Pre-winding-up attachment does not bind company assets in liquidation and may be raised to protect pari passu distribution.
A pre-winding-up attachment of a company's immovable property does not create title, charge, lien or any proprietary interest, and does not survive against the official liquidator where no execution sale has followed. The company's assets vest in the winding-up process for pari passu distribution, so such an attachment cannot defeat the equality principle under the Companies Act. The winding-up court may also ignore an ineffective attachment, remove the resulting cloud on title, and direct deletion of consequential revenue entries to enable collection and realisation of the assets for liquidation.
Issues: (i) Whether attachments levied on the company's immovable properties before the winding-up order survived against the official liquidator and could bind the property in liquidation; (ii) Whether the winding-up court had jurisdiction to ignore and raise such attachments and direct deletion of the consequential revenue entries.
Issue (i): Whether attachments levied on the company's immovable properties before the winding-up order survived against the official liquidator and could bind the property in liquidation.
Analysis: Attachment in execution merely prohibits alienation and does not create title, charge, lien, or any proprietary interest in favour of the attaching creditor. Once a winding-up order is made, the company's property vests in the custody of the court through the official liquidator, whose duty is to collect and realise the assets for pari passu distribution among unsecured creditors. A pre-winding-up attachment, if no further execution step has been taken, cannot be allowed to confer a priority inconsistent with the scheme of winding up and the equality principle embodied in the Companies Act.
Conclusion: The pre-winding-up attachments did not survive as against the official liquidator and were ineffective against the company's assets in liquidation.
Issue (ii): Whether the winding-up court had jurisdiction to ignore and raise such attachments and direct deletion of the consequential revenue entries.
Analysis: The winding-up court has power to deal with claims against the company and to remove impediments in the collection and realisation of its assets. Where an attachment constitutes a cloud on title and obstructs sale of the property by the liquidator, the court may disregard it as ineffective and direct that it be raised. The jurisdiction under the winding-up provisions is designed to prevent a scramble for assets and to ensure just and equitable distribution.
Conclusion: The winding-up court had jurisdiction to direct that the attachments be raised and the related entries be deleted.
Final Conclusion: The attachments were held to be of no effect against the liquidator, and the property was to be dealt with free from those encumbrances in aid of liquidation and pari passu distribution.
Ratio Decidendi: A pre-winding-up attachment of a company's property, standing alone and not carried to execution sale, does not create any enforceable interest against the official liquidator and may be ignored by the winding-up court to protect the pari passu scheme of distribution among unsecured creditors.
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