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Judgment
Wort, J.—The two applications are made by two creditors of the Ambler Slate and Stone Co. Ltd., the principal one of which at any rate was a decree-holder for a sum of approximately Rs. 20,000. The application in the first instance was that an official liquidator be appointed with Mr. Barnard who was the liquidator under a voluntary winding up: other claims also were made and an order was asked restraining the liquidator from parting with the property of the company. It was also prayed that Mr. Barnard might file in Court the register of shareholders and creditors, the register of assets and articles and goods of the company, the register of minutes and resolutions of meetings of the company, etc. Certain matters were pointed out at the first hearing and the case was adjourned. An additional petition was filed asking for a declaration that the voluntary liquidation was illegal, ultra vires and void. I do not know what the draftsman of the petition had thought when he had added to the petition by using all this surplusage of expression, but apparently it appears to have been in the mind of the petitioner that there was some sort of merit in the use of language of this kind. But it is perfectly clear that if he had any sort of case, a mere declaration that the winding up was void would have been quite sufficient. I think I better say at once that the application is wholly misconceived. It is a little difficult to understand why the petitioners took the action they did having regard to what might have been their rights under the Companies Act if proper proceedings had been brought. But this Court is not in any way concerned with that. I have to consider solely the petition which is before me.
The principal point by Mr. Moitra on behalf of the respondent company at the second hearing of the case was that the petitioners had no locus standi. There are authorities relating to that; but the only case which is directly in point having regard to the differences in the Companies Act in England before and after 1900 is a case reported in the King''s Bench Division Reports, a decision of a Divisional Court of that Division, being an appeal from the decision of a County Court Judge. But having regard to the judgments therein pronounced, it gives me very little assistance in the case, Lush, J. having decided the case on the merits and the decision of Greer, J., the other Judge of the Divisional Court, resting as it did upon the fact that the shareholders had waived any irregularity: In re Oxted Motor Co., Ltd. (1921) 3 KB 32.
So far as the point is concerned, I am thrown back on first principles. I do not think it was ever suggested, or ever could be suggested, that a creditor had any right to interfere with the internal management of a company. The principle is stated, although the authority is not directly in point on other matters, in Southern Counties Deposit Bank, Ltd., v. Rider and Kirkwood (1896) 73 LT 374. The case is not directly in point, as the decision of Lindley, L.J., and the other Lords Justices in that case very largely depended upon the fact in that case that the irregularity complained of could at any moment be set right. I am not quite sure whether that could be said in this case, but I would leave that for the moment. But in this connexion it is necessary for me to state that the reason why the creditors (the petitioners before me) complained that the voluntary winding up was void was that the resolution to wind up the company was passed at a meeting at which Mr. G.H. Barnard, the sole remaining Director and no other person was present. I need not, at the moment, refer to a number of other alleged irregularities in the case. I have to deal, as I have said, with the point, whether the creditor has any locus standi. Now, the only possible section under which the creditors could come would be Section 215, Companies Act, which provides:
Where a company is being wound up voluntarily, the liquidator or any contributory or creditor may apply to the Court to determine any question arising in the winding up, or to exercise....
and then certain powers are mentioned. Sub-section (2) of that section is of great importance and it says:
The Court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as the Court thinks fit.
Now that section, as we find it in the Companies Act, was the section as it appeared in the subject (?) Companies Act of 1908 before the Act of 1929. That section has always been understood to mean that the Court was empowered under that section, on the petition of persons named in the first sub-section, to exercise certain powers for the "assistance" if I may so use the expression, of the winding up. It is to be noticed that the first sub-section is very limited. It speaks of determining any question arising in the winding up, and, under the second sub-section, the Court has to be satisfied that the determination of the question or the required exercise of power will be just and beneficial. Thus it is quite clearly indicated in my opinion that a person has no right u/s 215 of the Act to come and say that there is no such thing as winding up in a particular case, that is to say, the winding up is irregular or void for another reason. The powers of a Court under that section are strictly limited to what I have described as assistance to the winding up. My greatest difficulty in this case, however, was to understand exactly what the nature of the petitioners'' application was. I have pointed out that in the first instance it was for the appointment of an Official Liquidator; and, secondly, in the amended or additional petition the prayer was that the winding up should be declared void. If it is necessary to determine the point advanced by the learned advocate for the respondent, I have very little hesitation in coming to the conclusion that there is no power under the Companies Act for the creditors to come and say that the winding up resolution is bad. But I have got to look at the substance of this application.
