9911796707
TMI Blog1954 (1) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany's reply was that the debts claimed by the appellants were undoubtedly due to them, but this scheme provided that the debts were to be paid out of the profits and inasmuch as the company had not made sufficient profits since the date of the scheme, the debts had not yet become payable. To that plea the appellants' rejoinder was that the provision as to payment out of profits was repugnant to other and clearer provisions of the scheme and ought, therefore, to be disregarded. The learned trial Judge, Banerjee J., accepted the contention of the company and held that the provision as to payment out of profits was an integral part of the scheme which could not be Ignored. Necessarily, he Held further that since the company had yet made no sufficient profits, its liability to pay the debts had not yet arisen and therefore the company's failure to pay the first instalment of the appellant's debts could not be a ground for making a winding-up order. Two other breaches of the scheme were also urged by the appellants as entitling-them to a winding-up order. With respect to them, the learned Judge held that although the breaches alleged had occurred, they were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the debt was established by action. If, however, there was no reason to believe that the debt, if established, would not be paid, the petition was dismissed. The modern practice has been to dismiss such petitions, But, of course, if the debt is not disputed on some substantial ground, the Court may decide it on the petition and make the order. (See Buckley on the Companies Acts , Twelfth Ed., P. 452). 5. In the case cited the passage was quoted from the 11th Ed. of Buckley, pp. 356, 357 and in quoting it, the learned Master of the Rolls observed that the law and practice in regard to such matters had been stated in the passage with sufficient accuracy. 6. In order to appreciate the passage correctly, it may be useful to recall what the position is as to making a winding-up order against a company on the ground of its inability to pay its debts. The basis of such an order is that the company has ceased to be commercially solvent and, accordingly, it is fit and proper in the interest of the creditors and share-holders not to allow it to function further as a company. When there has been a failure to pay a debt in accordance with a statutory notice of demand, ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two months afterwards, the creditor presented a petition in a Country Court for a winding-up order. The Company's defence was that the creditor was under an obligation to make advances up to the limit of 5,000, which he had not yet done, and that under an agreement with the creditor, the company's obligation to, repay was to be deferred till after she had completed the advances and the company had acquired certain properties and become self-sufficient. It was urged before the County Court Judge that since the King's Bench Division had given the company unconditional leave to defend, it must have done so in the view that it had a substantial defence and, therefore, the case ought to be treated as one where there was a 'bona fide' dispute about debt and where no winding-up order ought to be made. The County Court Judge overruled that contention, went into the evidence, found that a debt existed and proceeded to make a winding-up order. The company then preferred an appeal which, being an appeal from a County Court, was confined to matter of law. The grounds urged before the Court of Appeal were, first, that the County Court Judge should have accepted the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany was a 'bona fide dispute. He found that issue not in favour of the company but against it, and it was only thereafter that he proceeded to consider for himself if a debt existed and to make a winding-up order when he found that a debt did exist. It is not as if he found that there was a bona fide dispute and yet proceeded to decide the dispute himself and make a winding-up order. The decision upholding the County Court Judge does not therefore indicate that the Court' of Appeal intended to modify in any way the rule of practice as summarised in Buckley. 10. In the present case, there can be no question that the scheme presents a substantial problem of construction and, accordingly, it can by no means be said that the dispute raised by the company rests on a ground which is plainly unsubstantial. It does not appear to me to be material, at any rate in the -facts of the .present case, that the dispute is not as to the existence of a debt, but only as to its immediate payability. If the debts are not immediately payable, the omission or failure to pay them cannot entail a winding-up order because there being yet no debts to pay, the question of ability or inability to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already been, brought on the Original Side for a construction of the scheme and is awaiting decision. In our opinion, the dispute can be more conveniently decided in the suit already brought and the winding-up Court ought not to undertake the task of; construction. 11. I desire to make it clear that we are not laying down any general law as regards what the winding-up Court should or should not do when a-debt is disputed. The question is one of convenience and practice and we have only indicated what, as' a rule the practice ought to be when the dispute is a 'bona fide' one and when it is not so. I desire also to, add that if the dispute regarding the construction of the scheme be decided against the company, the company will still have the liberty to urge that no winding-up order should be made against it on such other grounds as may be open to it. Equally, it will be open to the creditors, when the appeal comes up for further hearing, to urge the two remaining grounds on which also they claimed a winding-up order before the learned trial Judge. 12. For the reasons given above, we direct that the further hearing of the appeal do stand adjourned till after the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
