Winding-up after scheme default: curable procedural defects, unpaid debt under modified terms, and asset protection justified intervention.

A creditor may continue or renew winding-up relief after sanction of a scheme of arrangement where the debt remains unpaid under the modified payment terms and the earlier petition was only adjourned, not dismissed. Defects in the petition or demand notices were treated as curable, and any notice defect affected only the statutory presumption of inability to pay, not the underlying right to prove insolvency by other evidence. Where the sanctioned scheme collapsed, payments were not made, and material facts were suppressed, the Court found a prima facie case for winding up on the just and equitable ground and appointed a provisional liquidator to protect the assets pending final hearing.

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Issues: (i) Whether a winding-up petition could proceed after sanction of a scheme of arrangement and in the face of objections as to defects in the petition and demand notices. (ii) Whether the failure of the sanctioned scheme and the surrounding conduct of the company justified proceeding with winding up and appointment of a provisional liquidator.

Issue (i): Whether a winding-up petition could proceed after sanction of a scheme of arrangement and in the face of objections as to defects in the petition and demand notices.

Analysis: The petition was founded on the original winding-up application already on record, and the affidavit filed in support was treated as sufficient in the circumstances. Irregularities in form were held to be curable. The objection to the demand notices was not ative because any defect would only deprive the petitioner of the statutory presumption of inability to pay debts, not of the right to prove that inability by other evidence. The sanction of a scheme did not extinguish the petitioner's right to proceed where the debt remained unpaid under the scheme and the petition had been adjourned, not dismissed. Default under the scheme could support a fresh or continuing winding-up claim, and the scheme did not create a new debt but only modified the manner and time of payment of the existing debt.

Conclusion: The petition was maintainable and the procedural objections were rejected.

Issue (ii): Whether the failure of the sanctioned scheme and the surrounding conduct of the company justified proceeding with winding up and appointment of a provisional liquidator.

Analysis: The evidence showed that the promised amalgamation had collapsed, that the company had suppressed that fact, that the sanctioned scheme was not being carried out, and that payments due under it had not been made. The Court treated the non-performance of the scheme, the suppression of material facts, and the serious allegations against the management as strong grounds for intervention. The company was also unable to show any convincing basis for the delay or non-compliance, and the Court found that the interests of the general body of creditors required protection. These circumstances furnished a prima facie case on the just and equitable ground and supported the need to secure the assets pending hearing.

Conclusion: The petitioner was permitted to proceed with the winding-up petition and a provisional liquidator was appointed.

Final Conclusion: The Court allowed the winding-up proceedings to go forward, held that the scheme's failure and the company's conduct warranted judicial intervention, and protected the assets by appointing a provisional liquidator pending final hearing.

Ratio Decidendi: A creditor bound by a sanctioned scheme may proceed with winding-up relief where the company defaults under the scheme, the debt remains due within the modified terms, and the surrounding circumstances disclose a prima facie case for winding up on the just and equitable ground.

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