1981 (8) TMI 240 - HC - Companies Law

Summary

Issues:
1. Suit against a dissolved company.
2. Misdescription of the defendant in the cause-title.
3. Arbitration clause and repudiation of the claim.

Analysis:

Issue 1: Suit against a dissolved company
The appeal arose from an order dismissing a suit against a dissolved company, Ruby General Insurance Company Limited. The suit was filed in 1975, after the company was dissolved in 1974 under the National Insurance Company Limited (Merger) Scheme, 1973. The main contention was whether a suit against a dissolved company was incompetent. The court referred to precedents establishing that a dissolved company ceases to exist and cannot be a party to legal proceedings. The court cited various cases to support the principle that a suit against a dissolved company is null and void. The appellant argued for an amendment to the plaint, claiming misdescription, but the court held that the suit against the dissolved company was indeed incompetent.

Issue 2: Misdescription of the defendant in the cause-title
The appellant contended that the cause-title misdescribed the defendant as being under the management of the Government of India. However, the court rejected this argument, stating that the assets and liabilities of the dissolved company had vested in a different entity, a Government company, distinct from the Government of India. Therefore, the court held that the cause-title accurately described the defendant as the dissolved company, and the suit was rightly dismissed.

Issue 3: Arbitration clause and repudiation of the claim
The appellant also raised the issue of an arbitration clause in the agreement, claiming that the matter should have been subject to arbitration. However, the respondent had repudiated the claim, rendering it unsuitable for arbitration under the agreement. The court noted that the arbitration process had been initiated but later revoked by a court order. While the appellant argued that the claim was not barred by limitation, the court did not delve into this aspect due to the dismissal of the suit against the dissolved company. Consequently, the court dismissed the appeal with costs.

In conclusion, the High Court of Calcutta upheld the dismissal of the suit against the dissolved company, emphasizing the legal principle that a dissolved company cannot be a party to legal proceedings. The court rejected arguments of misdescription and inapplicability of the arbitration clause, ultimately dismissing the appeal.