1944 (6) TMI 12 - HC - Companies Law

Summary

Issues Involved:
1. Whether the company formerly carried on business in England.
2. Whether the company has ceased to carry on business in England.
3. Whether the company has assets within the jurisdiction.
4. Whether the petitioners have a claim against the company.

Detailed Analysis:

1. Whether the company formerly carried on business in England:
The company, established under Russian laws in 1879, had its principal place of business in Moscow. From 1889 to 1914, the company increasingly sourced machinery and raw materials from England. Directors visited England annually from 1905 to 1914 to maintain supplier relationships, place orders, and conduct company affairs. These visits lasted from a few weeks to five months, during which the directors stayed at the Midland Hotel, Manchester, which acted as the company's business base. They held interviews and received correspondence there. Banking accounts were maintained in London, and directors had full authority to enter contracts and operate these accounts.

The Court found that the company was indeed carrying on business within the jurisdiction under section 338(1) of the Companies Act, 1929. The Midland Hotel was considered the company's place of business in England during the directors' visits, fulfilling the legislative intent to make assets available for creditors even if the company ceased operations or was dissolved in its origin country.

2. Whether the company has ceased to carry on business in England:
The company's operations in England ceased with the outbreak of war in 1914. Post-revolutionary decrees in Russia annulled the company's shares, deprived shareholders of remedies under Soviet law, and nationalized the company's properties and assets. By November 29, 1920, the company had ceased to carry on business. The Court accepted that the company had ceased operations long before the petition was presented.

3. Whether the company has assets within the jurisdiction:
The petitioners claimed the company had assets in England, specifically a sum of lb34,257 6s. 11d. held by the Banque des Merchant de Moscon (Koupetschesky) in liquidation. The Court found no evidence to suggest this claim was not genuine. Despite the Russian Bank not admitting the asset, the Court was inclined to make the order if this were the only point.

4. Whether the petitioners have a claim against the company:
The petitioners, as legal representatives of a creditor, claimed a rouble debt (partly salary and loans) equivalent to lb1,562 and a sterling debt of lb87 16s. 3d. The rouble debt was likely extinguished by the Russian decree of March 4, 1919, but the sterling debt remained. The Court noted that a winding-up petition is not typically a means to enforce a disputed debt. However, given the impossibility of establishing the debt through action in England due to the Russian decrees, the Court found the petitioners' claim sufficient to proceed.

Conclusion:
The Court concluded that the company did carry on business in England by maintaining a place of business at the Midland Hotel during the directors' visits. This activity was substantial and essential to the company's operations. The Court rejected the argument that an established office was necessary for jurisdiction under section 338(1). Consequently, the Court ordered the winding-up of the company, with a provision to safeguard any rights of the Crown to the assets as bona vacantia.