SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
MPUMALANGA DIVISION, MBOMBELA MAIN SEAT
Case Number: 5801/2023
In the matter between:
SIZABANTU PIPING SYSTEMS (PTY) LTD APPLICANT
NEDBANK LTD INTERVENING PARTY
And
MANTELANE CONSTRUCTION CC RESPONDENT
_________________________________________________________________________________
JUDGMENT
__________________________________________________________________________________
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED : NO
25.06 .2026 ___ ____________________
KEKANA AJ
INTRODUCTION
[1] This is an application for the final winding -up of the respondent on the basis that it has
failed to discharge a debt due and owing to the applicant. Nedbank Limited (the
intervening party), a creditor of the respondent and the intervening party in these
proceedings, brought an application to intervene, which application was granted. The
intervening party supports the relief sought by the applicant on the basis of its own claim
against the respondent.
BACKGROUND
[2] The respondent was awarded a tender by the Ehlanzeni District Municipality (“the
municipality”) during 2021 for the construction of a pipeline. Pursuant to the execution
of that tender, the respondent procured goods and services from the applicant.
[3] The applicant alleges that the respondent is indebted to it in the amount of R6 903
267.07 in respect of goods supplied and services rendered pursuant to the aforesaid
tender. Following the respondent’s failure to settle the outstanding amount, the applicant
caused a letter of demand to be served by the sheriff at 1[…], Zone […], S[…], being the
respondent’s registered address.
[4] Despite demand having been made, the respondent failed to discharge the debt or make
satisfactory arrangements for payment. Consequently, the applicant launched these
windingup proceedings on the basis that the respondent is unable to pay its debts as
contemplated in the applicable provisions of the Companies Act.
THE APPLICANT’S VERSION AND SUBMISSIONS
[5] The respondent signed an acknowledgment of debt but has failed to honour that
acknowledgment of debt. The applicant submitted that the signed acknowledgement of
debt in the amount of R6 903 267.07 constitutes conclusive proof of the respondent’s
indebtedness to the applicant. The applicant further contended that, notwithstanding
demand, the respondent has failed to settle the outstanding amount. In this regard, a letter
of demand was served by the sheriff at the respondent’s registered address on 6
September 2023, demanding payment of the aforesaid amount. Despite such demand, the
respondent failed to make payment.
THE INTERVENING PARTY’S VERSION AND SUBMISSIONS
[6] The intervening party obtained judgment against the respondent in the amount of R2 035
225.87 on 6 September 2024. Despite judgment having been granted, the respondent has
failed to satisfy the judgment debt. The intervening party accordingly contends that the
respondent’s failure to meet its obligations to creditors constitutes further evidence of its
inability to pay its debts and supports the granting of a final winding-up order.
THE RESPONDENT’S VERSION AND SUBMISSIONS
[7] The respondent submitted that the applicant has failed to establish that the respondent is
indebted to it in the amount claimed. It contends that the alleged indebtedness is bona
fide disputed on reasonable grounds, thereby rendering winding -up proceedings
inappropriate for the determination of such dispute. The respondent further averred that
the applicant breached the agreement between the parties, in that the applicant was aware
that payment to the applicant was contingent upon the respondent receiving payment
from the municipality.
[8] The respondent further contends that it remains in a sound financial position and is
therefore solvent. It submits that, in terms of the agreement between the parties, payment
to the applicant would only become due once the municipality had paid the respondent
for the work performed. Accordingly, the respondent maintains that, should the alleged
indebtedness ultimately be established, payment will be made to the applicant upon
receipt of payment from the municipality. The respondent further asserts that it has no
other overdue creditors, which, according to it, demonstrates that it is not unable to pay
its debts.
LEGAL FRAMEWORK
[9] It is trite that the power of a court to grant a winding -up order is discretionary and that
such discretion must be exercised judicially upon a consideration of all the relevant facts
and circumstances. It is equally well -established that winding -up proceedings are not
designed to enforce payment of a debt that is disputed on bona fide and reasonable
grounds. In such circumstances, a winding-up application constitutes an abuse of process
and should not be employed as a substitute for ordinary action proceedings. The
principle was articulated in Badenhorst v Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346 (T), where the Court held that a winding-up order should not be granted
where the indebtedness relied upon is genuinely and reasonably disputed.
[10] However, where the indebtedness is admitted or where the alleged dispute is not bona
fide or reasonable, the court may, subject to its discretion, which is narrow and limited,
grant a winding up order if the requirements of section 344 and 345 of the Company’s
Act have been satisfied.
