Unpaid debt and inability to meet liabilities justified winding up; power of attorney holder could depose for the principal.

Where a company failed to prove repayment or any other discharge of an admitted liability, the Court treated the debt evidenced by the dishonoured cheque as unpaid and accepted the creditor's claim. On the financial record, erosion of net worth, negative current assets and non-payment even after time was granted established inability to meet liabilities, so winding up was justified. The Court also held that a power of attorney holder was competent to depose as a witness for the principal; the objection that the principal had not entered the witness box was rejected.

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Issues: (i) Whether the respondent-company was liable to repay the sum paid by the petitioner and whether the debt evidenced by the cheque had been discharged. (ii) Whether the respondent-company was unable to pay its debts so as to warrant winding up. (iii) Whether a power of attorney holder could depose as a witness for the principal in such proceedings.

Issue (i): Whether the respondent-company was liable to repay the sum paid by the petitioner and whether the debt evidenced by the cheque had been discharged.

Analysis: The evidence showed that the petitioner had remitted money to the company towards share capital, the amount was reflected in the company's ledger, and no allotment of shares or repayment was proved. The cheque issued by the company towards refund was returned unpaid. The company failed to establish that the petitioner's claim had already been satisfied through some other payment arrangement. The burden to explain the issuance and dishonour of the cheque and to prove discharge of the liability lay on the company, and that burden was not met.

Conclusion: The debt due to the petitioner was held to be unpaid, and the issue was decided in favour of the petitioner.

Issue (ii): Whether the respondent-company was unable to pay its debts so as to warrant winding up.

Analysis: The material on record, including the company's balance-sheets and admissions regarding negative current assets, showed erosion of net worth and inability to meet liabilities. The company did not establish that it was a viable concern able to discharge its admitted debt, nor did it pay the amount even after being granted time by the Court. On the facts, inability to pay debts was made out under the governing winding-up provisions.

Conclusion: The company was held to be unable to pay its debts, and winding up was justified.

Issue (iii): Whether a power of attorney holder could depose as a witness for the principal in such proceedings.

Analysis: The legal position distinguished between pleading or right of audience, which is regulated, and giving evidence on behalf of the principal, which is not prohibited. The powers-of-attorney framework permits an agent to act for the principal, and the Evidence Act allows evidence to be received from an agent. The objection that the petition should fail because the principal herself did not enter the witness box was therefore rejected.

Conclusion: The power of attorney holder was competent to depose as a witness, and the objection was overruled.

Final Conclusion: The petition succeeded on the merits, the company was ordered to be wound up, and the petitioner obtained the substantive relief sought.

Ratio Decidendi: In winding-up proceedings, where the company fails to prove repayment or discharge of an admitted debt and the evidence shows inability to meet liabilities, the Court may order winding up; a power of attorney holder may depose as a witness for the principal, though not plead as of right.

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