Winding-up petition standards: valid licence records, admitted liability, and dishonoured cheques supported proof of debt and inability to pay.

A belated objection that the debt was not legally recoverable for want of a valid wireless telegraphy licence was rejected because the record showed renewal requests, licence history, and a renewed licence covering the relevant supply period. The Court treated the licence as valid for that period and held that liability could not be denied on the basis of an alleged licensing defect, making further examination of section 23 of the Contract Act unnecessary. On the debt issue, receipt and use of supplies without protest, dishonoured cheques issued towards part payment, and an admitted liability in the balance sheet were treated as sufficient proof of indebtedness and inability to pay, supporting admission of the winding-up petition.

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Issues: (i) whether the respondent's objection that the debt was not legally recoverable for want of a valid wireless telegraphy licence was sustainable; (ii) whether the petitioner had established that the respondent was indebted and unable to pay the debt.

Issue (i): Whether the respondent's objection that the debt was not legally recoverable for want of a valid wireless telegraphy licence was sustainable.

Analysis: The objection was raised belatedly and was contradicted by the record. The petitioner had placed on record the licence history, renewal requests, and the renewed licence showing validity for the relevant period. The Court treated the licence as valid for the period covered by the supplies and held that the respondent could not deny liability on the basis of an alleged licensing defect. The plea based on section 23 of the Contract Act was therefore found unnecessary to examine further.

Conclusion: The objection was rejected and was held against the respondent.

Issue (ii): Whether the petitioner had established that the respondent was indebted and unable to pay the debt.

Analysis: The supplies were received and utilised without protest, dishonoured cheques were issued towards part payment, and the respondent's balance sheet reflected an admitted liability. The defence was characterised as frivolous and lacking commercial morality, and the materials on record were treated as sufficient to show indebtedness and inability to repay.

Conclusion: The petitioner established that the respondent was indebted and unable to pay the debt, in favour of the petitioner.

Final Conclusion: The company petition was found fit for admission and the Court proceeded on the basis that the respondent-company's liability was established for winding-up purposes, with provisional liquidation directed.

Ratio Decidendi: A debtor cannot successfully resist a winding-up petition on a belated and untenable plea of illegality where the record establishes a valid licence for the relevant period, admitted liability, and conduct showing acknowledgement of the debt.

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