Admitted debt and repeated breach of payment undertakings justified winding up admission and provisional liquidation.

In a winding up petition for inability to pay debts, the Delhi HC held that admitted liability, repeated failure to honour payment undertakings, and the absence of any concrete repayment scheme justified admission of the petition despite the discretionary nature of the remedy. The company had already been granted substantial time and no further extension was warranted. Because the company was selectively paying some creditors while defaulting on the petitioner's admitted dues, the Court also directed appointment of the Official Liquidator as provisional liquidator to secure the company's assets pending further proceedings.

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Issues: (i) whether a winding up petition under Section 433(e) of the Companies Act, 1956 can be admitted where the debt is admitted and the company has repeatedly failed to honour undertakings to pay; (ii) whether the company was entitled to further time before admission of the petition; and (iii) whether a provisional liquidator should be appointed to take charge of the company's assets.

Issue (i): whether a winding up petition under Section 433(e) of the Companies Act, 1956 can be admitted where the debt is admitted and the company has repeatedly failed to honour undertakings to pay.

Analysis: The remedy of winding up for inability to pay debts is discretionary, but the discretion must be exercised judicially. An admitted creditor's claim, repeated defaults in complying with payment undertakings, and the absence of any concrete repayment scheme are material considerations supporting admission of the petition. The company had been granted multiple opportunities and had still failed to discharge even a fraction of the admitted liability.

Conclusion: The petition was maintainable and admission was warranted.

Issue (ii): whether the company was entitled to further time before admission of the petition.

Analysis: The company had been given substantial time, yet it failed to pay the amounts it had specifically undertaken to pay and also failed to place any concrete scheme for repayment of the dues. In these circumstances, further extension of time was not justified and it would not be equitable to defer admission of the petition.

Conclusion: Further time was declined and the petition was admitted.

Issue (iii): whether a provisional liquidator should be appointed to take charge of the company's assets.

Analysis: The company had been selectively paying some creditors while defaulting on the petitioner's admitted dues. A company exposed to winding up cannot be permitted to pick and choose among creditors, and the earlier undertaking contemplated appointment of the Official Liquidator if the commitment was not honoured. These circumstances justified immediate appointment to secure the assets.

Conclusion: The Official Liquidator was appointed as provisional liquidator.

Final Conclusion: The winding up petition was admitted and the company was placed under provisional liquidation, with directions for publication, filing of statement of affairs, and protection of its assets pending further proceedings.

Ratio Decidendi: In a winding up petition based on inability to pay debts, admitted liability coupled with repeated breach of payment undertakings and absence of a concrete repayment scheme can justify admission of the petition and appointment of a provisional liquidator, notwithstanding that the winding up remedy is discretionary.

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