060-NLR-NLR-V-07-NEINA-MARIKAR-v.-CEYLON-STANDARD-PRESS-COMPANY,-LIMITED.pdf
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NEINA MARIKAR v. CEYLON STANDARD PRESSCOMPANY, LIMITED.
1904.
June 17*
Special, 279.
Company—Ordinances Nos. 4 of 1861, 6 of 1888, and 8 of 1893—Applicationfor compulsorily winding up—Discretion of the Court to inquire intothe boh& fides of the application.
Upon an application to the District Court by a registered shareholderin a JointStock Company foranorder to windup the Company
compulsorily—
Held, perMiddleton, J., that,as'a general rule,after a resolution
had been passed for winding np a Company voluntarily a shareholdercould not obtain a compulsory order for winding up, there being noallegation in the petition or affidavit that it was not the majority ofthe shareholders who had assentedtothe voluntary winding up, or that
there was any fraud on the part of those who had done so, or that theycould not be trusted to determine the matter themselves, and that theresolution to wind up voluntarily was a sham.
Held, per Curiam, the Court has a discretion vested in it by sections 78and 80 of Ordinance No. 4 of 1861 to dismiss a petition for winding up-a Company,if it is satisfied thatthepetition is onenot made' in good
faith, or is founded upon insufficient- materials.
S
L. NEINA MARIKAR being a registered shareholder in the• Ceylon Standard Press, Company, Limited, petitioned the
District Court of Colombo for an order to wind up the Companycompulsorily under the provisions of the Joint Stock Companies’Ordinance, No. 4 of 1861, and the amending Ordinances No. 6 of1888 and No. 3 of 1893.
In his application and affidavit submitted to the AdditionalDistrict Judge, Mr. Felix Dias, it was stated that an attempt wasbeing made to wind up the Company privately to the detrimentof the general body of shareholders, and that a resolution to thateffect had been passed, but had not been confirmed. The counselfor the applicant moved for an interim order on the Company notto confirm any such resolution until the hearing of the application.The Additional District Judge allowed an order on the Companyreturnable on the 25th February, to appear and show causewhy the Court should not order it to be* wound up compulsorilyunder its direction, and it further ordered»tliat the Companyshould refrain from confirming ijny resolution for the voluntarywinding up of its affairs until the hearing and determination ofthe said application.
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1904. On tiie .1st February, 1904, the proctor lor the said CompanyJune 17. applied to the District Judge of- Colombo, Mr. Joseph Grenier, tofix the 4th February, 1904, lor the Company to show cause againstMr. Dias’s order. This was allowed ex parte.
Pursuant to this order an inquiry was held by Mr. Grenier intothe matters alleged in the petition, and on the 22nd Februarythe learned Judge dismissed the petition with costs by thefollowing order: —
“ I find the petitioner is a Moorish trader, and holds oneshare in the Company worth Es. 100. His application towind up the Company is supported by an affidavit carefully andmethodically arranged with figures, which apparently justify
these statements In view of his admission in cross-
examination the first question I have to determine is whetherthis petition is a bond fide one; and secondly, whether the peti-tioner can be held responsible for the statements contained in
it and in his affidavit It is contended for the Company
that the petitioner has been made use of by others for purposesof their own.
“ I think that the Court has a discretion vested in it by sections78 and 80 of Ordinance No. 4 of 1861 and the preceding sectionto dismiss a petition for winding up a Company, if it is satisfiedthat the petition is one not made in good faith, or is founded uponinsufficient material, or no materials at all.
“ This petition has been presented by u contributory who had notfully paid up his share at the date of the application, and before Igrant, the prayer of it I must be satisfied that it is a bond fide one.The cross-examination of the petitioner shows that he was not afree agent, so to speak, in presenting this petition, and that he didnot know what the object of the petition was. According to hisown admissions he did not know who siipplied the facts containedin the affidavit or who drafted out the affidavit. All he can say isthat counsel drafted it, and that the affidavit was sent to his house'on the morning of the day he presented it to the AdditionalDistrict Judge; but it is certain that, although he possesses aslight knowledge of the English language, he had not the leastconception of the real contents of the affidavit or the petition orof the gravity of the charges *he was making against the directorsof the Company. The Court cannot have any sympathy witha shareholder who thu^ lends himself to be made use of byothers.
