could have no winding-up or sale of the undertaking, and their petition was consequently dismissed. IN RE Herne Bay Waterworks Co., 10 Ch.

D.,

42.

"A petitioner holding fully paid-up shares is not liable to contribute Paid-up, anything towards the assets of the Company, and if he has any interest Shareholder. at all, it must be that after full payment of all the debts and liabilities of the Company, there will remain à surplus divisible among the shareholders of sufficient value to authorize him to present a petition. That being his position, and the rule that the petitioner must succeed upon allegations which are proved, of course the petitioner must show the Court by sufficient allegation that he has a sufficient interest to entitle him to ask for the winding-up of the Company. I say 'a sufficient interest,' for the mere allegation of a surplus, or of a probable surplus, will not be sufficient. He must show what I call a tangible interest." Per Jessel, M. R., IN RE Rica Gold Washing Co., 11 Ch. Div., 42, 43. See also per Thesiger, L. J., Diamond Fuel Co., 13 Ch. Div., 411, and per Jessel, M. R., IN RE Vron Colliery Co., 20 Ch. Div., 447.

Whether the Court will order a winding-up on the application of a fully paid-up shareholder where the Company has no assets, except monies to be recovered under a case of fraud alleged and proved, quære, RE Rica Co., 11 Ch. Div., 36.

In IN RE Sylhet and Cachar Tea Co., 2 Ind. Jur. N. S. 94, a holder of fully paid-up shares was held entitled to apply for the winding-up of the Company.

Petitioner.

A petitioner who after the presentation of a winding-up petition filed Security for a petition under the Bankruptcy Act, 1869, for the liquidation of his costs of affairs, was ordered to give security for costs in the winding-up petition. IN RE Carta Para Mining Co., 19 Ch. D., 457 (following Malcolm v. Hodgkinson, L. R. 8 Q. B. 209 and Brocklebank v. King's Lynn Steamship Co., 3 C. P. D., 365).

To entitle a creditor to his costs of appearing on a winding-up petition, Costs. he must show a reasonable ground for appearing, IN RE Hull and County Bank, 10 Ch. D., 130.

In IN RE The Nabor Hali Tea Co. 3 Beng. L. R. Appendix 11, the petitioning creditor was held entitled to his costs as a first charge on the assets of the Company, subject to any prior liens on the estate.

On the hearing of a winding-up petition an official liquidator should not be appointed, as it is the settled practice to direct a reference to Chambers for that purpose. IN RE General Financial Bank, 20 Ch. Div., 276.

As to the presentation of a second petition, see Buckley, 4th ed., pp. 201, 202, and as to costs of a petitioner who presents a second petition in ignorance of a prior one, see IN RE General Financial Bank, 20 Ch. Div., 576.

qualified

petition.

132. No contributory of a Company under this Contributory Act shall be capable of presenting a petition for when not winding-up such Company(i) unless the members of the Company are reduced in number to less than winding-up seven(ii), or unless the shares in respect of which he is a contributory, or some of them, either were originally allotted to bim, or have been held by him, and registered in his name, for a period of at least six months during the eighteen months previous to the commencement of the winding-up(iii), or have devolved upon him through the death of a former holder:

Commencement of winding-up by Court.

Court may grant injunction.

Provided that, where a share has, during the whole or any part of the six months, been held by or registered in the name of the wife of a contributory either before or after her marriage, or by or in the name of any trustee for such wife, or for the contributory, such share shall, for the purposes of this section, be deemed to have been held by and registered in the name of the contributory.

Sec. 40 of the English Companies' Act (30 and 31 Vic., c. 131), 1867, verbatim.

(i) See sec. 131, supra.

(ii) See sec. 128 (c).

(iii) Cf. table A (47), as to voting.

A winding-up petition by a shareholder ought to state that the petitioner had held his shares for six months before filing the petition, IN RE City and County Bank, L. R. 10 Ch., 470. Buckley, 4th ed., 512.

Where it was through the default of the Company which had been ordered by the Court to allot shares to the petitioners and register them. as shareholders that the petitioners' names were not on the register for the six months, it was held that a winding-up order could be made, IN RE Patent Steam Engine Co., 8 Ch. D., 464.

The word "held" has no technical meaning, the true meaning of the word being that the name of the contributory has been on the register as the holder of shares for the period in question. IN RE Wala Wynaad Indian Gold Mining Co., 21 Ch. D., 849.

133. A winding-up of a Company by the Court shall be deemed to commence at the time of the sentation of the petition for the winding-up(i).

pre

Sec. 84 of the English Companies' Act (25 and 26 Vic., c. 89), 1862; and sec. 105 of the Indian Companies' Act X. of 1866, verbatim.

(i) Sec. 174, for the commencement of voluntary winding-up. Sec. 191, as to winding-up under supervision and note thereto. As to the " commencement of a winding-up, where a voluntary winding-up has been followed by a compulsory winding-up order, see IN RE Taurine Co., 25 Ch. Div., 118, noted fully infra, note to sec. 174.

134. The Court may, at any time after the presentation of a petition for winding-up a Company under this Act, and before making an order for winding-up the Company, upon the application of the Company or of any creditor or contributory of the Company, restrain further proceedings in any suit or proceeding against the Company, upon such terms as the Court thinks fit(i).

