Sanctioned scheme does not extinguish debt; non performance permits a creditor to proceed with winding up and seek interim relief.

Addresses whether a creditor may resume a winding up petition after a court sanctioned scheme; clarifies that a sanctioned scheme binds the company and creditors but modifies rather than extinguishes the original debt, so present non payment of an instalment or failure to carry out the scheme permits a creditor to press winding up on inability to pay debts and just and equitable grounds. Suppression of material facts and allegations of mismanagement can establish a prima facie case. Operative effect: petitioner may proceed with the winding up petition and interim protective measures, including appointment of a provisional liquidator, are appropriate where risk to creditors is shown.

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Issues: Whether the petitioner, whose winding-up petition was adjourned sine die after a scheme sanctioned by the Court, may proceed with the winding-up petition on the grounds pleaded (including inability to pay debts and just and equitable grounds) and whether the Court should direct interim measures including appointment of a provisional liquidator.

Analysis: The Court examined (i) the effect of a sanctioned scheme on a petitioning creditor's right to proceed with a winding-up petition, (ii) whether default in carrying out terms of the sanctioned scheme or other facts (including suppression of material information and alleged mismanagement) give rise to present grounds for winding-up, and (iii) the need for interim protective measures pending full hearing. The Court applied the principle that a scheme, once sanctioned, binds the company and creditors but does not create a new debt - it merely reduces and modifies the original debt as to amount and time; if an instalment or amount payable under the sanctioned scheme becomes presently due and remains unpaid (or if the scheme is not being carried out and there is evidence of mismanagement or suppression of material facts), the creditor may present or proceed with a winding-up petition on grounds under the Companies Act including inability to pay debts and the just and equitable ground. The Court considered the factual matrix: the proposed amalgamation held out to creditors but subsequently declined by the scheduled bank, deliberate suppression of that fact from the petitioner, failure to make payments in terms of the scheme (including non-payment of the instalment due within six months), absence of steps to reduce capital or comply with other scheme clauses, and serious allegations of mismanagement involving the managing director. On these facts the Court found a prima facie case that the sanctioned scheme had not been carried out and that there was a real risk to the interests of creditors and the proper collection and protection of assets.

Conclusion: The petitioner is entitled to proceed with the winding-up petition; there is a prima facie case on just and equitable grounds and on inability to pay debts in terms of the sanctioned scheme. The Court fixed the petition for hearing and ordered interim protective measures including publication of notices and the appointment of a provisional liquidator.

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