The company can successfully defend the case against the winding up petition

The company can successfully defend the case against the winding up petition by stating that the mere fact that the liabilities of the company are in excess of its assets would not necessarily mean that the company is unable to pay its debts or that it is commercially insolvent. In the case of Registrar of Companies Vs. Ajanta Lucky Scheme and Investment Company Private Ltd., the Registrar of Companies filed a petition for the windng up of the company under section 433(e) read with Section 439(5) of the Companies Act on the ground that the company was unable to pay its debts and that its liabilities exceeded its assets. The two issues that emerged therefrom were: (a) whether the company was unable to pay its debts and meet its liabilities; and (b) whether it was a proper case for winding up. It was held (a) that for determining the company’s ability or otherwise to pay its deb,it was necessary to consider whether the company was able to meet its liability as and when they accrued due. Section 434 of the Act prescribes the circumstances in which a company was to be treated as unable to pay its debts. Admittedly, none of these circumstances was present in the case in question and no complaint had ever been received against the company from any creditor regarding non-fulfilment of any of their claims against the company. The mere fact that certain liabilities might accrue due in future which could exceed the existing assets of the company, would not necessarily lead to the conclusion that the company would be unable to meet its liabilities when they accrued due.