79 Comp. Cas. 835 SC) that an order under clause (e) of section 433 was discretionary, and it was beyond dispute that the machinery for winding up would not be allowed to be utilized by a creditor merely as a means for realising his/its debts due from a company. ( 18 ) SECTION 433 of the Act mentions certain circumstances in which a company may be wound up by the Court and one of those circumstances as mentioned in clause (e) thereof is that the company is unable to pay its debts. Therefore, if a company is unable to pay its debts it may be wound up by the Court. Section 434 of the Act specifies certain situations when a company shall be deemed to be unable to pay its debts. Clause (a) of sub-section 1 of said section 434, inter alia, provides that if a creditor to whom the company is indebted, serves a notice demanding payment of the debt and the company neglects to pay the sum within three weeks, then the company shall be deemed to be unable to pay its debts. ( 19 ) POSITION of law is crystallized as to what amounts to negligence to pay on the part of the company for the purpose of section 434 (1) (a) of the Act. ( 19 ) POSITION of law is crystallized as to what amounts to negligence to pay on the part of the company for the purpose of section 434 (1) (a) of the Act. When the company in spite of demand by the creditor chooses not to pay a debt without reasonable cause, it will amount to negligence on the part of the company within the meaning of the said provision of law. When a debt is bona fide disputed by the company, there is no negligence to pay. Therefore, before drawing the presumption under section 434 (1) (a) of the Act that a company is deemed to be unable to pay its debt and accordingly may be wound up in terms of section 433 (e), what is required to be ascertained is whether the company's refusal to pay the debt to a creditor, who had served a demand notice, was supported by reasonable cause; or was because of a bona fide dispute raised by the company regarding the creditor's entitlement to the debt. ( 20 ) KEEPING in mind the provisions of law and the settled principles laid down by the Apex Court of our country as briefly discussed hereinbefore, in our view, it cannot be said that in the facts and circumstances of the case the learned Company Judge has rightly exercised his discretion in favour of admission of the winding up petition. We hold so for the reasons given hereinafter. ( 21 ) THE case of the company that the petroleum products were supplied by the creditor at the company's tea garden was rejected by the learned Company Judge on the ground that the claim was not supported by any particulars. With due respect, we are unable to accept this finding of the learned Company Judge. It is apparent from the agreement dated September 16, 1997 that the creditor was to supply the petroleum products on credit basis for the company's tea garden only. The challans and letters annexed to the creditor's petition also showed that the creditor supplied the petroleum products to the company's tea garden by the creditor's own vehicles (tankers ). It is apparent from the agreement dated September 16, 1997 that the creditor was to supply the petroleum products on credit basis for the company's tea garden only. The challans and letters annexed to the creditor's petition also showed that the creditor supplied the petroleum products to the company's tea garden by the creditor's own vehicles (tankers ). ( 22 ) BY relying on the creditor's letter dated August 11, 1998 the learned Company Judge appears to have held that once the petroleum products were taken away from the creditor's pump, there was no scope to dispute the quality and thereof by the company. The contents of the said letter dated August 11, 1998, however, do not justify the findings recorded by the learned Company Judge. The supplies, in respect of which the dispute arose between the parties, were connected with the six bills dated June 24, 1998; July 18, 1998; July 24, 1998; August 6, 1998; August 11, 1998; and August 20, 1998. It appears from the letter dated August 11, 1998 that the creditor was writing the same to the company's Managing Director regarding the procedures to check quality of petroleum products to be supplied by the creditor in future; and the letter was written as a follow up action of an earlier discussion held between the parties on August 7, 1998. It was mentioned in the said letter that regarding quality of products to be supplied to the tea garden, on the company's being dissatisfied, the company would be entitled to return the vehicle (tanker) without unloading the product. In any event, in the instant case substantial portions of the disputed supplies had been made by August 11, 1998. Thus the learned company Judge was not right in holding that because of the stipulations mentioned in the said letter dated August 11, 1998 there was no scope to dispute the quality. The stipulations to which the learned Company Judge referred, were clearly not applicable to the disputed supplies which had been made not at or from the pump but to the company's tea garden. The stipulations to which the learned Company Judge referred, were clearly not applicable to the disputed supplies which had been made not at or from the pump but to the company's tea garden. ( 23 ) THE company's two letters dated August 27, 1998 and October 6, 1998 by which the company allegedly returned the six disputed bills and asked the creditor to take back the materials on the ground that the products supplied were adulterated, were not considered by the learned Company Judge on the ground that those were not at all served on the creditor. The learned Company Judge has drawn the conclusion that the two letters were not served on the creditor because the creditor in its reply denied