Inability to pay debts and prejudicial asset transfers justified winding up and official liquidator control.

A company was found unable to pay its debts where it had no operational manufacturing activity, failed to place any credible repayment plan, and could not show a realistic source of funds for proposed payments. The court treated the admitted arrears owed to creditors, workmen, employees and statutory authorities, together with the absence of annual accounts, as confirming insolvency. It also relied on surrounding conduct, including alienation of valuable immovable assets for negligible consideration and a dubious asset revaluation to exit BIFR protection, as factors prejudicial to stakeholders and supporting winding up on just and equitable grounds. The official liquidator was directed to take charge of the company and its assets, recover alienated properties, and pursue further proceedings as required.

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Issues: Whether the company should be wound up on the creditors' petitions and whether the court should direct appointment of the official liquidator with full powers.

Analysis: The company had no operational manufacturing activity, had failed for a prolonged period to place any credible repayment plan before the court, and could not show any realistic prospect of meeting its massive debts. The admitted arrears of creditors, workmen, employees and statutory authorities, together with the absence of annual accounts and the company's inability to disclose the source of funds for proposed payments, established inability to pay debts. The court also relied on the surrounding circumstances of large-scale alienation of valuable immovable properties for negligible consideration, the dubious revaluation of assets to exit BIFR protection, and the resulting prejudice to creditors, workmen and other stakeholders. In that backdrop, the conduct of management, the absence of opposition from any represented creditor, and the just and equitable considerations justified winding up.

Conclusion: The company was directed to be wound up, and the official liquidator was to take charge of the company and its assets with steps to recover the alienated properties and pursue further proceedings as necessary.

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