Winding up for inability to pay debts where statutory notice is refused and the debt remains unrebutted.

A company may be wound up for inability to pay its debts where the petitioning creditor proves the debt, statutory notice is served and returned marked "refused," and the company enters no appearance to dispute the claim. Refusal of the notice gives rise to a presumption of service, and unrebutted material on record supports a finding that the debt is lawfully due and remains unpaid. On the facts stated, the petition was maintainable, and the company was ordered to be wound up with an official liquidator appointed to take charge of its assets, properties and records.

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Issues: Whether the respondent-company was liable to be wound up for inability to pay its debts under the Companies Act, 1956.

Analysis: The petitioning creditor established supply of goods and the debt due therefrom. Statutory notice under section 434(1)(a) was served at the registered office and returned with the endorsement "refused", giving rise to a presumption of service. No appearance was entered to dispute the claim, and the material on record remained unrebutted. On these facts, the Court found that the debt was lawfully due and that the company had failed to discharge its liability, showing inability to pay its debts.

Conclusion: The winding up petition was maintainable and was allowed. The respondent-company was ordered to be wound up and the official liquidator was appointed to take charge of its assets, properties and records.

Ratio Decidendi: Where a company fails to pay an admitted or unrebutted debt after statutory notice, and service of the notice is evidenced by refusal, the company may be ordered to be wound up for inability to pay its debts.

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