In the first instance it was for the appointment of an Official Liquidator. It is a little difficult to understand what that means because an Official Liquidator can only be appointed when a compulsory winding up order is made. It might be possible to treat the application (although not expressed, as it might have been clearly) as an application for an order for supervision. The application might also have been treated as an application for the removal of the liquidator. The application cannot be treated by me as an application for the compulsory winding up of the Company, because on the face of it the rules to be strictly observed have not been observed in this case. I am not concerned merely with the litigants or the parties before me in the jurisdiction conferred upon the Court under the Companies Act but I am concerned with the creditors or contributories and the public generally, and indeed I have no power to waive any irregularity as regards the strict compliance with the law laid down in the Act and the rules made thereunder. It is obvious that I cannot treat the application as an application for compulsorily winding up the Company. Also Rule 24 of the Rules of this Court apply equally to an application for the winding up of a Company by the Court and an order for the winding up under the supervision of the Court. That rule has not been complied with. In other words, the petition does not pretend to be a petition for the winding up of the Company. The only other contention put forward is to treat the application as an application for the removal of the liquidator who has been described as a self-appointed liquidator of the Company.
Now before dealing with that point, however, I would like to make another observation. The application is wholly misconceived for this very reason. If it is treated as a petition for supervision or some such order as the Court might be empowered to make in the case of a compulsory winding up, it is obvious that in order to make such an order the Court would have to be satisfied that the winding up had taken place; and the whole case of the petitioners here is that the whole proceedings were ultra vires and void. I need say no more about that matter than to quote a decision of the English Court on this point in Re the Caloric Engine and Siren Fog Signals Co., Ltd. (1885) 52 LT 846, where the petition was to wind up the Company compulsorily. The Company suggested that a supervision order should be made. Kay, J. pointed out that as there were certain irregularities, and as the supervision order contemplated a valid winding up, the only order that could be made was a compulsory winding up. In other words, to put it shortly, a supervision order can be made only where there is a valid winding up. As I have pointed out, the whole case of the petitioners here is that there is no such winding up. The powers of the Court in the case of voluntary winding up, which this is, are given u/s 209 of the Act, and the only right, which the petitioner has to move the Court is under Sub-section (2) of that section. The condition precedent to moving the Court for the removal of the liquidator is a meeting of the creditors held in pursuance of Sub-section (1) of Section 209 in which the creditors shall determine whether an application shall be made to the Court for the appointment of any person as liquidator in the place of or jointly with the liquidator appointed by the Company.
Now the petitioners in this case seem to have taken one part of the section and forgotten the remainder. In other words, as I have already pointed out, no application of that kind can be made unless the condition precedent exists, namely, a meeting of the creditors resolving that the liquidator of the Company should be removed and certain person be appointed as liquidator in place of, or jointly with him, and no such meeting or resolution has taken place or been passed. Whichever way one looks at this application, it is impossible to say that the application either on merits or for any other reason complies with the provisions of the Act. The application is misconceived and does not lie. It is impossible in my judgment, quite apart from the technical objection that the creditors have no locus standi, for me to exercise any powers u/s 215 of the Act for the simple reason that exercise of such powers must be in cases which are just and beneficial, not only just and beneficial to the petitioner but just and beneficial to all parties. In other words, the powers are strictly limited (if I may use the expression which I have already used in connection with this matter), to the assistance in the winding up. It would be impossible for me to hold that I should be exercising such powers if I accepted the applications before me. There are obvious irregularities in the procedure as regards the winding up, and I express no view with regard to that because in certain circumstances it has been held in a very large number of cases, that the winding up is valid in spite of the irregularities. I do not say that this case is similar to those; I do not, on the other hand, say that it is not.
Both these petitions are dismissed and as I cannot say that in the circumstances these are proper applications and raise questions which should have been brought to the notice of the Court, I cannot say that the costs should come out of the assets in the winding up. The petitioners will, therefore, pay to the respondent Company five gold mohurs, the principal petitioner paying of that sum three gold mohurs and the other petitioner two gold mohurs. The costs will be paid into the Court and the respondent Company will be entitled to withdraw them.