Winding-up petition advertisement refused where the company disputed liability, complied with court payments, and remained a running concern.

A winding-up petition will not be advertised merely because a debt is disputed or a demand notice was not met within time, where the company has disputed liability and complied with the court-recorded payment arrangement. The HC found the company to be a running concern and held that the material did not show destruction of substratum, continuing inability to pay debts, or sufficient facts to justify winding up on the just and equitable ground. The petitioning material also suggested pressure tactics rather than a present case for winding up, so advertisement was refused.

---

---

Issues: Whether the winding-up petition should be advertised under the Companies (Court) Rules, 1959 on the grounds of inability to pay debts and, alternatively, that it was just and equitable to wind up the company.

Analysis: The demand notice under section 434(1)(a) of the Companies Act, 1956 did not justify advertisement once the company had disputed liability and thereafter complied with the arrangement recorded by the Court by making the agreed payments. The company was found to be a running concern, and the material placed did not establish destruction of its substratum, a continuing inability to pay debts, or facts sufficient at this stage to justify winding up on the just and equitable ground. The sequence of prior proceedings also supported the view that the petition was being used to pressurise the company rather than to establish a present case for winding up.

Conclusion: The grounds for directing advertisement of the winding-up petition were not made out, and the prayer was rejected.

Ratio Decidendi: Advertisement of a winding-up petition will not be ordered merely because a debt is disputed or a demand notice has not been met within time, where the company is a running concern, has complied with the court-accepted payment arrangement, and no present material establishes inability to pay debts or a just and equitable basis for winding up.

---