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Issues: Whether section 332(3) of the Companies Act, 1948 creates an offence of fraudulent trading only where the company is in liquidation or has been wound up, or whether it applies generally to trading conducted with intent to defraud creditors.
Analysis: The majority treated the provision as part of a consolidation statute and read it in the context of the earlier enactment from which it derived. The linked wording of subsection (3) to subsection (1), the placement of the provision within the winding-up group of sections, and the structure of the earlier legislation were taken as showing that Parliament did not intend subsection (3) to create a free-standing offence disconnected from liquidation. The majority also regarded the contextual indicators, including the cross-headings and the relationship between civil and criminal remedies, as creating sufficient doubt to require the narrower construction in a criminal case. The dissenting view considered the words of subsection (3) to be clear and unqualified, with no warrant for importing words of limitation from subsection (1) or from the surrounding headings and structure.
Conclusion: Section 332(3) was held to be confined to cases where the company had been or was being wound up, so the prosecution could not stand without liquidation.
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