Statutory demand service and inability to pay debts must both be shown before winding up can be pursued.

Valid service of a statutory demand under the Companies Act was treated as satisfied where the notice was addressed to the company, delivered at its business address, and receipt was not effectively denied, making the objection about non-service at the registered office hyper-technical. However, a winding up petition based on non-payment of a debt must also contain a specific averment that the company is unable to pay its debts or is commercially insolvent; mere non-payment, refusal, or a disputed liability is not enough. On the pleadings as framed, the presumption of inability to pay was not attracted, and winding up was refused because the petition could not be used as a debt recovery mechanism.

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Issues: (i) Whether notice under section 434(1)(a) of the Companies Act, 1956 was invalid because it was served at the administrative office and not the registered office of the company; (ii) Whether the winding up petition was liable to be rejected for want of a plea that the company was unable to pay its debts.

Issue (i): Whether notice under section 434(1)(a) of the Companies Act, 1956 was invalid because it was served at the administrative office and not the registered office of the company.

Analysis: The notice was addressed to the company, received at its business address, and supported by postal verification showing delivery. Earlier correspondence had also been exchanged at the same address. The objection that service was not at the registered office was treated as hyper-technical in the facts of the case, especially when receipt of notice by the company was not effectively denied. The statutory demand requirement was therefore held to have been complied with.

Conclusion: The notice was valid and the objection based on want of service at the registered office failed.

Issue (ii): Whether the winding up petition was liable to be rejected for want of a plea that the company was unable to pay its debts.

Analysis: The petition pleaded non-payment of the invoice amount, but did not contain a specific averment that the company was unable to pay its debts or was commercially insolvent. The Court held that a mere debt dispute, refusal to pay, or neglect to pay does not by itself establish inability to pay. The presumption under section 434(1)(a) was not attracted on the pleadings as framed, and the materials showed that the company was a continuing concern with employees and ongoing business. A winding up petition cannot be used as a mere method for debt recovery.

Conclusion: The petition was not maintainable for want of the minimum plea of inability to pay debts, and winding up was declined.

Final Conclusion: The statutory notice requirement was satisfied, but the company petition failed because the essential pleading of inability to pay debts was absent, so winding up was refused.

Ratio Decidendi: In a winding up petition for inability to pay debts, valid service of statutory notice alone is insufficient unless the petition also contains a specific plea and supporting basis that the company is unable to pay its debts; mere non-payment or a disputed liability does not justify winding up.

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