Inability to pay debts established from admitted accounts and unsupported defence, justifying winding-up admission and interim protection.

An acknowledged debt reflected in the company's audited balance sheet, together with an unsupported defence of defective and returned goods, was treated as sufficient to show inability to pay debts and justify admission of the winding-up petition. The court also found special circumstances to dispense with prior notice and appoint a provisional liquidator, relying on the long pendency of the petition, earlier requests for interim protection, and the respondent's non-appearance. Protective relief was directed to preserve the company's assets and records pending further proceedings.

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Issues: (i) Whether the respondent was unable to pay its debts so as to justify admission of the winding-up petition; (ii) Whether the court could appoint a provisional liquidator and dispense with prior notice to the respondent.

Issue (i): Whether the respondent was unable to pay its debts so as to justify admission of the winding-up petition.

Analysis: The respondent did not dispute the underlying commercial transactions and the outstanding liability was reflected in its audited balance sheet. The defence of defective goods and return of goods was unsupported by contemporaneous material and was not substantiated by documents. The entry in the respondent's books of account was treated as an acknowledgment of debt, and the court found that the respondent had failed to show that it could liquidate the admitted dues.

Conclusion: The issue was decided against the respondent and in favour of the petitioner; the respondent was held unable to pay its debts.

Issue (ii): Whether the court could appoint a provisional liquidator and dispense with prior notice to the respondent.

Analysis: The petition had remained pending for several years, the petitioner had already sought appointment of a provisional liquidator earlier, and the respondent had stopped appearing at the hearings. In these circumstances, the court held that further delay would defeat the ends of justice and that special reasons existed to dispense with prior notice under the applicable procedural provisions.

Conclusion: The issue was decided in favour of the petitioner; a provisional liquidator was appointed and notice was dispensed with.

Final Conclusion: The winding-up petition was admitted, the respondent's indebtedness was accepted, and protective steps were directed for preservation of its assets and records pending further proceedings.

Ratio Decidendi: An admitted debt reflected in the company's own accounts, coupled with an unsubstantiated defence and circumstances justifying urgency, is sufficient to hold that the company is unable to pay its debts and to warrant admission of the winding-up petition with protective interim relief.

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