Winding-up petition can proceed where debt is proved, dispute is not bona fide, and procedural defects are curable.

Curable procedural defects in a winding-up petition, including typographical errors or form non-compliance, do not justify recall where the petition is filed by a duly authorised officer and the supporting affidavit is substantially compliant; the recall request was rejected. On the merits, proof of supply of goods, dishonoured cheques, balance confirmation, absence of a bona fide dispute, unpaid debt above the statutory threshold, cessation of business activity, and erosion of substratum established inability to pay debts and grounds for winding up; the petition was allowed to proceed to advertisement, liquidation, and appointment of the Official Liquidator.

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Issues: (i) Whether the recall of the order admitting the winding up petition was warranted on the grounds of alleged procedural defects and pending proceedings before the appellate forum. (ii) Whether the respondent company had become liable to be wound up on account of inability to pay its debts and the petition deserved to be admitted for winding up and liquidation.

Issue (i): Whether the recall of the order admitting the winding up petition was warranted on the grounds of alleged procedural defects and pending proceedings before the appellate forum.

Analysis: The petition was filed through a duly authorised officer and the supporting affidavit was not found to be defective in a manner that could defeat the petition. The objections regarding typographical error and alleged non-compliance with form requirements were treated as curable and there was substantial compliance. The pending proceeding before the appellate forum had already been dismissed, removing any legal impediment to continuation of the company petition.

Conclusion: The request for recall of the admission order was rejected and the earlier order was confirmed.

Issue (ii): Whether the respondent company had become liable to be wound up on account of inability to pay its debts and the petition deserved to be admitted for winding up and liquidation.

Analysis: The record showed supply of goods, issuance of cheques by the respondent, dishonour of those cheques, and a balance confirmation acknowledging the outstanding dues. The respondent failed to place reliable material to establish a bona fide dispute regarding quality of goods. The outstanding debt exceeded the statutory threshold, the sole secured creditor also showed substantial unpaid dues, and the company's industrial activity had ceased, indicating erosion of substratum and inability to meet liabilities. On these facts, the case fell within the statutory grounds for winding up and was also found to be just and equitable.

Conclusion: The respondent company was held liable to be wound up and the petition was allowed to proceed to advertisement and liquidation.

Final Conclusion: The company petition was maintained, the recall application was dismissed, and winding up of the respondent company was directed with appointment of the Official Liquidator.

Ratio Decidendi: Admission or recall in a winding up matter turns on whether the statutory debt is proved, the dispute is bona fide, and the material shows inability to pay debts or erosion of the company's substratum; procedural objections that are curable do not defeat such relief.

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