Chitty, J., in delivering judgment, observed that the most important sections in the Companies' Act 1862, bearing on the question were sections 84 and 153; [corresponding with sections 133 and 197 of the Indian Act]. The 84th section enacted that a winding-up by the Court should be deemed to commence at the time of the presentation of the petition, but the section did not state what consequences were to follow from this enactment. The language of the section being precise, he could not hold that as to the transactions in the Mauritius the winding-up ought to be deemed to commence from the 14th of May. Sec. 153 [sec. 197 of the Indian Act] dealt only with dispositions of property, and did not mention contracts, and the case before the Court was one not of disposition of property but of contract only. The authority of the officers of the bank to carry on the business in Mauritius was not revoked until notice of the appointment of the provisional liquidator reached the island, i.e. the 14th May; and it would be wrong by a fiction of law to impute notice to the persons on the island at a time when it was impossible for them to have had notice. The purchasers of the bills got what they bargained for, viz. drafts of the bank, the payment of which depended on the solvency of the bank at the time of their presentation at the head office; and the principle of caveat emptor would seem to apply to their case. The rule upon which the Court exercised the discretion entrusted to it by the 153rd section of the Act was to affirm all transactions bona fide entered into without notice of the petition, and which were also complete at the date of the winding-up order. His Lordship accordingly held that the bills given by the officers of the bank on behalf of the bank were binding on the bank, and the applicants were not cutitled to an order for refunding the consideration paid, but merely to a right of proof; and that the holders of the bills were the persons entitled to prove.

The case being a test case, the costs of all parties were directed to come out of the assets in liquidation. IN RE Oriental Bank Corporation (not yet reported).

See the note to this sec. at pp. 275-278 of Buckley, 3rd ed., and 4th ed. 307-310.

198. Where any Company is being wound-up, The books of all books, accounts and documents of the Company the Company and of the liquidators shall, as between the contri- evidence. butories of the Company, be prima facie evidence of the truth of all matters purporting to be therein recorded,

Sec. 154 of the English Companies' Act (25 and 26 Vic., c. 89), 1862; and sec. 170 of the Indian Companies' Act X. of 1866, verbatim.

Cf. sec. 78 of Act XIX. of 1857.

See Fox's case, 3 D. J. and S., 465; decided under s. 40 of the Joint Stock Companies' Act, 1856.

See also per Hall, V. C., IN RE Esparto Trading Co., 12 Ch. D., at

p. 204.

accounts and

199. Where any Company has been wound-up As to disposal under this Act and is about to be dissolved), the of books, books, accounts and documen of the Company and documents of the liquidator may be disposed of in the following of the Company. way; that is to say, where the Company has been wound-up by or subject to the supervision of the Court, in such way as the Court directs, and where

Inspection of books.

the Company has been wound-up voluntarily, in such way as the Company by an extraordinary(ii) resolution directs.

But, after the lapse of five years from the date of such dissolution, no responsibility shall rest on the Company or the liquidators, or any one to whom the custody of such books, accounts and documents has been committed, by reason that the same or any of them cannot be made forthcoming to any party or parties claiming to be interested therein,

Sec. 155 of the English Companies' Act (25 and 26 Vic., c. 89), 1862; and sec. 171 of the Indian Companies' Act X. of 1866, verbatim, save that "liquidator" in the first sentence is substituted for "liquidators" in these sections. (i) Sees. 159 and 187, supra.

(ii) See 173, supra.

200. Where an order has been made for winding-up a Company by the Court or subject to the supervision of the Court, the Court may make such order for the inspection by the creditors and contributories of the Company of its books and papers as the Court thinks just, and any books and papers in the possession of the Company may be inspected by creditors or contributories in conformity with the order of the Court, but not further or otherwise(i),

Sec. 156 of the English Companies' Act (25 and 26 Vic., c. 89), 1862; and sec. 172 of the Indian Companies' Act X. of 1866, verbatim.

