In re Gosai's Transport Ltd [1999] FJHC 168; HBE0012D.1999S (23 November 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO: HBE 0012 OF 1999

BETWEEN:

GOSAI’S TRANSPORT LIMITED
Plaintiff

AND:

IN THE MATTER OF COMPANIES ACT
Defendant

COUNSEL: Mr. I. Khan for Applicant
Mr. R. Prasad for Respondent

Hearing: 2nd November 1999
Decision: 23rd November 1999

DECISION

This is an application for stay of execution of an order for the winding up of Gosai’s Transport, made on 14th May 1999 by Pathik J, pending the determination of an appeal against the order.

The petition for the winding up of Gosai’s Transport Limited stated that the Petitioner had demanded the sum of $14,171.67 of the Company on 6th January 1999 and that the Petitioner had not and could not pay its debts. The Petition prayed for the winding-up of the Company.

In response, the Company denied receiving the Demand Notice, denied the debt, and said, by the affidavit of Parmendra Chandra Gosai, that the Company had assets which could be utilised to pay its debts.

In an affidavit in reply, Isaac Yaya of Shell (Fiji) Ltd, deposed that the debt was owed by the Company, that although there was a change in the name of the Company after the debt accrued, the Company was the same in substance, and that the opposition to the Petition was a delaying tactic.

The matter was set for hearing on 14th May 1999. On that day, Mr V. Kapadia appeared for the Company. Mr R. Prasad appeared for the Petitioner. Counsel for the Company made no submissions, and an order was granted in terms of the Petition. No further judgment was delivered in the circumstances. Thereafter, on 20th May an application was made to stay the winding-up order and to prevent publication of the order pending appeal.

The grounds of appeal in the affidavit of Parmendra Chandra Gosai, sworn on 20th May 1999 are as follows:

“(a) the learned judge erred in making an Order towing-up the company when there was evidence before the Court that the debt was not occurred by the Company.

(b) the learned judge’s decision was unjust in that its practical effect is unjustly to deprive the respondent of its defence.

(c) the learned judge failed to consider or to properly consider the provisions of section 22, of the Companies Act in that he failed to take into account the respondent denied being indebted to the petitioning creditor.

(d) the learned judge erred in law and in fact in making an order for the winding up of the respondent as in all the circumstances it was not just and equitable that the respondent be wound up.”

The Petitioner objects to the stay on the ground that it constitutes a deliberate attempt to delay the inevitable, that the petitioner should not be deprived of the fruits of the judgment, that the company’s assets could be tampered with, and, in the alternative the sum of $14,171.67 should be paid into Court.

In response, the Company says that it has substantial assets, that it can pay its debts and that if the orders are not granted its activities would cease, and the Company be destroyed. Further, the Company says that since the Company had not been in existence when the debt occurred there was a good chance of the success of the appeal.

Counsel have both filed written submissions in this matter. I note that in the additional affidavit of Virendra Singh, sworn on 6th July 1999, he says of the events of 14th May 1999 at paragraph 10:

“That I am further informed by my solicitors that when the matter was called for hearing of the winding-up petition on 14th May 1999, the Respondent Company Solicitors on instructions from Mr Iqbal Khan made an application for adjournment by consent but the Court refused to accept the reasons for adjournment posing an option to the solicitors to either have the petition heard or withdrawn. In the circumstances our solicitors asked for an order in terms of Petition which was duly granted.”

The Court has a discretion to stay execution of judgments and orders pending appeal. In Linotype-Hell Finance Ltd. -v- Baker (1992) 4 All ER 887, Staughton LJ said:

“It seems to me that if a defendant can say that without a stay of execution he will be ruined and that he has an appeal which has some prospect of success, that is a legitimate ground for granting a stay of execution.”

In that case the Court went on to consider whether the appellant had an arguable case.

The Court should also consider whether the effect of not granting a stay would render the appeal nugatory, and whether the appellant has shown that the interests of justice justify preventing the successful party from enjoying the fruits of the litigation.

In all the circumstances, I am satisfied that whilst the prospects of success of appeal are difficult to assess without a written judgment, the appellant’s appeal is likely to be frustrated if the stay application is refused.

Furthermore, the proceedings after the order for winding-up and publication are likely to have a final effect on the company which would frustrate the appeal.

However, since the company asserts that it is a substantial company, and is in a position to pay its debts, I order that the appellant pay into Court the disputed sum of $14,171.67 within 7 days of the judgment. I order stay of execution of the winding-up order of 14th May 1999, and further order non-publication of the order pending determination of the appeal.

Nazhat Shameem (Ms)
JUDGE

At Suva
16th November 1999