Commercial insolvency and unpaid decretal debt justified winding up where the company failed to rebut inability to pay liabilities.

An admitted and decreed debt remained unpaid despite demand, and the company failed to produce credible material showing present financial capacity or a genuine reconstruction plan to meet liabilities. On those facts, the court treated non-payment of the admitted liability as prima facie evidence of commercial insolvency and held that mere availability of execution did not bar winding up. The company's ability to meet current liabilities, not the existence of a decree-execution remedy, was the relevant test. The winding up petition was therefore maintainable and the company was ordered to be wound up.

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Issues: Whether the respondent company was unable to pay its debts so as to justify winding up under the Companies Act, 1956, and whether the availability of execution of the decree or the plea of reconstruction could defeat the winding up petition.

Analysis: The debt in favour of the petitioners stood admitted and had been reduced to a final decree. The company did not pay the decretal amount despite demand, and no convincing material was placed to show present financial ability or any concrete reconstruction that would enable discharge of liabilities. The court treated non-payment of an admitted debt, coupled with the absence of a credible rebuttal, as prima facie evidence of inability to pay. It further held that the mere availability of execution was not a sufficient ground to refuse winding up, and that the company had to be judged on commercial solvency and its ability to meet current liabilities. The objections of the other creditor and the absence of objection from workmen did not alter the conclusion that the company was commercially insolvent.

Conclusion: The company was held to be unable to pay its debts, and the winding up petition was maintainable and justified.

Final Conclusion: The respondent company was ordered to be wound up, with the parties left to bear their own costs.

Ratio Decidendi: A company may be wound up for inability to pay debts where an admitted and decreed liability remains unpaid and the company fails to rebut the presumption of commercial insolvency by showing a real capacity to meet its current liabilities.

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