64

(i) As to the accounts to be kept by the directors of a Company, see sch. I. table A, cl. 78, post; and see rule 54, post, as to inspection of books and accounts relating to the winding-up by creditors and contributories. Independently of this section, semble, a creditor's right to inspection rests upon principles similar to those which would be applicable in a suit if he had filed a bill to establish his claim." Buckley, 3rd ed., p. 279, 4th ed., 311, citing ex parte Walker, 15 Jur., 853.

See sees. 129 et seqq. of the Civil Procedure Code XIV. of 1882.

46

In the English Companies' Act (25 and 26 Vic., c. 89), there follow these sections: see. 157: “Any person to whom anything in action belonging to the Company is assigned in pursuance of this Act, may bring or defend any action or suit relating to such thing in action in his own name." As to which see now sec. 25, el. 6, of the Judicature Act (36 and 37 Vic., c. 66), 1873.

And see. 158," In the event of any Company being wound-up under this Act, all debts payable on a contingency, and all claims against the Company, present or future, certain or contingent, ascertained or sounding only in damages shall be admissible to proof against the Company, a just estimate being made, so far as is possible, of the value of all such debts or claims as may be subject to any contingency or sound only in damages, or for some other reason do not bear a certain value."

See Mr. Buckley's note to this section, 3rd ed., pp. 281,-311. 4th ed., 312–345. In India, however, a section corresponding to sec. 157 would be useless, there being no such distinctions between law and equity as existed in England prior to the Judicature Act, 1873. See the Act for establishing High Courts of Judicature in India (24 and 25 Vic., c. 104), 1861; and the Letters Patent of 1862, clauses 18, 19 and 20; and 1865, clauses 19, 20, and 21 granted under that Act.

Section 158 seems to have been omitted from the Indian Companies' Acts as unnecessary, having regard to Rules 20 to 28, post, and see the note thereto.

No rules have as yet been made under the present Act but by section 2, supra, the rules at present in existence which were made under Act X. of 1866 are to be deemed to have been made under this Act. See the rules, post.

scheme of

sanctioned.

201. The liquidator may, with the sanction of General the Court(i) where the Company is being wound-up by liquidation the Court or subject to the supervision of the Court, may be and with the sanction of an extraordinary resolution (ii) of the Company where the Company is being woundup altogether voluntarily, pay any classes of creditors in full, or make such compromise or other arrangement as the liquidator may deem expedient with creditors or persons claiming to be creditors, or persons having or alleging themselves to have any claim, present or future, whereby the Company may be rendered liable.

Sec. 159 of the English Companies' Act (25 and 26 Vie c. 89), 1862; and sec. 173 of the Indian Companies' Act X. of 1866, substituting "liquidator" for "liquidators" in these sections. In the sec. in the English Act the words "present or future" are followed by "certain or contingent, ascertained or sounding only in damages against the Company, or whereby," &c.

(i) See rule 48, post.

(ii) See secs. 173, 183, supra. (iii) Cf. sec. 180, supra.

See note to the following section.

compromise.

202. The liquidator may, with the sanction of Power to the Court(i) where the Company is being wound-up by the Court or subject to the supervision of the Court, and with the sanction of an extraordinary resolution(i) of the Company where the Company is being woundup altogether voluntarily, compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts, and all claims, whether present or future, subsisting or supposed to subsist between the Company and any contributory or alleged contributory, or other debtor or person apprehending liability

Where

to the Company, and all questions in any way relating to or affecting the assets of the Company or the winding-up of the Company, generally upon such terms as may be agreed upon, with power for the liquidator to take any security for the discharge of such debts or liabilities, and to give complete discharges in respect of all or any such calls, debts or liabilities.

Ser. 160 of the English Companies' Act (25 and 26 Vic., c. 89), 1862, in which after the words "present or future" are added "certain or contingent, ascertained or sounding only in damages," and after the words "or the winding-up of the Company" are added "upon receipt of such sums, payable at such times and generally upon such terms," &c.; and sec. 174 of the Indian Companies' Act X. of 1866, verbatim.

(i) See rules 47, 56, 57, 58, post.

