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Issues: (i) Whether the notice of demand relied upon by the creditor was a valid statutory notice for winding up purposes; (ii) whether the company was shown to be unable to pay its debts, or whether a winding up order could be justified on the ground that the substratum of the company had gone.
Issue (i): Whether the notice of demand relied upon by the creditor was a valid statutory notice for winding up purposes.
Analysis: The notice intended to found the statutory presumption was not delivered at the company's registered office, and the later notice was served too late to satisfy the required interval before presentation of the winding up petition. In the absence of a valid statutory notice, the creditor could not rely on the presumption of inability to pay under the statutory scheme.
Conclusion: The statutory notice was invalid and this ground failed against the appellant.
Issue (ii): Whether the company was shown to be unable to pay its debts, or whether a winding up order could be justified on the ground that the substratum of the company had gone.
Analysis: The material before the Court showed that the company had an admitted fund exceeding the aggregate of the alleged debts, so the case was not one of inability to pay debts but at most one of disputed or delayed payment. As to substratum, the alleged acquisition of the railway and the compensation payable were still unsettled, the facts were in dispute, and the creditor's debt was not shown to be in peril. In such circumstances, a winding up order was not warranted on equitable grounds.
Conclusion: The appellant was not shown to be unable to pay its debts, and the substratum ground also failed.
Final Conclusion: The winding up order could not be sustained on the record, and the petition for winding up was dismissed with the appeal succeeding.
Ratio Decidendi: A creditor cannot obtain a winding up order unless the statutory basis for inability to pay is established, and an equitable ground such as disappearance of substratum will not justify winding up where the creditor's debt is not shown to be in jeopardy and the relevant facts remain unresolved.
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