Positive net worth and settled secured debts can defeat a winding-up opinion under the sick-industrial-company regime.

A company may avoid acceptance of a winding-up opinion under the special sick-industrial-company framework where later financial developments show positive net worth and ability to meet liabilities. The Court treated the sale of non-productive assets, settlement of secured creditors, and audited accounts reflecting surplus assets over liabilities as material circumstances, because the statute links sickness to accumulated losses equalling or exceeding net worth and the winding-up assessment must reflect the revival objective. On those facts, the earlier recommendation for winding up was not conclusive, and the matter was disposed of with consequential directions concerning amounts held by the official liquidator.

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Issues: Whether, in view of subsequent sale of assets, settlement of secured debts and audited accounts showing positive net worth, the winding-up opinion under the special sick-industrial-company regime could be declined and the winding-up proceedings brought to an end.

Analysis: The special statute treats a company as sick only when accumulated losses equal or exceed its net worth, and the Board's opinion on winding up is meant to be assessed in the light of the company's financial condition and the object of revival. The Court noted that the company had sold non-productive assets with judicial permission, settled the claims of secured creditors under one-time settlements, and the audited balance-sheet showed surplus assets over liabilities with net worth no longer remaining negative. The Court also treated the post-reference financial improvement as a material circumstance bearing on whether winding up continued to serve the interests of shareholders, creditors and public interest. In that situation, the earlier recommendation for winding up could not be accepted as conclusive.

Conclusion: The winding-up opinion was not confirmed and the company petition was disposed of with consequential directions regarding retention and return of amounts lying with the official liquidator.

Ratio Decidendi: Where a company's later financial position shows that it has achieved positive net worth and can meet its liabilities, the Court may refuse to act on an earlier winding-up opinion under the special sick-industrial-company framework and dispose of the matter in light of those subsequent developments.

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