Inability to pay tax debts can justify winding-up even while assessment appeals or references remain pending.

A company may be subjected to compulsory winding-up where the pleadings and proof show an inability to pay substantial tax debts, including failure to satisfy an admitted liability despite repeated demands. A mere dispute over the quantum of assessment does not negate that inability if the debt remains legally recoverable. Pending appeal, reference, or other challenge to the tax assessment does not by itself bar or postpone winding-up proceedings, and such a petition is not an abuse of process where insolvency is established and the liability is not required to be first reduced to judgment in a civil suit.

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Issues: (i) whether the company was unable to pay its debts so as to justify a compulsory winding-up order under the Companies Act; (ii) whether pending dispute, appeal, or proposed reference concerning the tax assessments barred or delayed winding-up proceedings.

Issue (i): whether the company was unable to pay its debts so as to justify a compulsory winding-up order under the Companies Act.

Analysis: The petition alleged specific facts showing the company's unsatisfactory financial position, the non-application of substantial sale proceeds to tax arrears, and its failure to meet a large admitted demand despite repeated demands. Mere dispute as to the quantum of assessment did not displace the admitted inability to meet the liability. The court found the pleading and proof sufficient to establish inability to pay debts within the winding-up provision.

Conclusion: The company was unable to pay its debts, and the winding-up order was justified.

Issue (ii): whether pending dispute, appeal, or proposed reference concerning the tax assessments barred or delayed winding-up proceedings.

Analysis: The assessments remained legally recoverable notwithstanding pending appeal or reference, and the case was not one where the creditor had to first establish the debt in an ordinary civil suit. The winding-up petition was not filed merely to press a disputed claim, because the tax liability was recoverable by coercive process and insolvency was established. The court found no basis to characterise the petition as an abuse of process, and no sufficient ground existed to adjourn the matter pending final resolution of the assessment challenges.

Conclusion: Pending assessment proceedings did not bar or postpone winding-up, and the petition was not an abuse of process.

Final Conclusion: The appeal failed, and the compulsory winding-up order was upheld on the footing that the company had proved inability to pay its tax debts and the pending tax challenges did not defeat the winding-up jurisdiction.

Ratio Decidendi: Where a company is established to be unable to pay a substantial tax liability, the existence of a pending appeal or proposed reference against the assessment does not prevent winding-up proceedings, nor does it make the petition an abuse of process if the debt remains legally recoverable.

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