‘ ‘ It was contended for the petitioner ‘ that, as the statementscontained in the affidavit had not been contradicted by any counter-«raffidavit, I must accept them as' true. If I was satisfied of the
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bond fides of the petition I should certainly have required an■affidavit from the directors. But where an irresponsible personwho confesses to ignorance of the entire contents of his affidavitis put forward to asperse the integrity and probity of severalpublic men I fail to see of what use any counter-affidavit canpossibly be. The petition must be dismissed with costs.”
The petitioner appealed. The case was argued on the 24th and25th May, 1904.
DodweU Browne (with Samarawikramd), for appellant.
Lascell.es, A.-G., for the Company, respondent.
Cur. adv. vult.
17th June, 1904. Wendt, J.—
1 To my mind the wording of section 80 of the Joint StockCompanies’ Ordinance, 1861, which empowers the Court to dismissthe petition of a contributory, with or without costs, or to makeca winding-up order, or such other order or decree as it deemsjust, gives the Court a discretion as to whether it will or will notgr^nt the prayer of the petition. Any doubt that might exist isremoved by the decision in the case of the Metropolitan Saloon■Omnibus Company (5 -Jut. N. S. 922, 28 L. J. Ch. 830.
The question then is whether the learned District Judgeexercised his discretion, and, if so, whether he exercised it in away which was reasonable.
It is true that the Company presented no counter-affidavitto contradict the allegations in the petitioner’s affidavit, suchas they were, but they were not bound to do so, if petitionerhad failed to make out a primd facie case to the satisfaction ofthe Court. The Court has held that he did so fail. It has heldthat the petition was not presented bond fide, but that the peti-tioner me^ly allowed himself to be put forward by others. Theimpression left on my mind by the petitioner’s cross-examinationis that the petitioner, a wealthy man, took his single Rs. 100 sharein the .Company, not by way of an investment for himself, #but in»order $9 “ oblige ” others who asked him to do so. He took nointerest' whatever in the Company’s affak®. thereafter, and never:a£tende|, any one of its meetings, or (so f%r as appears) wasrepresented at it. He neglected to pay the last call of Rs. 25 onius share, and it seems difficult to believe that his petition was’‘simply prompted by a desire to get*repaid his Rs. 75.
1904.
June 17.
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1904.
June 11.
Wendt, J.
At the argument I was somewhat inclined to think that-the District Judge ought to have required an answer from,the Company, and then investigated the charges made by thepetitioner, but on fuller consideration I think this would onlycome at a later stage after the petitioner had satisfied the Courtas to his bond fides, and primd facie satisfied it as to thetruth of his allegations. As the case stands, I think appellanthas not shown that we ought to interfere with the DistrictJudge’s order, and I would therefore dismiss the appeal with,costs.
Middleton, J.—
This was an appeal against an order of the District Judgedismissing an application for the winding up of the Standard’Press Company, Limited, compulsorily by the Court under sections.75 to 80 of the Joint Stock Companies’ Ordinance, No. 4 of1861.
The District Judge’s reason for dismissing the petition was thathe considered he had a discretion under sections 78 and 80 to-refuse to make the order if he thought fit, and that he exercisedthat discretion adversely to the petitioner on the ground thatthe petition was not presented in good faith. The petitionerwas the owner of only one Rs. 100 share which was notfully paid up. :JFor the appellants it was contended that thelearned District-''Judge did not possess under the Ordinance thediscretion he claimed, and that, even if he did, such discretionhad not been rightly exercised. The affidavit in support of thepetition alleged that the Company was unable to pay its debts,and that three-fourths of the capital had been lost or become-unavailable.
