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Issues: (i) Whether the statutory demand dated 29th August, 1951 was duly served on the company in conformity with section 163(1)(i) of the Indian Companies Act; (ii) Whether the company is to be deemed unable to pay its debts under section 163(1)(ii) by reason of an unsatisfied decree and, on that basis, whether an order for winding up should be made.
Issue (i): Whether the statutory demand dated 29th August, 1951 was duly served on the company at its registered office by registered post as required by section 163(1)(i) of the Indian Companies Act.
Analysis: Evidence was given by the person who posted the notice and the postal acknowledgment was produced showing return through the post with the company's rubber stamp. The company did not produce any witness or affidavit contradicting delivery or the acknowledgment. The statutory requirement is delivery by registered post or otherwise at the registered office; a postal acknowledgment and the sender's sworn evidence establish the presumption of proper delivery until rebutted by the company.
Conclusion: The statutory demand was properly delivered by registered post at the company's registered office in conformity with section 163(1)(i) of the Indian Companies Act; delivery is held effective.
Issue (ii): Whether the company is to be deemed unable to pay its debts under section 163(1)(ii) because execution on a decree in favour of the creditor was returned unsatisfied, and whether the petition for winding up should therefore be granted.
Analysis: The decree in favour of the petitioner remains unsatisfied despite execution and attachment; execution proceedings and sale were admitted by the company. The company's allegations that the decree was fraudulently or collusively obtained were vague, lacking particulars, and no steps had been taken to set aside the ex parte decree under the civil procedure rules. Under section 163(1)(ii), return of execution unsatisfied brings the company within the statutory events deeming inability to pay. Authorities permit enquiry into judgment debts only where strong particulars of fraud or collusion are shown; no such prima facie case was established here.
Conclusion: The unsatisfied decree and absence of any satisfactory rebuttal establish that the company is to be deemed unable to pay its debts under section 163(1)(ii) of the Indian Companies Act; the winding up petition is maintainable and succeeds on this ground.
Final Conclusion: The petition for winding up is allowed and an order for winding up of the company will be made; costs are to be paid out of the company's assets.
Ratio Decidendi: Where a statutory demand is shown to have been duly delivered by registered post and execution on a decretal debt is returned unsatisfied, the company is deemed unable to pay its debts under clauses (i) and (ii) of section 163(1) of the Indian Companies Act, unless the company adduces particularised and prima facie proof of fraud or collusion sufficient to require the court to go behind the decree.
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