JUDGMENT

Lord Edmund-Davies:

This is an appeal from a judgment of the Court of Appeal of the Republic of Singapore, who on 14 April 1978, dismissed the present appellants' appeal from an order of Wee Chong Jin CJ made upon the respondents' petition, that the appellant company be wound up.

The appellants were incorporated in Singapore on 9 February 1972, under the Companies Act (Cap. 185). The nominal capital was $10m and the amount paid up or credited $1.77m. The respondents are a bank wholly owned by the Soviet Government, but incorporated in London and having a place of business in Singapore. From 1972 the respondents extended financial accommodation for the appellants' trading activities in three ways:

(1) overdraft facilities;

(2) credit facilities for the acquisition of goods, a trust receipt being issued in respect of each transaction and the goods and their proceeds of sale being held on trust for the respondents; and

(3) acceptance by the respondents of bills of exchange on the appellants' behalf.

By way of security, the appellants mortgaged their Singapore premises to the respondents and from 1974 onwards they also pledged their goods.

The appellants traded successfully for some time, and they understandably relied heavily in these proceedings on the fact that, as late as 17 December 1975, the respondents described them to a third party as 'a valued customer of the Bank [who] has maintained a satisfactory account with us since 2 October 1972', and added 'We estimate their net worth to be in the region of Singapore Dollars low eight figures and would consider the company good for their commitments'. But trading conditions deteriorated, and the respondents became concerned about the proceeds of sale of goods held by a number of trust receipts whose dates of maturity had expired. Correspondence passed between the parties and in December 1976, two meetings were held, at one of which Yap Cheng Hai (the appellants' chairman and managing director) renewed his earlier promise of concrete proposals to repay moneys which the appellants claimed in respect of certain trust receipts. At the end of the first of these meetings the respondents' solicitors served upon Yap Cheng Hai a written demand for payment of $8,092,088.56 within three weeks from that date, failing which they would petition for a winding-up order. Nevertheless, at the second meeting on 17 December 1976, the respondents were met by nothing more than a promise to prepare what was called a 'schedule of repayment'. But, in the absence of any concrete proposals, on 27 January 1977, the respondents caused to be served on the appellants a statutory demand under s. 218(2)(a) of the Act for payment within three weeks of the aforesaid sum together with 14% interest, failing which they would institute winding-up proceedings.

On 21 February 1977, the respondents presented their petition, based on s. 218(1)(e) and s. 218(2)(a) of the Companies Act asserting that the company was unable to pay its debts and was so 'deemed' (having neglected for three weeks after service upon them of the statutory demand to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor,) and that in those circumstances it was just and equitable that the company should be wound up.

No oral evidence was called when the learned Chief Justice dealt with the petition on 12 May 1977. Yap Cheng Hai had sworn an affidavit in opposition, asserting that on several grounds it would not be just or equitable to wind-up the company. Foremost among these were the following:

- That the company did not owe the petitioner the debts alleged or the interest claimed;

- That it was a profit-making organisation; and

- That it would be beneficial to all creditors were no order made.

The petition was supported by one creditor in the sum of $12,362.40 and opposed by another in the sum of $1,795,793.58. Having considered all the material, including an affidavit filed on behalf of the