Winding up petition substitution is discretionary; creditor status must be shown before an applicant can replace original petitioners.

Substitution in a winding up petition is a discretionary remedy, and an applicant must show a proper case as well as an independent right to maintain the petition. Here, the applicants had not demanded payment, had not issued notice under section 434 of the Companies Act, 1956, and the company's uncontroverted accounts showed that no amount was due to them and that they, in fact, owed money to the company. Their claim arose only at the substitution stage, creating a serious bona fide dispute over creditor status. In these circumstances, and where the company had already paid its creditors, no basis existed to infer inability or neglect to pay debts, so substitution was refused.

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Issues: Whether the applicants were entitled to be substituted in place of the original petitioners in the winding up petition.

Analysis: Substitution in a winding up petition is not automatic but lies in the court's discretion. The court must be satisfied that a proper case is made out and that the applicant could independently have maintained a winding up petition. The applicants had never demanded payment, had not issued a notice under section 434 of the Companies Act, 1956, and the company's uncontroverted accounts showed that no amount was due to them and that they, in fact, owed money to the company. The claim was raised for the first time at the stage of substitution, giving rise to a serious and bona fide dispute as to creditor status. Since the company had already paid all its creditors, no basis existed to infer inability or neglect to pay debts.

Conclusion: The request for substitution was rightly refused in the exercise of judicial discretion.

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