Invalid service of statutory notice does not bar proving inability to pay by independent evidence; remitted for fresh merits hearing.

Invalid service of the statutory notice at the registered office was not proved; that invalidity defeats only the presumption of inability to pay under the statutory scheme but does not preclude a petitioning creditor from proving inability to pay by independent evidence (proof aliunde). The Company Court's merits finding was set aside for relying substantially on the presumption without properly addressing whether the company's dispute was bona fide or whether the petitioner proved inability to pay; the matter is remitted for fresh hearing on merits and admissible proof including service issues.

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Issues: (i) Whether the statutory notice under section 434 was duly served at the registered office of the company; (ii) Whether invalidity of service of the statutory notice renders the winding up petition not maintainable; (iii) Whether the Company Court properly decided on the merits that the company is unable to pay its debts.

Issue (i): Whether the statutory notice under section 434 was duly served at the registered office of the company.

Analysis: The returned postal endorsements 'not known' and 'left' were specifically denied by the company as constituting service at its registered office. No reliable evidence was produced to show that the registered office had been removed from the stated Calcutta address or that the notice was tendered or delivered at the registered office. Authorities relied upon by the lower court were inapplicable on the facts.

Conclusion: The statutory notice was not proved to have been served at the registered office of the company.

Issue (ii): Whether invalidity of service of the statutory notice renders the winding up petition not maintainable.

Analysis: Sections 433 and 434 create a presumption of inability to pay where a valid statutory notice is served, but those provisions do not bar a petitioning creditor from proving inability to pay by independent evidence. Precedents establish that invalidity of notice only defeats the presumption; the creditor may still establish inability to pay aliunde.

Conclusion: Invalidity of service of the statutory notice does not by itself render the winding up petition not maintainable; the creditor may still prove inability to pay by other evidence.

Issue (iii): Whether the Company Court properly decided on the merits that the company is unable to pay its debts.

Analysis: The lower court treated the matter inconsistently, relying substantially on the presumption under section 434 while also purporting to decide on merits without proper consideration of whether the dispute raised by the company was bona fide or whether the petitioner had proved inability to pay on the existing pleadings and evidence.

Conclusion: The Company Court's merits finding cannot be sustained and requires fresh consideration.

Final Conclusion: The appeals are allowed, the impugned orders are set aside, and the matter is remitted to the Company Court for fresh hearing on the merits including examination of whether the petitioning creditor has proved inability to pay and whether the dispute pleaded by the company is bona fide; service issues may be considered but do not preclude proof aliunde.

Ratio Decidendi: Invalidity of service of the statutory notice at the registered office defeats only the presumption of inability to pay under section 434; it does not bar a petitioning creditor from proving the company's inability to pay by independent evidence, and winding up petitions must be decided on proper consideration of merits and bona fide disputes.

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