[11] The relevant parts of section 344 and 345 reads as follows:
Section 344 “A company may be wound up by the Court if-
…
(f) the company is unable to pay its debts as described in section 345;
Section 345 (1) A company or body corporate shall be deemed to be unable to pay its debts if-
(a) a creditor, by cession or otherwise, to whom the company is indebted in a sum not less
than one hundred rand then due-
(i) has served on the company, by leaving the same at its registered office, a demand
requiring the company to pay the sum so due; or
(ii) ...
and the company or body corporate has for three weeks thereafter neglected to pay the sum,
or to secure or compound for it to the reasonable satisfaction of the creditor; or (b) …
(c) it is proved to the satisfaction of the Court that the company is unable to pay its debts.”
ANALYSIS
[12] The guiding principle in such matters is that generally an unpaid creditor has a right
ex debito justitiae to a winding up order against a company that has failed to discharge the
debt owed to it. See Afri Operations Ltd v Hamba Fleet (Pty) Ltd 2022 (1) SA 91 (SCA) at
paragraph 12. The discretion of the court to grant or refuse a winding up order where the
applicant has established that the respondent has failed to pay the debt is narrow.
[13] The respondent disputes the debt to the applicant and contends that if the indebtedness
is established, the debt is not due and payable. The acknowledgement of debt signed by the
respondent filed by the respondent as an annexure to its answering affidavit contradicts the
respondent’s contention. In addition to acknowledging being indebted to the applicant in the
sum of R6 903 267.07, there is a clause in the acknowledgement of debt that provides as
follows:
“2.4 In the event of:
2.4.1 any one instalment required in terms hereof not being paid upon due date; or
2.4.2 the buyer being in breach of any other provisions hereof (all of which are deemed to be
material); or
2.4.3 the buyer committing any act of insolvency; the full outstanding balance, together with
interest thereon and costs, shall immediately become due and payable and …”
[14] The respondent acknowledges that it is experiencing financial difficulties but contends
that it will be in a position to discharge the indebtedness at some unspecified future date once
the municipality pays its invoice. This assertion serves only to confirm its inability to pay its
debts as they become due. Furthermore, the respondent failed to make payment in accordance
with the acknowledgement of debt, with the result that the full outstanding balance became
due and payable in terms of clause 2.4 thereof. In my view, the denial by the respondent of its
indebtedness does not raise a real, genuine or bona fide dispute of fact. (see Plascon Evans
Limited v Van Riebeck Paints (Pty) Ltd 1984(3) SA 623)
[15] Regarding the respondent’s assertion that it is financially stable as evidenced by its
financial statements and its assets which are valued in excess of R6 000 000.00, the test is not
whether the respondent's assets exceed its liabilities, but whether the respondent is able to
meet its current obligations in the ordinary course of business. A company may be factually
solvent yet commercially insolvent if it is unable to pay debts when they fall due. The
guiding principle in such matters, as enunciated in Afri Operations Ltd v Hamba Fleet (Pty)
Ltd 2022 (1) SA 91 (SCA) at paragraph 12, is that generally an unpaid creditor has a right to
ex debito justitiae to a winding up order against a company that has failed to discharge the
debt owed to it. The discretion of the court to grant or refuse a winding up order where the
applicant has established that the respondent has failed to pay the debt is narrow.
[16] The respondent has admitted its indebtedness to the applicant and has acknowledged
experiencing financial difficulties. It has further failed to comply with the terms of the
acknowledgement of debt and has not discharged the amount demanded despite the statutory
demand having been served at its registered address. Although the respondent contends that
its assets exceed its liabilities, it has not demonstrated an ability to satisfy the debt due to the
applicant or the judgment debt owed to the intervening creditor.
[17] The respondent further asserts that it has a counterclaim against the applicant for
breaching their agreement by failing to deliver all the items required by the respondent. The
respondent's reliance on an alleged counterclaim arising from a purported breach of
agreement by the applicant does not avail it. No particulars of the alleged agreement, the
agreement by the applicant does not avail it. No particulars of the alleged agreement, the
alleged breach, or the quantum of the alleged counterclaim were furnished. The allegation is
therefore bald, unsubstantiated and insufficient to establish a bona fide and reasonable
dispute of the indebtedness contemplated in Badenhorst v Northern Construction Enterprises
(Pty) Ltd.