The Court may also at any time after the presentation of such petition, and before the first appointment of liquidators appoint provisionally an official liquidator of the estate and effects of the Company(ii).

Sec. 85 of the English Companies' Act (25 and 26 Vic., c. 89), 1862; and sec. 106 of the Indian Companies' Act X. of 1866, verbatim.

(i) Secs. 136, 212, 241, 245, post, and notes thereto.

(ii) Secs. 141-146, rules 15 and 55 post, and Form No. 9.

By the present section and sections 241, 245, the Court has in the interval between the presentation of a petition and an order upon it, a discretionary power to restrain proceedings against the Company and (as respects secs. 241, 245), against any contributory: secs. 136, 242, and 246, peremptorily stay proceedings after an order has been made until the leave of the Court has been obtained to proceed with them. See Buckley, 4th ed., p. 206, where also the difference between this section and the sections in the English Act corresponding with secs. 241 and 245 post is pointed out.

See secs. 192, 195, post, whereby a petition and order respectively for winding-up subject to supervision shall for the purpose of giving jurisdiction to the Court over suits be deemed to be a petition and order for winding-up by the Court. By sec. 177, post, in a voluntary windingup the creditors are to be paid pari passu, and by sec. 182 post, the Court may, on the application of the liquidators or a contributory, exercise all or any of the powers which it might exercise if the Company were being wound up by the Court.

Sec. 163 of the English Act, which corresponds with sec. 212 of this Act, see post, makes an execution issued against the effects of a Company after the presentation of a winding-up petition void; but according to the decided cases, this is subject to a discretionary power in the Court to allow execution to issue. Jessel, M. R., IN RE Vron Colliery Co., 20 Ch. Div., 442, 446; 51 L. J. Ch. Div., N. S. 389.

There the execution was issued after the presentation of the petition; but the case is the same where the execution has been issued before, but the sheriff has not taken possession till after the presentation of the petition, Ibid.

In IN RE Vron Colliery Co., 20, Ch. Div., 442; 51 L. J. Ch. Div., N. S. 389, the facts were as follows:-Repeated applications by a creditor of the Company for payment throughout the year 1881; 21st December 1881 payment on account made to him:

28th December writ issued by him against the Company.

4th January 1882 a paid-up shareholder of the Company, under considerable liability as a surety for it, presented a petition to wind it up, setting out a balance sheet which showed that the assets greatly exceeded the liabilities, but not alleging as a fact that they did so, stating that the Company was unable to pay its debts, and that it was just and equitable that it should be wound up.

6th January 1832 the creditor recovered final judgment without notice of the winding up petition.

7th January execution issued by him.

14th January the petition came on for hearing and was supported by creditors and a winding-up order was made.

The creditor then applied for leave to go on with the execution.
The Court of Appeal, reversing Bacon, C. J., held-

(a) That the petition could not be treated as collusively presented on behalf of a solvent Company for the purpose of defeating the execution, for that the balance-sheet could not be treated as proving the Company to be solvent and in fact they found that the Company was commercially insolvent, i.e., it had no means of paying its debts at once. See per Jessel, M. R., and Holker, L. J.

When the Court

will not stay proceedings.

Distress for

rent

(b) The petitioner, though not legally a ereditor, was virtually such, and by amending the petition by joining one of the supporting ereditors it might have been made a ereditor's petition.

(c) That consequently leave to proceed with the execution ought not to be granted.

(d) Leave ought not to be given on the ground that the ereditor had given indulgence to the Company, as he had never given time to the Company in the sense of binding himself not to sne, but had merely abstained from suing: and whether the giving indulgence to a Company is a sufficient reason for allowing a creditor to continue his proceedings notwithstanding a winding-up, quære.

66

66

60

Jessel, M. R., 20 Ch. Div., p. 448, "Cases decided by Courts of first "instance were eited, which lay down that the mere giving indulgence 'is a reason for preferring the creditor. I am not stisfied that these eases were rightly decided. It is not necessary to say on the present "occasion whether they ought to be overruled. I only say that I am "not satisfied that they ought to be upheld. I do not see why a creditor's allowing time to a Company should place him in a better position than other creditors under a winding-up. [Ex parte Railway Steel and Plant Co., IN RE Taylor, 8 Ch. D., 183.] So as to "the ease [IN RE Richards and Co., 11 Ch. D., 676] in which a creditor "who had been induced to delay his proceedings by false pretences has “ been held entitled to preference. I am not satisfied that they were well "decided. A Company does not make false pretences; its directors may "have made them, but they are not agents of the Company for the purpose of making false pretenees. That question, however, does not " arise on the present occasion, and I say no more than that I do not "wish to be understood as approving of these decisions." See also per Brett, L J. on the two cases above mentioned at p. 419, 20 Ch. Div.

