Provisional liquidator appointment to preserve company assets where commercial insolvency and trustees do not oppose, subject to conditions.

Provisional liquidator appointed to preserve and secure the company's assets pending the winding-up petition, the court finding prima facie commercial insolvency (deficient balance sheets, unpaid debenture interest, cessation of operations) and no effective opposition from debenture trustees or managing agents; jurisdiction invoked under statutory powers to protect assets and enable exercise of specified liquidation powers. Appointment of a chartered accountant as provisional liquidator was ordered with conditions: furnish security, cooperate with trustees in possession of charged assets, exclusion of specified statutory powers, costs to be costs in the main petition, and remuneration reserved for later determination.

---

---

Issues: Whether a provisional liquidator should be appointed over the Andhra Paper Mills Ltd. to secure and preserve the company's assets pending the main winding-up petition.

Analysis: The petitioner, a creditor served with the statutory notice, has established prima facie that the company is commercially insolvent: balance sheets show substantial deficits and increasing losses, debenture interest is unpaid, and the mills have ceased operation. The trustees for first debenture-holders and the managing agents do not oppose the appointment and are in possession or support protection of assets. There is evidence of disturbance and risk to company property and representatives at the company's registered place of business. The Court applied the established practice that a provisional liquidator may be appointed where it is necessary to protect assets and where the company or its controllers do not oppose winding up, relying on the jurisdiction under Section 175 of the Act and on the powers conferred under Section 179 of the Act to be exercisable by a provisional liquidator.

Analysis: Considering the size and location of the undertaking, the Court found it appropriate to appoint a chartered accountant rather than the Official Receiver to act as provisional liquidator. Conditions of appointment included furnishing security, cooperation with trustees already in possession of charged assets, and exclusion of specified powers under Section 179 (sub-clauses (c) and (g)). The costs of the application were directed to be costs in the main petition, and remuneration of the provisional liquidator was reserved for later determination.

Conclusion: A provisional liquidator is appointed; Mr. R.G.N. Price is appointed provisional liquidator to take charge of the company's assets at Rajahmundry, subject to the specified conditions including furnishing security of Rupees five lakhs and excepting the powers in sub-clauses (c) and (g) of Section 179 of the Act.

---