Commercial insolvency and disputed debt quantum: a winding-up petition is not barred where the debt is admitted and insolvency is shown.

Commercial insolvency under the Companies Act, 1948 was assessed by whether the company could meet current liabilities. Unpaid wages, outstanding judgment debts, cut-off supplies, and unpaid creditors established inability to pay debts. A winding-up petition was not defeated merely because the precise balance of an admitted debt was disputed, since a disagreement only as to quantum did not amount to a bona fide dispute where creditor status and insolvency were otherwise shown. The commentary states that, on those principles, the petitioners were entitled to a compulsory winding-up order.

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Issues: (i) Whether the company was unable to pay its debts within the meaning of the Companies Act, 1948. (ii) Whether a winding-up petition could be defeated merely because the precise amount of an admitted debt was disputed.

Issue (i): Whether the company was unable to pay its debts within the meaning of the Companies Act, 1948.

Analysis: The statutory test was commercial insolvency, namely inability to meet current liabilities. On the evidence, the company had numerous unpaid wage liabilities and outstanding judgment debts, with supplies cut off and other creditors unpaid, which established inability to pay debts.

Conclusion: The company was insolvent and unable to pay its debts.

Issue (ii): Whether a winding-up petition could be defeated merely because the precise amount of an admitted debt was disputed.

Analysis: The petitioners were creditors within the statutory scheme, and there was no real dispute as to the existence of their debt. A disagreement only as to the precise balance owing did not amount to a bona fide dispute sufficient to bar a winding-up order, particularly where the company was plainly insolvent.

Conclusion: A dispute only as to the amount of an admitted debt was not a sufficient answer to the petition.

Final Conclusion: The petitioners were entitled to a compulsory winding-up order against the company.

Ratio Decidendi: Where creditor status and the company's insolvency are established, a bona fide dispute only as to the quantum of an admitted debt does not prevent a winding-up order.

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