Winding-up on unpaid debt maintained where acknowledgments and correspondence prima facie proved liability, despite a weak denial.

A winding-up petition based on an alleged unpaid loan debt was found maintainable because contemporaneous acknowledgments, repayment deferrals and later correspondence, including cheques, prima facie established the debt. The company's denial was treated as vague and unsupported, as it did not effectively explain the acknowledgment letters, dispute the chairman's signature, or provide a credible alternative account such as share allotment. On that basis, the court admitted the petition, while allowing the company an opportunity to secure the claim with interest failing which the petition would proceed to advertisement.

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Issues: Whether the company petition for winding up was maintainable on the basis of the alleged unpaid loan debt and the statutory notice under section 434(1)(a) of the Companies Act, 1956.

Analysis: The petitioners relied on contemporaneous documents, including letters acknowledging the debt and deferring repayment, as well as subsequent correspondence and cheques said to have been issued by the company. The company's denial was found to be sparse and unsupported by authenticated material. The court noted that the company did not effectively explain the two principal acknowledgment letters, did not deny the chairman's signature on them, and failed to establish its version regarding share allotment or any bona fide alternative explanation for the debt claim. In these circumstances, the defence was treated as lacking credibility and the debt was treated as prima facie established for winding-up purposes.

Conclusion: The petition was admitted on the debt claimed, with the company given an opportunity to secure the petitioners' claim with interest, failing which the petition would proceed to advertisement.

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