1998 (11) TMI 497 - HC - Companies Law

Summary

Issues Involved:
Winding-up petition under sections 433(e) and 434(1)(a) of the Companies Act, 1956 based on inability to pay debts.

Analysis:

1. Petitioner's Claim and Respondent's Defense:
The petitioner filed a winding-up petition against the respondent company for failing to pay debts amounting to Rs. 2,74,625 along with interest. The respondent acknowledged the debt but disputed the liability for interest, citing financial constraints. They claimed an intention to pay and mentioned a supposed agreement for installment payments, which the petitioner denied in their rejoinder affidavit.

2. Court's Initial Assessment and Stay Order:
Upon considering the petition, the court found a prima facie case for admission and advertisement due to the admitted outstanding amount. A stay on advertisement was granted if the respondent paid the admitted sum in two equal installments. The question of interest was left for final hearing. The respondent challenged this order in a special appeal, which was dismissed with the option to seek further time for payment.

3. Failure to Comply with Payment Orders:
Despite multiple extensions granted by the court for payment, the respondent company consistently failed to meet the deadlines. They only paid a partial amount of Rs. 50,000 after several adjournments, leading the court to conclude that they were unable to pay their dues. The court noted the respondent's inability to pay even the admitted amounts, justifying the decision to wind-up the company.

4. Final Winding-up Order:
In light of the respondent's persistent failure to pay the outstanding debt, the court allowed the petition, ordering the winding-up of the respondent company. The Official Liquidator of the High Court was appointed as the Liquidator, and the petitioner was directed to advertise the winding-up order as per the Companies (Court) Rules. The court emphasized compliance with specific rules for the winding-up process.

This detailed analysis highlights the progression of events leading to the court's decision to wind-up the respondent company based on its inability to pay its debts, despite various opportunities and extensions provided for payment.