Inability to Pay Debts: winding up ordered and Official Liquidator appointed after undisputed default on a loan agreement.

Winding up was sought under the Companies Act on the ground of inability to pay debts where a lender proved a loan agreement, instalment schedule and statutory notice and the debtor made only partial payments before defaulting; the indebtedness and failure to discharge liability were undisputed on prima facie material. The court treated undisputed commercial insolvency as establishing inability to pay debts, allowed the petition, ordered winding up, appointed the Official Liquidator to realise assets and recover dues, and directed deposit for initial liquidation expenses and publication of the winding up order.

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Issues: Whether the respondent company is liable to be wound up under Section 433(e) of the Companies Act, 1956 on the ground of inability to pay its debts/default in repayment of loan.

Analysis: The petitioner advanced a loan to the respondent under a loan agreement with scheduled monthly instalments. The petitioner produced the loan application, agreement and a statutory notice, and established that despite payments in part the respondents defaulted, leading to an outstanding sum. The petition was admitted on prima facie material and published as directed; the respondents did not contest the claim or appear before the Court. On the materials before the Court the indebtedness and failure to discharge the liability remained undisputed. Under Section 433(e) of the Companies Act, 1956, inability to pay debts is a recognised ground for winding up. Given the undisputed default, the Court concluded that the respondent company was commercially insolvent and unable to pay its debts, warranting winding up and appointment of the Official Liquidator to realise assets and recover dues. The Court also directed deposit for initial liquidation expenses and publication of the winding up order.

Conclusion: The petition under Section 433(e) of the Companies Act, 1956 is allowed; the respondent company is ordered to be wound up, the Official Liquidator is appointed, the petitioner is to deposit initial liquidation expenses and to publish the winding up order.

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