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Bedell Cristin's litigation team acted on behalf of Al Jomaih Power Limited and Denham Investment Limited (the "Appellants") in their successful appeal against the Grand Court's decision to dismiss an application to strike out a petition (the "Petition") presented by IGCF SPV 21 Limited ("SPV 21") to wind up KES Power Limited ("KESP") on just and equitable grounds pursuant to section 92(e) of the Companies Act (2023 Revision) (the "Companies Act").

KESP was incorporated to hold a majority interest in K-Electric Limited ("KEL"), Pakistan's largest electricity company which services approximately 20 million residents in Karachi and is national strategic asset of Pakistan. In 2008, SPV 21 invested in KESP, and entered into a shareholders' agreement ("SHA") with the Appellants. Under Schedule 4 of the SHA, SPV 21 undertook to exercise all of its powers as a shareholder or otherwise and to procure that a "solvent liquidation, winding up or dissolution" of KESP would not take place. In July 2023, SPV 21 presented the Petition. In response, the Appellants applied to strike out the Petition and sought declarations that SPV21 was prohibited from presenting the Petition, and breached Schedule 4 by doing so. The Appellants also sought an injunction restraining SPV21 from prosecuting the Petition in breach of Schedule 4, an order that KESP and/or SPV21 exercise all its powers to procure the striking out of the Petition and an order that the Petition be dismissed pursuant to section 95(2) of the Companies Act. At both first instance and before the Court of Appeal ("CICA"), the Appellants argued that the presentation of the Petition was part of a wider litigation strategy deployed by SPV 21 to take control of KEL.

At first instance, on 31 May 2024, the Grand Court dismissed the Appellants' strike-out application and handed down its judgment. Although it was common ground between the parties that KESP is solvent, and consequently a winding up of KESP on the just and equitable basis was a "solvent" winding up, the Grand Court held that Schedule 4 did not prevent SPV 21 from exercising its statutory right to apply for a petition to wind up KESP on a just and equitable basis.

The Grand Court explained its reasoning by drawing a comparison between article 145 of KESP's articles of association (the "Articles") and Schedule 4 of the SHA. Article 145 is similar to Schedule 4 in that it requires SPV21 and the Appellants' consent to wind up KESP. However, crucially, article 145 is different to Schedule 4 in that it expressly refers to a "voluntary" winding up (which would exclude winding up petitions) and not a "solvent" winding up. Due to the similarities described above, the Grand Court concluded that Schedule 4 refers, and is intended to refer (and cross-refer), to the type of winding up regulated and dealt with by the Articles, being a voluntary winding up. The Grand Court stated that if it was intended that Schedule 4 would cover a winding up petition on the just and equitable basis, it would have included clear and express language, which was not present in this case. Ultimately, the Grand Court held that SPV 21 was not prevented from exercising its statutory right to seek the winding up of KESP on just and equitable grounds.

Additionally, the Grand Court rejected the Appellants' argument that it would be absurd if either party could petition to wind up KESP on a just and equitable basis if a deadlock in management or some other major disagreement arose, as the SHA provided detailed terms for the exit from and termination of the SHA in these circumstances.

The Appellants appealed the Grand Court decision, focusing on the interpretation of the restriction found in Schedule 4 of the SHA. The Appellants argued that the wording of Schedule 4 is unambiguous with no distinction made between the different types of solvent winding up. Accordingly, the Appellants argued that Schedule 4 should be interpreted on its natural and ordinary meaning, being that shareholders are prohibited (without unanimous consent of the other shareholders) from exercising their powers or otherwise to seek the solvent winding up of KESP, including by way of winding up petition on the just and equitable basis. The Appellants claimed that while a winding up petition cannot be presented without unanimous consent, the SHA contains exit mechanisms which allow for shareholders to exit the agreement if necessary. Further, the Appellants submitted that a distinction should be drawn between article 145 and Schedule 4, as article 145 relates to the winding up of KEL not KESP and therefore the reference to a "voluntary" winding up is irrelevant in the context of Schedule 4. For these reasons, the Appellants claimed that SPV 21 is contractually prohibited from seeking a solvent winding up of KESP, including by presentation of the Petition, without the Appellants' consent, which had not been given.

SPV 21 argued that Segal J had interpreted Schedule 4 correctly. It contended that had the shareholders intended to contract out of their statutory right to wind up KESP, Schedule 4 would have contained express language to that effect. On the exit provision point raised by the Appellants, SPV 21 submitted that the exit provisions in the SHA do not cater for the situations covered by a just and equitable winding up petition.

On 12 September 2025, the CICA handed down its judgment and struck out the Petition on the grounds that Schedule 4 of the SHA prohibited its presentation. The CICA accepted the Appellants' arguments on the interpretation of Schedule 4 and found that none of SPV 21's submissions were an answer to the Appellants' case on appeal. The CICA held that Segal J had misconstrued the key words of Schedule 4 in concluding that it only applied to solvent voluntary winding ups. Instead, the CICA focused on the natural and ordinary meaning of the words in Schedule 4, finding that the term "solvent winding up" included both voluntary, and court-ordered winding up.  The CICA also agreed with the Appellants that article 14 is worded sufficiently differently to Schedule 4 and consequently, a reference to voluntary winding up in article 145 does not dislodge the plain meaning of Schedule 4.

Ultimately, the CICA decided that SPV 21 is contractually bound not to present a petition to wind up KESP, and provisionally awarded the Appellants their costs of both the appeal and the Grand Court proceeding.

The decision highlights the court's willingness to uphold contractual restrictions on the exercise of statutory rights, confirming that parties can, by agreement, limit the ability for a shareholder to seek the winding up of a Cayman company on the just and equitable basis. The decision also emphasises that such restrictions will be enforced according to the natural and ordinary meaning of the words used in the contract.

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