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Issues: Application for winding up order and appointment of provisional liquidator in a limited company.
The judgment pertains to an application by three shareholders in a limited company for a winding up order and the appointment of a provisional liquidator. The company in question, Gaya Sugar Mills Ltd., had faced financial challenges due to an ambitious project to construct a sugar factory and a cardboard factory. The project faced setbacks, leading to dissensions among the directors. The application for a winding up order was based on the company's inability to perform its main purposes, lack of adequate funds, and heavy losses. The court considered the grounds presented by the petitioners, including the company's current capacity, preparations for the crushing season, and shareholder opposition to winding up. The court also noted allegations of fraudulent dealings by the Managing Director and the potential impact on shareholders. However, the court highlighted that a finding of fraud cannot solely rely on affidavits and emphasized the significance of appointing a provisional liquidator cautiously to ensure fair asset distribution. The judgment referenced a relevant case to illustrate the implications of appointing a provisional liquidator prematurely. The court scrutinized the circumstances, including financial threats from creditors and a perceived management deadlock, to determine the necessity of a provisional liquidator. Ultimately, the court dismissed the application for a provisional liquidator, citing the lack of justifiable grounds for such an appointment and suggested alternative measures for resolving the company's issues, such as convening an extraordinary general meeting to address management deadlock and strategic changes.
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