It would appear that our Companies’ Ordinance, No. 4 of 1861,.follows the provisions of the English Companies’ Act of 1856, andno .amendment has been made on the lines of the Companies'Act of 1862, and no provision similar to section 138 of that Act:which enables a contributory, where a Company is being volun-tarily wound up,, to obtain the assistance of the Court on a specificpoint t without all the expenses of a compulsory winding up, isavailable here. The real complaint of the learned counsel forthe petitioner fs, that, iie has not be^n able to develop what hebelieves to be his ease by the filing of affidavits by the directorsor the secretary and their cross-examination, /when he says hewould be in a position to show he was entitled to the order hg.claimed.
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It is admitted that on the 16th December, 1908, at a general 19°4*meeting of the Company a resolution was passed to wind up the June ‘Company voluntarily; that the 27th January, 1904, was fixed for Middleton-the confirmatory meeting; and that the petition in this case waspresented to the Court on the 23rd January, 1904, and that sincethen the confirmatory meeting has been held and the Companyhas resolved to wind itself up voluntarily.
The learned counsel for the appellant quoted various oases tous. In Ex parte Hawkins in re • Metropolitan Saloon OmnibusCompany, Limited (28 L. J. Ch., p. 830), decided by the LordsJustices in 1859 on sections 67 and 72 of “ the Joint StockCompanies’ Act, 1856,” there is no doubt that the Company were-called upon to answer the affidavit in the petition, but it is possiblethat the petitioner’s cross-examination on his affidavit might have-disclosed, as the Lords Justices held, that the evidence showed,after the inquiry before the Commissioner, the petition waspresented in bad faith and on' false pretences; and if it had doneso, the discretion which the Lords Justices held lay in the Com-missioner might very well have been exercised as the learnedDistrict Judge has exercised it here. Section 72 of the EnglishAct of 1856 is identical with section 80 of our Ordinance No. 4 of1661. Section 67 in that Act is the same as section 75 in ours.
The observations of Lord Justice Turner also apply to this case,where primd facie the large majority of the contributories are infavour of a voluntary winding up. He says when a person whois a partner takes proceedings against the will and against the•opinion of the large majority of his co-partners, he ought to showa clear case of bond fidee.
The present case is perhaps not so strong a one as the Englishease, but the petitioner here is the owner of one not fully paidup share, does not understand English well, never attended ameeting of the Company, took no interest in the Company, under-stands the reports only a little, only lately came to know of itsaffairs, is ignorant of the contents of his own affidavit, and did.not attend the winding up meeting of the Company. The affidavitalleges fraud in the directors in issuing misleading reports asto the prospects and position of the Company, and implies thatthey have failed to observe the statutory provisions in differentrespects, and believes that tlley are the latest creditors and maytake advantage- of it to waive the statute of limitations in their•own favour. I do not consider that Jessel M. B.’s judgment inIn re Rica Gold Washing Company (11 Ch. D., 42) assists theappellant, but is rather against him, and the Master of the Bolls’remarks as to stating the facts which constitute the fraud are very
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1904.
June 17.
Middleton,
3.
germane to this affidavit. Because the directors took a sanguineview of the business of the Company, they ought not to becharged with fraud in the absence of some facts to indicate it. Inre Crystal Beef Gold Mining Company (1 Ch. D., 410) does nothelp the appellant except in indicating that a shareholder who isin arrear in payment of calls presenting a petition may be heardwhen the calls are paid. The same observation applies to Inre BristolJoint Stock Bank (44 Ch.D., 703).On theother
hand, theAttorney-General relies onthe rulingof theLords
Justices In re Gold Company (11 Ch. D., 701), where it was laiddown that as a general rule after a resolution has been passedfor winding up a Company voluntarily, a shareholder cannot obtaina compulsory order for winding up. There is no allegation inthe petition or affidavit here that it was not the majority of theshareholders who have assented to the voluntary winding up, orthat there is any fraud on the part of those who have done soror that they cannot “ be trusted to determine the matter them-selves, and that the resolution to wind up voluntarily was a sham.”Consideringthat the ruling in that case applieshere, 1must
decline toaccede to the appellant’srequest tore-openthese
proceedings, as I am fully satisfied that under the circumstancesthe order made by the learned District Judge wa6 justified andequitable.
The appeal, in my opinion, should be dismissed with costs.