Discretionary substitution in winding-up proceedings may be refused where continuation is unjust and the petition is mala fide.

Substitution of a new petitioner in a winding-up petition is a discretionary remedy, not an automatic entitlement merely because the proposed substitute could otherwise present a petition and wishes to prosecute it. The court may decline substitution where the original petitioner is not proceeding diligently and the surrounding circumstances show that continuation of the winding-up proceedings would be unjust. On the stated facts, shareholder ratification of the arrangement, the bank's exercise of corporate powers, and the finding that the petition was mala fide and harmful to the interests of the company, its shareholders, and depositors justified refusal of substitution and termination of the proceeding.

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Issues: Whether a proposed substitute petitioner could be allowed to prosecute a winding-up petition where the original petitioner was not proceeding with the petition and the court found the petition to be mala fide and contrary to the interests of the company, its shareholders, and depositors.

Analysis: The power to substitute another person as petitioner under the applicable winding-up rules is discretionary and is not automatic merely because the proposed substitute has a right to present a petition and desires to prosecute it. The court may refuse substitution where the original petition is not being pursued with due diligence and the surrounding circumstances show that continuation of the winding-up proceedings would be unjust. On the facts, the shareholders had ratified the impugned arrangement, the bank had acted within its corporate powers, and the petition was found to be mala fide and harmful to the interests of the bank, its shareholders, and depositors. In such a situation, substitution would not be just.

Conclusion: The application for substitution was refused and the winding-up petition was not permitted to continue.

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