Winding-Up Petition Can’t Be Used If Bona Fide Payment Disputes Pending

The Karnataka High Court, in the case of M/s Uttam Industrial Engineering Ltd vs M/s Shree Basaveshwar Sugars Ltd, has held that a winding-up petition has serious ramifications on the financial standing of a company and cannot be used in cases where there is a bona fide dispute regarding the amount owed by one party to the other and in such cases the company court should relegate the matter either to the civil court or arbitral tribunal.

In this case, Uttam Industrial Ltd entered into a contract with Basaveshwar Sugars Ltd to provide machinery and equipment for a sugar plant.

Article referred: http://www.livelaw.in/remedy-winding-petition-cant-relied-upon-bona-fide-payment-disputes-karnataka-hc/

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