Inability to pay debt after statutory notice justified winding up where admitted dues and unpaid cheques remained unresolved.

A company may be treated as unable to pay its debt where an admitted debt remains unpaid after service of statutory notice and the company fails to raise any effective objection. Here, the petition was based on unpaid cheques issued towards the price of goods supplied; despite notice under section 434 of the Companies Act, 1956, the respondent-company neither paid nor filed any effective objection after publication of the winding-up petition. In the absence of any stay order or subsequent payment, the court treated the company as unable to pay its debt and allowed the winding-up petition.

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Issues: Whether the respondent-company was liable to be wound up on the ground that it had failed to pay the petitioner's admitted debt after service of statutory notice.

Analysis: The petition was founded on unpaid cheques issued towards price of goods supplied. Statutory notice under section 434 of the Companies Act, 1956 was served, yet the respondent-company neither paid the amount nor filed any effective objection after publication of the winding up petition. The prior order had already indicated a prima facie inability to pay the debt, and no stay order or payment followed thereafter. In these circumstances, the court treated the company as unable to pay its debt.

Conclusion: The respondent-company was liable to be wound up, and the petition was allowed.

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