[18] Additionally, despite the respondent’s assertion that it has no overdue creditors, the
judgment obtained by the intervening party on the 6 th September 2024 remains unpaid. The
respondent has accordingly failed to rebut the statutory presumption created by section
345(1)(a) of the Companies Act. The evidence demonstrates that the respondent has
neglected to pay a debt that is due and payable and has failed to satisfy another substantial
indebtedness owed to the intervening party. These facts constitute compelling evidence of
commercial insolvency.
COUNTER APPLICATION
[19] The respondent brought a conditional counter application seeking to be placed under
business rescue in terms of section 131 of the Act only if I found that the debt is due and
payable. The applicant resists this application on the following grounds: the respondent has
no locus standi to bring this application and that the application is an abuse of court process.
[20] Section 129 empowers the board of a company to voluntarily place a company under
business rescue by board resolution if there are reasonable grounds to believe that the
company is financially distressed and that there is a reasonable prospect of rescuing the
company. However, section 129(2)(a) expressly provides that such a resolution may not be
adopted once liquidation proceedings have already been initiated by or against the company.
In this matter, liquidation proceedings had already been instituted prior to the respondent’s
business rescue application. Consequently, the respondent could not validly invoke section
129.
[21] Section 131 provides that where liquidation proceedings have already commenced,
business rescue may only be initiated through an application brought by an affected person.
Section 128(1)(a) defines an affected person as a shareholder, creditor, registered trade union
representing employees, or employees (or their representatives) where no trade union exists.
The respondent is not an affected person as contemplated in section 128 and can therefore not
rely on section 131.
[22] The respondent’s conditional application approach is inconsistent with the statutory
framework. Section 131(6) clearly provides that once a proper business rescue application is
made, liquidation proceedings are suspended until the court adjudicates the application. The
made, liquidation proceedings are suspended until the court adjudicates the application. The
suspension operates immediately upon the lodging of a valid section 131 application.
[23] The respondent’s proposed procedure effectively invites this Court to first adjudicate
a substantial portion of the liquidation application, namely whether the debt is due and
payable and only thereafter consider business rescue application. This defeats the very
purpose of section 131(6), which is to suspend liquidation proceedings pending determination
of the rescue application. In the circumstances I find that the respondent’s conditional counter
application is not sanctioned by the act.
[24] It has been established that (a) the applicant and the intervening party are creditors of
the respondent for an amount exceeding R100.00; (b) the applicant sent through the statutory
demand to the registered address; (c) the respondent has failed to pay or make an
arrangement to pay the amount; and (d) the respondent has complied with the statutory
requirements in section 346.The applicant and the intervening party having satisfied the
requirements for a winding up order, it is for the respondent to establish circumstances that
warrants the exercise of the court’s discretion against the granting of the order.
[25] The respondent contends that it employs approximately 150 employees who will be
left destitute should the winding up order be granted. It further asserts that the respondent has
projects to the value of R49 000 000.00 and is therefore solvent. The respondent did not
provide any evidence demonstrating available liquidity or proof of its ability to satisfy its
obligation to creditors. The assertion regarding the project value alone is insufficient.
CONCLUSION
[26] Having regard to all the circumstances, I am satisfied that the applicant and the
intervening party have established the requirements for a final winding -up order. I am further
satisfied that there are no circumstances justifying the exercise of the Court's discretion
against granting such order.
In the result I make the following order:
1. The respondent’s counter application is dismissed with costs.
1. The respondent’s counter application is dismissed with costs.
2 The respondent is placed under final winding -up in the hands of the Master of the
High Court.
3. The costs of the application, including the costs occasioned by the intervention
application shall be costs in the winding up.
DATE OF HEARING: 16 APRIL 2026
DATE OF JUDGMENT: 25 JUNE 2026
ATTORNEYS FOR THE APPLICANT: SEYMORE DU TOIT & BASSON ATTORNEYS
COUNSEL FOR THE APPLICANT: C B ELLIS
ATTORNEYS FOR THE INTERVENING PARTY: N P MADONSELA ATTORNEYS
COUNSEL FOR THE INTERVENING PARTY: S TOWNSEND
ATTORNEYS FOR THE RESPONDENT: CHRISTO SMITH ATTORNEYS INC.
COUNSEL FOR THE RESPONDENT: A L VAN WYK
__ _______________________
P D KEKANA
ACTING JUDGE OF THE HIGH COURT