Inability to pay debts supports winding up where the debt is admitted and the company is effectively defunct.

Where a company admits the debt in its correspondence and does not seriously dispute liability, the statutory ground of inability to pay debts may be established. The court also treated prolonged closure of the business and the death of the directors as showing that it was impracticable to keep the company alive in the register. On those facts, winding up was ordered and the official liquidator was appointed to proceed under the Companies (Court) Rules.

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Issues: Whether the company was liable to be wound up for inability to pay its debts.

Analysis: The debt claimed by the petitioner was admitted in the company's correspondence and was not seriously disputed in the counter affidavit. The record also showed that the company had remained closed for many years and that its directors had died, making it impracticable to keep the company alive in the register of companies. In these circumstances, the statutory ground for winding up on inability to pay debts was made out.

Conclusion: The issue was answered in favour of the petitioner and against the company.

Final Conclusion: The company was ordered to be wound up and the official liquidator was appointed to take further steps in accordance with the Companies (Court) Rules.

Ratio Decidendi: Where the debt is admitted and the company is defunct, the court may order winding up on the ground of inability to pay debts.

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