Inability to Pay Debts: unpaid statutory demand plus admitted commercial insolvency supports making a creditors' winding-up petition absolute.

A creditors' petition for winding up is supported where an unpaid statutory demand shows inability to pay debts and the company admits commercial insolvency; in that circumstance the petition should be made absolute rather than limited to appointing a provisional liquidator. The liquidator, if funded, may prosecute the company's pending appeal and consider compromise schemes during winding up; costs of parties are to be paid out of the company's assets and the winding-up order advertised and published accordingly.

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Issues: Whether a creditors' petition for winding up should be made absolute on the grounds that the company is unable to pay its debts under Section 434(1)(a) of the Companies Act, 1956 and is commercially insolvent under Section 434(1)(c) of the Companies Act, 1956, and whether a provisional liquidator should instead be appointed.

Analysis: The petition relied on a statutory demand and unpaid debt of Rs. 5,320 under Section 434(1)(a) and on the company's admitted commercial insolvency supported by its balance-sheet and undisputed liabilities under Section 434(1)(c). The company did not deny the asserted liabilities and an affidavit expressly admitted commercial insolvency. The alternative submission for appointment of a provisional liquidator was considered against the strength of the case for winding up. Statutory provisions relating to the liquidator's powers to prosecute pending appeals (Section 457(1)(a)) and to consider schemes in the course of winding up (Section 446(2)(c)) were noted as permitting the liquidator, if funded, to pursue the company's pending appeal.

Conclusion: The creditors' petition for winding up is allowed and the petition is made absolute; the request to appoint only a provisional liquidator is refused. The liquidator may, if practicable and funded by creditors, prosecute the pending Supreme Court appeal. Costs of the petitioner, the company, appearing shareholders, and other appearing creditors are directed to be paid out of the company's assets in separate sets, and the winding-up order is to be advertised and published as directed.

Ratio Decidendi: Where a statutory demand under Section 434(1)(a) is unpaid and commercial insolvency under Section 434(1)(c) is admitted or established, a creditors' petition for winding up must be made absolute; the liquidator has statutory power to prosecute pending appeals if funded under Section 457(1)(a) and schemes may be considered during winding up under Section 446(2)(c).

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