1983 (3) TMI 207 - HC - Companies Law

Summary

Issues:
1. Whether a claim can be filed before an official liquidator against a joint debtor, a company in liquidation, if a suit has been filed against some of the joint debtors?
2. Whether the principle of joint and several liability applies in the context of filing claims before an official liquidator in a company liquidation scenario?

Analysis:
1. The judgment pertains to an appeal against an order of the official liquidator under the Companies Act, 1956. The appellant, a bank, had sanctioned an overdraft limit to a company, later ordered to be wound up. The appellant filed a suit against the directors for recovery of debt, excluding the company. The suit was dismissed, and an appeal led to a remand for fresh decision. The appellant then filed a claim before the official liquidator, which was rejected on the grounds that the suit against the directors barred the claim against the company.
2. The key question was whether a claim could be filed against a joint debtor, the company in liquidation, if a suit had been filed against some joint debtors. Section 43 of the Contract Act allows a promisee to sue one or more joint promisors without suing all together. The court analyzed English law precedent where a decree against one joint debtor barred subsequent suits against others, but Indian law, as per section 43, allows separate suits against joint debtors. This principle was upheld in various Indian High Court cases, emphasizing that a judgment against one joint debtor does not bar a subsequent suit against others.
3. The court cited cases where the principle of joint and several liability was applied, stating that a judgment against one partner does not extinguish the debt for other partners. The court also referred to commentaries on the Indian Contract Act, supporting the view that judgments against one joint promisor should not bar subsequent actions against others. The court agreed with this perspective, holding that a claim before an official liquidator is akin to filing a suit, and if the debt is not recovered from some joint debtors, a claim can be filed against other joint debtors, including a company in liquidation.
4. Consequently, the court accepted the appeal, set aside the official liquidator's order, and remanded the case for a fresh decision on its merits, emphasizing that the rejection of the claim based on the suit against the directors was erroneous. The judgment clarified the applicability of joint and several liability in the context of filing claims before an official liquidator in a company liquidation scenario.