The fourth respondent applied for confirmation of the provisional liquidation of the third respondent (Chaferfly Enterprises (Pvt) Ltd) on the basis of non-payment of debt. The court confirmed the provisional liquidation order on 16 December 2015, and appointed the first respondent as provisional liquidator. The liquidation application was initially set down for 9 December 2015 but was postponed to 16 December 2015 and heard on that date. The applicant, a director and contributory of the third respondent, filed an application (HC 113/16) to set aside the confirmation of the liquidation, arguing that the postponed hearing date should have been advertised in the Gazette as required by law, and that there were irregularities in the proceedings. When the first respondent advertised a sale in liquidation of the third respondent's property scheduled for 18 February 2016 despite the pending application, the applicant filed an urgent chamber application seeking to suspend/cancel the sale. The sale was extensively advertised in the Chronicle newspaper on multiple dates in February 2016, and the applicant only filed his urgent application on 19 February 2016, after the sale had been conducted.
The court granted the applicant's application for interim relief as prayed, ordering the suspension of any further sales in liquidation of the third respondent's property pending finalization of the section 227 application (HC 113/16). However, the order was made subject to the condition that property already purchased by third parties pursuant to the order of 16 December 2015 would remain with those purchasers and not be affected by the order.
Where a court adjourns the hearing of an application for the winding up of a company, section 210(3) of the Companies Act makes it mandatory for the applicant to advertise the application and the adjournment in the Gazette unless the court orders otherwise. Failure to comply with this mandatory statutory requirement renders the adjourned proceedings and their outcome incurably defective and a nullity. A contributory (as defined in sections 201 and 202 of the Companies Act), being a person liable to contribute to the assets of a company in the event of winding up, has locus standi to bring an application under section 227 of the Companies Act to set aside liquidation proceedings and to seek interim relief to prevent dissipation of company assets pending determination of such application.
The court observed that the fourth respondent's silence and failure to oppose the applications was indicative that its debt against the third respondent had been substantially satisfied through the warrants of execution it had previously caused to be issued. The court also made obiter comments endorsing the parties' shared view that innocent third-party purchasers should not be adversely affected by the outcome where they purchased property in good faith relying on a court order, stating this view resonates with principles of justice, equity and fairness. The court noted that the relationship between the applicant and the third respondent was not clearly pleaded in the founding affidavit, but was clarified by the Sheriff's return of service which showed the applicant was a director of the third respondent.
This case is significant in Zimbabwean company law for emphasizing the mandatory nature of procedural requirements in liquidation proceedings, particularly the requirement under section 210(3) of the Companies Act to advertise adjourned winding-up applications in the Gazette. It establishes that failure to comply with such mandatory provisions renders proceedings and orders a nullity, regardless of other technical arguments about delay or urgency. The case also clarifies the locus standi of contributories (including directors) to bring applications under section 227 to set aside liquidation orders. Additionally, it demonstrates the court's willingness to balance strict legal compliance with protection of innocent third parties who may have acted in reliance on court orders, even if those orders are subsequently found to be defective. The judgment reinforces that substantive compliance with statutory requirements takes precedence over procedural technicalities when fundamental legal requirements have been breached.