Compromise or arrangement in winding up may be initiated by members, but a court can refuse an unworkable scheme.

A compromise or arrangement application may be brought by a member or creditor even while the company is in winding up, because winding up does not by itself exclude their competence to seek a meeting. However, a court will refuse to direct a members' meeting where the proposed scheme does not genuinely address the cause of liquidation, leaves the oppressive majority control substantially unchanged, rests on disputed and incomplete membership records, or lacks a bona fide and feasible basis for consideration. The arrangement was therefore treated as unsuitable for member deliberation, and the existing winding up position remained undisturbed.

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Issues: (i) Whether an application for convening a meeting of members for a compromise or arrangement was competent when the company was already in winding up. (ii) Whether the proposed arrangement deserved to be placed before the members for consideration in the circumstances of the case.

Issue (i): Whether an application for convening a meeting of members for a compromise or arrangement was competent when the company was already in winding up.

Analysis: The provision permitting a meeting to be ordered on a summary application by the company, a creditor, or a member was construed as enabling those persons to apply even where the company is in winding up, with the liquidator being an additional person who may also apply in such a case. The competence of members and creditors to initiate the process was therefore not excluded merely because winding up proceedings were pending.

Conclusion: The application was held to be competent.

Issue (ii): Whether the proposed arrangement deserved to be placed before the members for consideration in the circumstances of the case.

Analysis: The proposed scheme did not cure the evil that had led to the winding up order. The majority control that had earlier oppressed the minority remained substantially unaltered, the suggested changes were found to be ineffective, the register of members was incomplete and disputed, and a meeting was not feasible in the existing state of uncertainty. The application was also viewed against the background of an earlier unsuccessful attempt and the absence of bona fide grounds to resuscitate the company on the terms proposed.

Conclusion: The arrangement was held not to deserve consideration by a meeting of the members and the application failed.

Final Conclusion: The request for convening a members' meeting to consider the proposed arrangement was rejected, leaving the existing winding up order undisturbed.

Ratio Decidendi: A compromise or arrangement application may be made by a member or creditor even in winding up, but a court will refuse to direct a meeting where the proposal does not genuinely address the cause of liquidation and no feasible, bona fide basis exists for member consideration.

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