Winding up for inability to pay debts and persistent statutory defaults where the company has ceased business and lacks management

A company may be ordered to be wound up where undisputed facts show it has ceased business, failed to repay loan and interest, vacated its registered office, lacks functioning management, and has persistently defaulted on statutory obligations such as holding an annual general meeting and filing annual returns. On those facts, the material indicated inability to meet obligations and no effective commercial operations, supporting winding up as a going concern issue under the Companies Act, 1956.

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Issues: Whether the company should be ordered to be wound up under section 433 of the Companies Act, 1956.

Analysis: The company had failed to repay the loan and interest, had closed its business, had vacated its registered office, had no functioning management to carry on its affairs, and had not held an annual general meeting or filed the annual return required by law. The allegations in the petition remained undisputed, and the material on record showed that the company was unable to meet its obligations and had ceased effective commercial operations.

Conclusion: The petition for winding up was allowed and the company was directed to be wound up.

Ratio Decidendi: A company may be ordered to be wound up when the uncontroverted facts show that it has ceased business, failed to meet its financial obligations, and committed persistent statutory defaults indicating inability to carry on as a going concern.

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