Commercial insolvency in winding-up: admitted debt, dishonoured cheques and balance-sheet dues justified admission despite disputed notice service.

A disputed service of the demand notice at the registered office did not by itself defeat the winding-up petition, because the substantive ground of inability to pay debts remained independently available. The Court relied on the admitted liability, dishonour of post-dated cheques, and the company's balance sheets showing substantial outstanding dues to find commercial insolvency. In commercial winding-up jurisdiction, an undisputed debt must be paid, and the defence for non-payment was not found bona fide. The petition was admitted, a Provisional Liquidator was appointed, and protective directions were issued to preserve the company's assets.

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Issues: (i) whether non-service of the demand notice at the registered office of the company defeated the winding-up petition; (ii) whether the company was unable to pay its debts and the petition for winding up deserved admission.

Issue (i): Whether non-service of the demand notice at the registered office of the company defeated the winding-up petition.

Analysis: The statutory scheme distinguishes between the deeming fiction under the service-based limb and the broader ground of inability to pay debts. Even if service of notice under the deeming provision was disputed, the petition could still be maintained on a properly pleaded case of inability to pay debts under the substantive winding-up ground. The petition contained averments that the debt remained unpaid despite demand, and the company's continued silence and non-payment were relied upon as material showing commercial insolvency.

Conclusion: The objection based on alleged defective service did not defeat the petition.

Issue (ii): Whether the company was unable to pay its debts and the petition for winding up deserved admission.

Analysis: The Court relied on the admitted liability in the pleadings and subsequent replies, the dishonour of post-dated cheques, and the company's own balance sheets showing substantial outstanding dues. In commercial winding-up jurisdiction, inability to pay debts is assessed in a commercial sense, and a debt that is undisputedly owing must be paid. The defence advanced for non-payment was found not to be bona fide, and the material on record established commercial insolvency.

Conclusion: The company was found unable to pay its debts, and the winding-up petition was admitted with appointment of the Provisional Liquidator.

Final Conclusion: The winding-up proceedings were allowed to proceed on the basis of proved indebtedness and commercial inability to pay, with protective directions issued for preservation of the company's assets and a short deferment to enable payment.

Ratio Decidendi: A winding-up petition may be admitted where the debt is admitted and the company's conduct and financial disclosures show commercial inability to pay, and a disputed mode of service will not by itself defeat the petition when the substantive ground of inability to pay is otherwise made out.

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