TEMISA HLDGS (PVT) LTD & ORS v REGISTRAR, PENSION & PROVIDENT FUNDS & ORS 1999 (2) ZLR 101 (H)

Flynote

Company — scheme of arrangement with creditors — scheme sanctioned by court — effect — not an order of court — effect isthat of a contract between the parties to the scheme — party — who is party to scheme — person on whom whole scheme depends — even if not a party, is bound by scheme

Headnote

The first applicant, a company, agreed to an arrangement whereby it was to inject capital into another, ailing company, in return for the shares in that other company. On the strength of this, the other company entered into a scheme of arrangement with its creditors; this scheme was sanctioned by the High Court. Before the applicant company had carried out its undertaking to inject capital, the directors of the ailing company agreed that the company's pension fund should be dissolved and made the necessary application to the Registrar, who authorised the winding up of the pension fund. The first applicant sought to set aside the Registrar's order, on the grounds that the directors were no longer empowered to act on behalf of the ailing company.

Held, that the fact that the court had sanctioned the scheme of arrangement did not mean that the scheme became an order of court. The scheme was a contract; the parties to it were bound by its terms and expected to meet their obligations under it.

Held, further, that as the whole scheme depended on the undertakings made by the first applicant, the first applicant was bound by the scheme, even though it was not specifically mentioned in the court's order sanctioning the scheme of arrangement.

Held, further, that as the first applicant had not met its obligations under the scheme of arrangement before the directors decided to wind up the pension fund, the directors were entitled to act as they did. The dissolution of the pension fund was properly sought and approved.