Admitted unpaid debt and broad power of attorney supported winding up petition and appointment of a provisional liquidator.

An admitted and unpaid debt can justify admission of a winding up petition where the company's defence is not bona fide. Here, dishonoured post-dated cheques and non-payment after demand notice were treated as acknowledgment of liability and inability to pay, while objections about the factoring arrangement and service of notice did not negate the admitted debt. A broadly worded power of attorney authorising execution and verification of legal documents was held sufficient to institute the winding up proceedings. The petition was admitted, with a provisional liquidator appointed and limited time given to clear the admitted dues.

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Issues: (i) whether the company petition for winding up was maintainable on the basis of an acknowledged and unpaid debt despite objections regarding notice and disputed liability; (ii) whether the power of attorney supporting the petition authorised the deponent to institute the winding up proceedings.

Issue (i): whether the company petition for winding up was maintainable on the basis of an acknowledged and unpaid debt despite objections regarding notice and disputed liability.

Analysis: The petition was founded on Sections 433(e), 434(1)(c) and 439 of the Companies Act, 1956. The Court found that receipt of the demand notice was not denied and that the respondent had issued post-dated cheques which were dishonoured for insufficiency of funds. The issuance and dishonour of those cheques constituted an acknowledgment of liability and showed inability to pay the admitted debt. The objections that the factoring agreement was not binding or that the notice was not sent to the registered office did not displace the admitted liability, and the defence was held not to be bona fide.

Conclusion: The petition was maintainable and the respondent's admitted liability justified admission of the winding up petition.

Issue (ii): whether the power of attorney supporting the petition authorised the deponent to institute the winding up proceedings.

Analysis: The power of attorney was worded broadly and expressly authorised the signatory to execute legal documents and to sign and verify plaints, applications, petitions, affidavits, vakalatnamas and other documents connected with legal proceedings. On that wording, the authority extended to filing a winding up petition. The objection based on lack of specific authorisation was distinguished on the facts.

Conclusion: The deponent was duly authorised to institute the winding up petition.

Final Conclusion: The winding up petition was admitted, a provisional liquidator was appointed, and the order was kept in abeyance for a limited period to enable payment of the admitted dues.

Ratio Decidendi: A winding up petition lies where there is an admitted and unpaid debt and the company's defence is not bona fide, and a broadly worded authorisation to sign and verify legal proceedings is sufficient to support institution of the petition.

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