1972 (7) TMI 113 - HC - Companies Law

Summary

Issues Involved:

1. Legality of voluntary winding up under the Companies Act, 1913.
2. Validity of the Scheme of Arrangement under Section 208-C of the Companies Act, 1913.
3. Service of notice to shareholders regarding the Scheme of Arrangement.
4. Entitlement of General Krishna Shamsher Jung Bahadur Rana to payment under the Scheme.
5. Jurisdiction of the Company Court post-dissolution.
6. Limitation period for filing the claim petition.
7. Cross-objections by General Krishna Shamsher Jung Bahadur Rana.

Detailed Analysis:

1. Legality of Voluntary Winding Up:

The Court held that the voluntary winding up of the Indian National Airways Limited under the Companies Act, 1913, was valid and did not violate Section 28 of the Air Corporations Act. The winding up complied with the requirements of the Indian Companies Act, 1913, and the alternative mode of proceedings provided by the Air Corporations Act did not exclude the applicability of the Companies Act.

2. Validity of the Scheme of Arrangement:

The Scheme of Arrangement entered into by the joint liquidators with South Asia Industries (P) Limited under Section 208-C of the Companies Act, 1913, was held to be valid. The liquidators were conferred with both general and special authority to enter into such an arrangement. The Scheme was binding on the shareholders of the Indian National Airways Limited and the South Asia Industries (P) Limited.

3. Service of Notice to Shareholders:

The Court found that there was no proof of service of the notice of acceptance of the Scheme of Arrangement on General Krishna Shamsher Jung Bahadur Rana. The presumption of service under a certificate of posting could not be pleaded against General Krishna Shamsher Jung Bahadur Rana due to his categorical denial of receipt. The earliest possible notice could be considered as the one sent by the transferee company to Mr. B.U. Advani on October 11/13, 1962.

4. Entitlement to Payment:

General Krishna Shamsher Jung Bahadur Rana was entitled to claim payment under the Scheme of Arrangement within one year from the date he received notice of the Scheme. However, he did not exercise his option within the stipulated time after receiving the letter dated October 11/13, 1962. Despite this, the Court held that the stipulation in paragraph 5 of the Scheme could not bar his claim as the joint liquidators failed to serve the required notice.

5. Jurisdiction of the Company Court Post-Dissolution:

The Court held that the Company Court retained jurisdiction to give directions regarding the implementation of the terms of the Scheme of Arrangement even after the dissolution of the company. The relief sought was against the transferee company, and the dissolution of the transferor company was immaterial in this context.

6. Limitation Period:

The Court held that the cause of action for General Krishna Shamsher Jung Bahadur Rana arose on November 10, 1967, when the transferee company first rejected his claim. The company petition filed on November 2, 1970, was within the three-year limitation period prescribed by Article 137 of the Limitation Act, 1963. Additionally, the statement in the balance sheet of the transferee company as on May 31, 1969, amounted to an acknowledgment of liability, extending the limitation period.

7. Cross-Objections:

The cross-objections filed by General Krishna Shamsher Jung Bahadur Rana were dismissed. The Court held that the voluntary winding up under the Companies Act was valid, and there was no need to set aside the dissolution. The request to deposit undistributed amounts in the Company's Liquidation Account with the Reserve Bank of India was not applicable to the transferee company under Section 208-C. The claim against the joint liquidators could not be entertained in the cross-objections as they were co-respondents.

Conclusion:

The appeal by South Asia Industries (P) Limited was dismissed, and the cross-objections by General Krishna Shamsher Jung Bahadur Rana were also dismissed. The Court upheld the validity of the voluntary winding up and the Scheme of Arrangement, and directed South Asia Industries (P) Limited to pay General Krishna Shamsher Jung Bahadur Rana in terms of paragraph 4 of the Scheme. The claim was not barred by limitation, and the Company Court retained jurisdiction to enforce the Scheme post-dissolution.