1954 (1) TMI 41 - SC - Indian Laws

Summary

Issues Involved:

1. Validity of the transfer against the High Court order.
2. Allegation of fraudulent preference under Section 231, Companies Act.
3. Presentation of bills under Section 64, Negotiable Instruments Act.
4. Liability for interest.

Detailed Analysis:

1. Validity of the Transfer Against the High Court Order:

The appellants contended that the transfer of hundis was void as it contravened an order of the High Court, which directed the Bank of Calcutta not to pay off more than 60% of any creditor's dues. The Court, however, interpreted the order differently. It held that while the order restricted cash payments to 60%, it allowed the satisfaction of claims by adjustment against dues without any limitation. The Court found no justification for reading a 60% limitation into the part of the order that permitted adjustments. Consequently, the Court rejected the appellants' contention, affirming the validity of the transfer.

2. Allegation of Fraudulent Preference Under Section 231, Companies Act:

The appellants argued that the transfer amounted to a fraudulent preference under Section 231 of the Companies Act, citing intimacy between the local Manager of the Bank and one of the plaintiffs. The Court clarified that for a transfer to be deemed a fraudulent preference, it must be shown that it would be considered such in the insolvency of an individual under Sections 53 and 54 of the Provincial Insolvency Act. Since the transfers in question did not occur within three months preceding the winding-up application, they did not fall within the purview of Section 231. Therefore, the Court dismissed the allegation of fraudulent preference.

3. Presentation of Bills Under Section 64, Negotiable Instruments Act:

The appellants contended that the bills were not presented for payment as required under Section 64 of the Negotiable Instruments Act, rendering the drawer and acceptor not liable. The Court examined the interpretation of "other parties thereto" in Section 64, concluding that it refers to parties other than the acceptor in the case of a bill of exchange. Therefore, the acceptor remains liable even if the bill is not presented. However, the drawer, Manick Ratan Guin, in Appeal No. 137 of 1949, was found not liable due to the lack of presentment. The respondents' argument that presentment was unnecessary due to part payment by the drawer was rejected as there was no evidence that the drawer had knowledge of the non-presentment.

4. Liability for Interest:

The appellants argued that no interest was payable as there was no presentation. The Court referred to Section 80 of the Negotiable Instruments Act, which allows for interest at 6% per annum from the date the amount ought to have been paid. The Court concluded that interest was rightly allowed from the date of maturity of the bill, as the amount became payable upon the expiry of a certain period of time. The Court affirmed the Subordinate Judge's decision to allow interest from the date of maturity.

Judgment and Decree:

The Court modified the decree to allow the remaining amount to be paid in two equal installments, with specific deadlines. In default of any installment, the entire amount would become due. Appeal No. 137 of 1949 was allowed in part, setting aside the judgment against Manick Ratan Guin while affirming the decree against the other appellant, Prasanta Kumar Sengupta, with directions regarding installments. Appeal No. 136 of 1949 was dismissed with costs, subject to the installment directions. The cross-objections were dismissed without costs.

Conclusion:

The Supreme Court addressed the issues of the validity of the transfer, allegations of fraudulent preference, the necessity of bill presentation, and liability for interest. The Court provided a detailed interpretation of relevant legal provisions, ultimately modifying the decrees to allow for installment payments and dismissing certain claims based on the presented evidence and legal standards.