1930 (9) TMI 13 - HC - Companies Law

Winding up Delivery of property to liquidator, Debts of all descriptions to be admitted to proof, Avoidance of transfer, etc.

Issues Involved:
1. Validity of the creditor's claim in the winding-up proceedings.
2. Discharge of debt by payment or adjustment.
3. Binding nature of the settlement dated 10th December, 1926.
4. Computation of interest subsequent to the winding-up order.
5. Payment of unpaid dividends.
6. Claim of Hanumanthappa.
7. Claim of Messers. R.D. Lakshmi Das & Co.

Detailed Analysis:

1. Validity of the Creditor's Claim in the Winding-Up Proceedings:
The creditor, Pola Sankariah, applied to the liquidator for payment of his debt. The winding-up petition for Sabapathy Press Co, Ltd. was initially dismissed but later remanded for fresh disposal. The Official Referee found that the debt was not discharged, and Beasley, J. ordered the company to be compulsorily wound up. The liquidator raised the point again, necessitating a detailed examination.

2. Discharge of Debt by Payment or Adjustment:
The primary question was whether the debt was discharged by payment on 31st December, 1921. The company's account books showed entries made after the accounts were closed, which were alleged to be fraudulent. Venkata Rao's affidavit dated 13th June, 1922, admitted the debt was subsisting, implying the entries were spurious. The audited balance sheet of September 1922 showed the debt as discharged, but the unaudited balance sheet showed it as due. The entries in K.V.S.R. & Co.'s books suggested an adjustment on 31st December, 1922, but this was not binding on the creditor without evidence of a novatio. The court found the debt was not discharged by payment or adjustment on either date.

3. Binding Nature of the Settlement Dated 10th December, 1926:
The liquidator raised the question of whether the settlement of accounts on 10th December, 1926, reducing the debt to Rs. 19,987-3-9, was binding. The settlement was supported by shareholders and creditors, and the liquidator concurred, finding it beneficial to the company. The court held the settlement as binding.

4. Computation of Interest Subsequent to the Winding-Up Order:
The law states that interest on debts ceases to run from the date of the winding-up order unless the assets are sufficient to pay all debts in full. The court cited relevant cases and confirmed that interest continues to accrue if there is a surplus after paying all creditors. It was admitted that there would be a substantial balance after paying all creditors, so interest had not ceased to run from the date of the winding-up order.

5. Payment of Unpaid Dividends:
During the winding-up petition, dividends were declared for 1931-25 but not paid to all shareholders. The court directed the liquidator to pay the declared dividends to all shareholders to ensure equality, subject to verification.

6. Claim of Hanumanthappa:
The liquidator was directed to examine Hanumanthappa's claim and state his view within a week.

7. Claim of Messers. R.D. Lakshmi Das & Co.:
The claim was for goods supplied between the presentation of the winding-up petition and the order. Section 227(2) avoids dispositions of property unless sanctioned by the court. The court confirmed the transactions as they were made in the ordinary course of trade. The claim amount was adjusted, authorizing payment of Rs. 3,331-13-6 less Rs. 500, with interest from 1st January, 1927. The Rs. 500 described as a hand loan to Mr. Venkata Rao was reserved for future consideration.

Conclusion:
The parties were directed to bring in a statement showing the amount due to the applicant. The applicant's costs were fixed at Rs. 400, to be paid from the assets. The liquidator's costs were not allowed. The liquidator was directed to pay dividends and examine Hanumanthappa's claim. The claim of Messers. R.D. Lakshmi Das & Co. was partially allowed, with further consideration for the Rs. 500 loan.

← Previous Next →