receipt thereof and alleged that creditor's seal appearing on them was not genuine and signature of one Ram Singh showing receipt of said letters on behalf of the creditor were irrelevant as the creditor had no employee by the said name. We think, on the facts, the conclusion of the learned Company Judge that said letters were never served on the creditor was not based on any irrefutable evidence. The receipts produced by the company were sufficient prima facie proof of service of the letters in question. ( 24 ) THE company's letter dated September 7, 1998 which was sent under registered post with acknowledgement due from the company's head office at Calcutta and whereby the creditor was told that failure to take back the disputed materials by the creditor would not fasten any liability on the company, was not considered by the learned Company Judge mainly on the ground that as proof of service thereof on the creditor the company failed to make the acknowledgement card available before the Court. With due respect, the learned Judge was not right here too. The fact that the said letter had been sent under registered post with acknowledgement due is beyond any dispute. The company produced before the learned Company Judge the postal receipt showing that a postal article had been sent to the creditor by registered post with acknowledgement due and that the address recorded on the receipt was the creditor's correct postal address. The creditor had denied the receipt of company's letter dated September 7, 1998. The creditor had, however, not said that it received some other postal articles from the company under registered post with acknowledgement due. The creditor had denied the receipt of company's letter dated September 7, 1998. The creditor had, however, not said that it received some other postal articles from the company under registered post with acknowledgement due. The company produced a letter dated July 7, 1999 written to the Post Master of the concerned post office for supplying information about delivery of the company's said registered letter. The company stated that the acknowledgement card was not received back from the postal authority. The learned Judge and brushed aside the company's letter to the Post Master on the ground that it should have been written to the Post Master General. It has remained unclear to us as to why the letter was required to be written to the Post Master General and not to the Post Master of the concerned post office. For the simple reason that the creditor denied receipt of said registered letter and the company failed to produce the acknowledgement card, in our view, it cannot be said with certainty that the said letter was not received by the creditor. On the contrary it should be held that the postal receipt and the letter to the postal authority were enough prima facie proof adduced by the company of the facts of writing the said letter dated September 7, 1998 and service thereof on the creditor. ( 25 ) IN the proceeding before the learned company Judge for defending an order of winding up against it, the company was required to adduce only prima facie proof of the facts on which its defence depended. The company's defence mainly was that the supply made by the creditor had created no obligation on the part of the company to make payment as the supplied petroleum products were spurious, mixed and adulterated and as such, not used. The question was whether this defence was taken by the company for the first time in its affidavit-in-opposition to the winding up petition or prior thereto. Mr. Bose has argued that such a defence was taken for the first time in the affidavit filed in Court, and, as such, it could not be considered to be a bona fide defence. He cited the decisions as mentioned before in support of his argument. Mr. Bose has argued that such a defence was taken for the first time in the affidavit filed in Court, and, as such, it could not be considered to be a bona fide defence. He cited the decisions as mentioned before in support of his argument. If the company's said letters dated August 27, 1998, September 7, 1998 and October 6, 1998 are taken into consideration, then it can be said that the company had raised the dispute about quality standard of the products long before the filing of the winding up petition. If the contents of the letters are believed, then company's defence in support of refusal to make the payment cannot be described as not bona fide. In our view, in the facts and circumstances of the case it cannot be said that the company did not adduce prima facie proof of the facts on which its defence was based, because the letters in question cannot be disbelieved without further tests. ( 26 ) IT appears that the learned company Judge had completely overlooked one document annexed by the creditor to the winding up petition. It was the letter dated October 5, 1998 stated to be written to the creditor by the company's Manager of the garden. The creditor made out a case that by the said letter the company had confirmed and accepted its debt of Rs. 2,89,646/- to the creditor on account of supply of petroleum products related to the disputed bills. The company in its opposition, besides denying the issuance of the said letter, challenged the genuineness of the said letter by stating that it had been fabricated and forged by the creditor for the purpose of the winding up petition. In reply the creditor simply denied that the said letter dated October 5, 1998 was a forged one. The allegations and counter allegations made by the parties regarding this document were serious in nature. If the company's version was correct, then it would have led to a finding that the creditor filed the petition dishonestly and with improper motive. On the contrary, if the creditor's version