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Issues: Winding up petition under section 434(1)(c) of the Companies Act, 1956.
Analysis: 1. The petitioners filed a winding-up petition under section 434(1)(c) of the Companies Act, 1956, alleging that the respondent company was unable to pay its debts. The petition was restricted to section 434(1)(c) by the Court. 2. The petitioners claimed that the company's cheques were dishonored, indicating commercial insolvency. The company denied the allegations, stating it had resources to meet its liabilities. The Court noted two requirements under section 434(1)(c): proving the company cannot pay its debts and considering contingent liabilities. While the petitioners showed the debt owed, they failed to provide evidence of contingent liabilities, crucial for proving commercial insolvency. 3. The Court emphasized that the burden of proving commercial insolvency lies with the petitioner. The petitioners' failure to present material on contingent liabilities led to the rejection of the petition. Reference was made to a judgment emphasizing the importance of proving insolvency and the obligation to provide necessary evidence. 4. The petitioners' argument regarding the respondent's failure to produce balance sheets was dismissed as insufficient to prove commercial insolvency. Mere correspondence requesting balance sheets was deemed inadequate without concrete evidence of insolvency. 5. Due to the lack of evidence on contingent and prospective liabilities, the Court could not determine the company's commercial insolvency, leading to the rejection of the petition. 6. The petition was dismissed for lack of substance, as the petitioners failed to meet the burden of proving commercial insolvency required under section 434(1)(c). 7. No costs were awarded in the case.
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