Admitted debt and bona fide dispute principles can sustain winding up where unpaid liability remains unchallenged in correspondence.

An engagement letter providing success fees on completion of a financing transaction supported an admitted debt where the company did not terminate the engagement, did not contemporaneously dispute the invoices, and later correspondence acknowledged receipt of the invoice and sought time to pay. A later attempt to confine the fee to an "arranged" finance structure, or to rely on an alleged oral reduction of fees, was not supported by the contract or correspondence. On the winding-up issue, once the debt was not shown to be bona fide disputed and remained unpaid, the statutory presumption of inability to pay arose; commercial solvency alone did not answer an admitted liability. The winding-up petition was therefore maintainable, subject to the time granted for payment before the order became operative.

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Issues: (i) Whether the respondent's liability under the engagement letter was an admitted debt, notwithstanding the defence that the fee claim was unascertained or based on a reduced scope of services; (ii) whether the company was liable to be wound up on the ground of inability to pay its debts.

Issue (i): Whether the respondent's liability under the engagement letter was an admitted debt, notwithstanding the defence that the fee claim was unascertained or based on a reduced scope of services.

Analysis: The engagement letter provided for success fees upon completion of the financing transaction and expressly protected the fee even if the transaction evolved from the original structure. The respondent did not terminate the engagement, did not contemporaneously dispute the invoices, and its letter acknowledging receipt of the invoice and seeking time to clear the amount amounted to an unequivocal admission of liability. The later attempt to recast the arrangement as confined only to "arranged" finance, or to rely on an alleged oral understanding reducing the fee, was not borne out by the contract or the correspondence.

Conclusion: The debt was held to be admitted and the defence of unascertained liability was rejected.

Issue (ii): Whether the company was liable to be wound up on the ground of inability to pay its debts.

Analysis: Under Sections 433(e) and 434(1)(a) of the Companies Act, 1956, where the debt is not shown to be bona fide disputed and the demand remains unpaid, the presumption of inability to pay arises. Commercial solvency is not a standalone answer where the liability is admitted. The respondent failed to establish a genuine or substantial dispute and the statutory demand remained unsatisfied.

Conclusion: The petition was admitted and the Official Liquidator was appointed as provisional liquidator, with the order kept in abeyance for the limited payment period granted by the Court.

Final Conclusion: The Court concluded that the respondent had an admitted but unpaid debt and that the winding up petition was maintainable on the ground of inability to pay debts, subject to the time granted for payment before the order became operative.

Ratio Decidendi: An admitted debt not shown to be the subject of a bona fide dispute may found a winding up petition for inability to pay, and commercial solvency does not by itself defeat the statutory presumption under Section 434(1)(a) of the Companies Act, 1956.

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