would have emerged to be the correct one, then the company besides facing winding up order would have faced other consequences as well. If the company's version was correct, then it would have led to a finding that the creditor filed the petition dishonestly and with improper motive. On the contrary, if the creditor's version would have emerged to be the correct one, then the company besides facing winding up order would have faced other consequences as well. The gravity of the dispute was such that, in the absence of to the other evidence, only on affidavit evidence in the nature of oath versus oath, it was not at all safe to draw a just conclusion on such disputed fact. In our view, there was no scope to ignore this aspect while dealing with the petition presented by the creditor, particularly having regard to the facts that the Court was exercising a discretionary power and that the case of one of the parties could be found to be false only after a full-scale trial in a civil suit. ( 27 ) THE contents of the association's letters dated December 18, 1998 and January 7, 1999 read with the creditor's letters and particularly letter dated August 11, 1998 prima facie prove one fact that the company was disputing its liability on account of the products, related to the disputed bills, supplied by the creditor. ( 28 ) THE learned Company Judge rejected the company's defence of a counter claim by holding that such claim was afterthought and without any basis. The learned Company Judge also concluded that before replying to the statutory notice of demand the company had not made such counter claim in any of its earlier letters i. e. letters dated August 27, 1998, September 7, 1998; and October 6, 1998. With great respect, we are unable to agree with the learned Company Judge. Simply because the company in its earlier letters had not made any counter claim, it cannot be concluded that the company's counter claim made in its reply to the statutory notice was afterthought. In its reply dated April 19, 1999 (reply to statutory notice) the company stated that as per its audit report dated December 4, 1998 (copy whereof was annexed to the reply) the creditor had received over payment of Rs. 33,110. 60p. In reply the creditor simply denied the fact of over payment. In its reply dated April 19, 1999 (reply to statutory notice) the company stated that as per its audit report dated December 4, 1998 (copy whereof was annexed to the reply) the creditor had received over payment of Rs. 33,110. 60p. In reply the creditor simply denied the fact of over payment. In those circumstances it could not be said that there was no prima facie basis and/or proof produced by the company in support of its counter claim which also was one of the company's defences. ( 29 ) IN the aforestated facts and circumstances, in our view, it cannot be said that the company took the defence for the first time in affidavit filed in Court so the defence of the company was not in good faith. The defence on the fact of it was one of substance. On the facts of the case, it also cannot be said that the company failed to adduce prima facie proofs of the facts on which its defence depended. In view of the claims and counter claims made by the parties, it also cannot be said, at this stage, that the company's defence is not likely to succeed in point of law. The nature of disputes raised by the Company in the instant case are such that for admitting the winding up petition the Court has to settle the alleged debt with serious doubts in mind. In our view, the discretionary power should not be exercised in such a case. The disputes can be adjudicated only by holding trial in a regular Civil Court. ( 30 ) BEFORE we part with this judgment, we think it just to deal with one contention raised by Mr. Bose. He contended that discretion having been exercised by the learned Judge in favour of admission of the winding up petition, at such stage, in the absence of any patent error, appeal Court should not interfere. ( 31 ) WE are unable to accept Mr. Bose's contention. The appeal Court's power to interfere with such an order cannot be restricted to the formula of ?patent error'' only for the simple reason that in an appeal the appellant has the right to challenge the impugned decision both on facts and in law, unless specifically restricted by Statutory provision. As for the instant case, the order is, however, patently erroneous. As for the instant case, the order is, however, patently erroneous. The learned Company Judge applied total wrong tests to ascertain whether the company's defence was bona fide or not. The Company was required to adduce only prima facie proof of the facts on which its defence depended and not irrefutable proof. The learned Company Judge declined to accept proof of defence adduced by the company as they did not emerge irrefutable. An order admitting a winding up petition, being fraught with serious consequences, as far as the company is concerned, does not wear a protective shield of the shape as visualized by Mr. Bose. ( 32 ) FOR the reason recorded hereinabove we do not think the respondent creditor's petition for winding up merited admission. Accordingly the impugned order is set aside. The present appeal is allowed. However, this order will not prevent the creditor from pursuing its remedies, if any, before the appropriate regular Civil Court, in accordance with law. In the facts and circumstances of the case there will be no order as to costs. The Registrar, Original Side is directed to release within a month the Bank Guarantee furnished by the company. T. Chatterjee, J.-I agree. Stay of this Judgment is prayed for by the learned counsel for the respondent. We do not find any reason to grant such stay. Accordingly, the prayer for stay is refused. Appeal allowed