66

The Court, however, will not exercise its discretion in favour of a Company to stay proceedings when the Company have allowed an order to be made whereby the person seeking to issue execution has incurred a liability and altered his position, and have lain by till that order could not be appealed from; Rudow v. Great Britain Mutual Life Assurance Society, 17 Ch. Div., 600, where it was also held that where proceedings are pending for winding-up an unregistered Company, all the provisions of Part IV. of the Companies' Act 1862, other than those expressly excepted, are applicable. See note to secs. 245 and 248, post.

As to restraining a distress, after a Company has gone into voluntary liquidation see Thomas v. Patent Lionite Co., 17 Ch. Div., 250, and see sections 177 and 182 post.

The principles applicable to this proceeding are thus stated by Fry, J. in IN RE Brown, Byly and Dixon, ex parte Roberts and Wright, 18 Ch. D., 649, where it was held that mortgagees having a right of distress to enforce payment of interest will be allowed to distrain after a winding-up for interest accrued while the liquidators were in possession, but not for arrears accrued before the winding-up, p. 652. "A mortgagee and a lessor, though in one sense independent persons, are nevertheless creditors of the Company in respect of any amount due on the mortgage, or on the lease at the date of the winding-up, and, as such creditors, they ought, in my judgment, to have neither preference nor priority. In respect of any rights arising after the winding-up by reason of the Company or the liquidators remaining in possession of the demised or the mortgaged premises, they ought, in my judgment, to be treated as independent persons, and if the Company or the liquidator choose to reu ain in possession of the demised or mortgaged premises, they must so remain upon the terms and conditions of the instrument; just as any other person must observe those terms. In that way, then, I draw the line at the commencement of the winding-up; and I hold that all claims of creditors before that date should be dealt with upon the principle of equality; but that with regard to the

rights after that, the Company is in no better position because it has become insolvent and has had a winding-up. That appears to me to be consistent with the current of decision which has drawn the line with regard to the exercise of the power of distress in respect of rent accrued before and rent accrued after the winding-up. The practice certainly has grown-up of allowing the lessor to distrain or to be paid in full in respect of rent, after the winding-up; but with respect to rent before the winding-up, to allow him only his right to compete with the other creditors by proving in the winding-up.

See also Thomas v. Patent Lionite Co., 17 Ch. Div., 250, 256.

But where the landlord, by enforcing his right of re-entry, is seeking to exercise a legal right to determine the term, if the Company desire to hold the estate after a winding-up subject to that legal right, the Company must satisfy the legal condition which precluded that right from being exercised. Therefore where a half-year's rent of a mine accrued due on the 3rd of November 1880, and on the 5th November an order was made for winding-up the Company which related back to the 7th October 1880, when the petition was presented, and the lessors had the right, if rent remained unpaid for thirty days after it was due, to enter and stop the working as well as to distrain, and on the 6th December they gave notice to the liquidator demanding either payment of the rent or stoppage of the works, but the liquidator continued working for the benefit of the Company, and did not pay the rent, it was held by Fry, J., upon a summons by the lessor for leave to distrain that the liquidator having elected to continue the working for the advantage of the Company must pay the full rent due out of the first assets. IN RE Silkstone and Dodworth Coal and Iron Co., 17 Ch. D., 158, with which contrast IN RE South Kensington Co-operative Stores, 17 Ch. D., 161, and see also General Share and Trust Co., v. Wetley Brick and Pottery Co., 20 Ch. Div., 260.

All the cases on this subject are to be found cited and classified by Lindley, L. J., delivering the judgment of the Appeal Court in IN RE Oak Pit Colliery Co., 21 Ch. Div., 322, 51 L. J. N. S., Ch. Div., 768, where it was held that a landlord is entitled to distrain for, or to be paid in full, rent accruing after the commencement of the winding-up, if the liquidator has retained possession for the purposes of the winding-up, that is, if he has used the property for carrying on the Company's business, or has kept the property in order to sell it or to do the best he can with it. But the landlord is not entitled to such priority if the liquidator has kept possession by arrangement with the landlord, and for his benefit as well as for the benefit of the Company, and has not agreed with the landlord to pay rent, nor if he has done nothing except abstain from trying to get rid of the property which the Company holds as lessee. The following is a concise abstract of the cases as cited by Lindley, L. J., in the above case.

I.

Distress for rent in arrear at commencement of winding-up.

a. If landlord a legal creditor of the Company, he is not allowed to distrain, but must prove in ordinary way.

IN RE Traders' North Staffordshire Carrying Co., 44 L. J., Ch. 172; L. R. 19 Eq. 60; IN RE Coal Consumers' Association, 46 L. J. Ch. D., 501; 4 Ch. D., 625; Thomas v. Patent Lionite Co., 50 L. J., Ch. Div., 544; 17 Ch. Div., 250.

N.B.-In such cases the circumstance that the liquidator has retained possession and carried on the Company's works does not entitle a landlord or a mortgagee (with a power of distress as and for rent) to distrain for rent in arrear in the winding-up.

IN RE Brown, Bayly and Dixon, ex parte Roberts and Wright, 50 L. J., Ch. D., 738; 18 Ch. D., 649; IN RE North Yorkshire Iron Co., 47 L. J., Ch. D, 333; 7 Ch. D., 661; IN RE South Kensington Co-operative Stores, 50 L. J., Ch. D., 446; 17 Ch. D., 161.