Winding-up for inability to pay debts upheld where stamping and regulatory objections were found not bona fide.

A winding-up petition for inability to pay debts will be resisted only if the debtor raises a bona fide, substantial defence supported by prima facie facts and likely to succeed in law. Objections based on stamping, the form or assignment of bills of exchange, and enforceability of the debt were treated as issues of proof rather than grounds to defeat the petition. The company's certificates of acceptance for each invoice amounted to an admission of liability, and its technical objections were found not bona fide. A defence based on absence of DGCA approval and public policy also failed because the company had continued taking the services and remained bound by accrued contractual obligations. The company was liable to be wound up.

---

---

Issues: Whether the company should be wound up for inability to pay its debts when the respondent raised objections as to stamping, validity of assignment, enforceability of the debt, and alleged violation of aviation regulatory requirements.

Analysis: A winding-up petition based on inability to pay debts is governed by the deeming provision in section 434 of the Companies Act, 1956, but the Court must still examine whether the defence is bona fide, substantial, likely to succeed in law, and supported by prima facie facts. The objections regarding insufficiency of stamp duty and the character of the bills of exchange were treated as matters that go to proof and enforcement of the debt, not to the threshold inquiry in winding-up proceedings. The respondent had executed certificates of acceptance for each invoice, thereby admitting liability, and its technical objections to endorsement and stamping were held not bona fide. The defence based on absence of DGCA approval and public policy also failed because the respondent had knowingly continued to take the services, had not terminated the agreement, and remained bound by accrued obligations under the contract.

Conclusion: The respondent failed the test for resisting winding up and was liable to be wound up for inability to pay its debts.

---