Provisional liquidator appointment to preserve company assets pending winding-up; interim appointee limited to specified powers and security.

Provisional appointment of a liquidator was ordered to protect and preserve company assets pending a main winding-up petition because the company exhibited commercial insolvency, ceased operations, and unsecured assets of material value remained; debenture trustees had taken possession of charged assets and did not oppose interim appointment. The court authorised an interim chartered-accountant appointee to exercise statutory powers except specified sub-clauses, required furnishing of security, and directed cooperation with debenture trustees. The appointment addresses asset preservation and interim management until final adjudication.

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Issues: Whether a provisional liquidator should be appointed for Andhra Paper Mills Ltd. pending the main petition under section 175 of the Act.

Analysis: The company is shown to be commercially insolvent by consecutive balance-sheets disclosing growing deficits and substantial unpaid debentures and interest. The mills ceased operations and the debenture trustees had taken control and possession of charged assets; other unsecured assets of material value remain. There is no opposition by the company or the debenture trustees to provisional appointment, and one shareholder's objections raise matters relevant to the main petition but do not outweigh the need to protect assets and maintain order pending full hearing. The provisional appointee is a chartered accountant rather than the Official Receiver because of the company's size and location. The provisional liquidator is to act with specified statutory powers except sub-clauses (c) and (g), to give security, and to co-operate with debenture trustees.

Conclusion: Appointment of a provisional liquidator is appropriate and is ordered; Mr. R.G.N. Price is appointed provisional liquidator with immediate effect, subject to furnishing security and the excluded sub-clauses of powers.

Ratio Decidendi: Where a company is commercially insolvent, ceases operations, unsecured assets of value remain, and there is no opposition from principal stakeholders, a provisional liquidator may be appointed to safeguard assets pending the main winding-up petition.

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