(ii) See sees. 173, 183, supra.

A going Company has, as an incident to its existente, the same power of compromising claims against it as an individual has. This and the preceding section appear to provide that a Company in liquidation by its official liquidators, with the sanction of the Court, shall have exactly the same power of compromising both with its creditors and its debtors as an individual would have." Buckley, 4th ed., 347.

The words of the section and especially the words "liabilities to calls, debts, and liabilities capable of resulting in debts, subsisting or supposed to subsist," and the words "alleged contributory," plainly show that the compromises intended to be sanctioned might be entered into before the list of contributories had been settled, or the liabilities or competence of the shareholders had been ascertained. Bank of Hindustan, &c. v. Eastern Financial Association, L. R. 2 P. C. 489, 501; 13 Moore 1. A. 15; 3 Beng. L. R. P. C. 8; 12 W. R. P. C. 27; 6 Moore P. C. C. N. S. 114; where it was held further that upon the evidence and the judicial knowledge of the existing state of affairs of the Eastern Financial Association in Bombay, the High Court in Bombay had exer cised a just discretion in the investigation and the order sanctioning the compromise was affirmed. See also IN RE Commercial Bank Corporation of India and the East, L. R. 8 Eq., 211.

If a scheme of arrangement under the English Companies' Act, 1862, and the Joint Stock Companies' Arrangement Act, 1870, has received the sanction of the majorities of contributories and creditors required by the Acts, and also the sanction of the Conrt, it is not material in what order those sanctions have been obtained. And when the arrangement is a fair one, and is likely to be beneficial to all parties, the Court will not be astute to find technical defects in the proceedings. IN RE Dynecor Dyffryn and Neath Abbey Collieries Co., 11 Ch. Div, 605. See further IN RE Tunis Railway Co., 19 Ch. D., 270, n, where the Court sanctioned, and IN RE Richards and Co., 11 Ch. D., 676, where the Court declined to sanction, a scheme of arrangement.

203. Where any compromise or arrangement compromise shall be proposed between a Company which is, at the commencement of this Act or afterwards, in the course of being wound-up either voluntarily or by

proposed, Court may

order a

creditors

or under the supervision of the Court, and the meeting of creditors of such Company, or any class of such &c., to decide creditors, it shall be lawful for the Court, in addition as to such to any other of its powers. on the application in a compromise. summary way of any creditor or the liquidator, to order that a meeting of such creditors or class of creditors shall be summoned in such manner as the Court shall direct; and, if a majority in number, representing three-fourths in value, of such creditors or class of creditors present either in person or by proxy at such meeting shall agree to any arrangement or compromise, such arrangement or compromise shall, if sanctioned by an order of the Court, be binding on all such creditors or class of creditors, as the case may be, and also on the liquidator and contributories of the said Company.

Sec. 2 of the Joint Stock Companies' Arrangement Act (33 and 34 Vic., c. 104), 1870, verbatim, omitting the reference to the English Companies' Acts of 1862 and 1867 in that section.

For the difficulties which this section was aimed at see Buckley, 4th ed., 348, 515, et seqq.

to accept

of property of

204. Where any Company is proposed to be, or Power for is in the course of being, wound-up altogether liquidators voluntarily, and the whole or a portion of its busi- shares, &c., ness or property is proposed to be transferred or as a considersold to another Company, the liquidators of the ation for sale first-mentioned Company may, with the sanction of Company. a special resolution(i) of the Company by whom they were appointed, conferring either a general authority on the liquidators or an authority in respect of any particular arrangement, receive, in compensation or part compensation for such transfer or sale, shares, debentures, policies or other like interests in such other Company, for the purpose of distribution amongst the members of the Company being woundup, or may enter into any other arrangement whereby the members of the Company being wound-up may, in lieu of receiving cash, shares, debentures, policies or other like interests, or in addition thereto, participate in the profits of, or receive any other benefit from, the purchasing Company.

Any sale made, or arrangement entered into, by the liquidator in pursuance of this section shall be