1955 (1) TMI 27 - HC - Companies Law

Right to present winding-up petition where company is being wound-up voluntarily or subject to courts supervision

Issues Involved:
1. Compulsory winding up of B. Karsberg Ltd.
2. Disputed debt of petitioners.
3. Usurious loans and moneylender status.
4. Loans for personal use versus company use.
5. Wishes of the majority of creditors.
6. Just and equitable grounds for winding up.

Issue-wise Detailed Analysis:

1. Compulsory Winding Up of B. Karsberg Ltd.:
The appeal is from an order made by Vaisey J. on November 4, 1955, for the compulsory winding up of B. Karsberg Ltd. Despite the opposition from the company and the majority of its creditors, Vaisey J. concluded that a compulsory winding up was in the interests of the creditors for a thorough investigation and public examination. However, the creditors and the company appealed, arguing that it was not in their interest.

2. Disputed Debt of Petitioners:
Mr. Blackledge argued that the petitioners' debt is genuinely disputed on two grounds: first, that the petitioners are unregistered moneylenders, and second, that the loans were for personal use and not for the company. The court generally does not make a winding up order on a disputed debt and leaves the creditor to establish it through proper proceedings. The evidence was conflicting on whether the petitioners were moneylenders, with no cross-examination on the point.

3. Usurious Loans and Moneylender Status:
The matter of usurious interest rates was speculative, based on the transactions and documents presented. Suspicion arose regarding certain aspects of the loans, such as the cash payment of lb100 by Moishe Rokach, leading to inferences about the improbability of the transaction. This approach was deemed speculative and would need to be addressed when the petitioners' debt is submitted to proof.

4. Loans for Personal Use Versus Company Use:
The evidence, including cheques and agreements, indicated that the loans were made to the company, with the company liable to repay them, coupled with a personal guarantee by the Fredmans. Thus, the company had not shown grounds to bona fide dispute the debts.

5. Wishes of the Majority of Creditors:
The majority of the company's creditors opposed the compulsory winding up and supported the voluntary liquidation managed by Mr. Fine. The court generally respects the wishes of the majority of creditors unless a valid reason or special circumstances are shown. The principles from cases like In re Home Remedies Ltd. and In re Fthcica Shipping Co. Ltd. emphasize considering the wishes of all creditors. In this case, no valid reason or special circumstances were shown to override the creditors' wishes.

6. Just and Equitable Grounds for Winding Up:
The petitioners did not rely on the "just and equitable" provision independently of insolvency. The judge likely decided on the validity of the debt and made the winding up order on that ground, considering the evidence of irregularities as supporting the petitioners' entitlement. However, the facilities for investigation and inquiry available in a voluntary liquidation were deemed sufficient, and no hardship or injustice was shown to justify a compulsory order.

Conclusion:
The appeal was allowed on the grounds that the overwhelming majority of creditors opposed the compulsory order and supported the voluntary liquidation. The petitioners did not demonstrate any hardship or injustice to warrant a departure from the ordinary principles of respecting the creditors' wishes. The voluntary liquidation was deemed adequate for any necessary investigation and inquiry.

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