1945 (1) TMI 13 - HC - Companies Law

Winding up - Payment of debts due by contributory and extent of set off and Enforcement of orders of courts

Summary

Issues:
Interpretation of section 73(1) of the Civil Procedure Code - Whether an order under section 186 of the Companies Act qualifies as a decree for the purpose of rateable distribution among decree-holders.

Analysis:
The judgment in this case revolves around the interpretation of section 73(1) of the Civil Procedure Code, focusing on whether an order under section 186 of the Companies Act can be considered a decree for the purpose of rateable distribution among decree-holders. The appellant, a decree-holder under the Companies Act, sought a share in the rateable distribution of assets held by the District Court, Unao. The appellant's claim was initially disallowed by the District Judge and subsequently dismissed by the Chief Court of Oudh on the basis that the order under the Companies Act did not meet the definition of a decree under the Civil Procedure Code. The Courts relied on the decision in Mohan Lal Lal Chand v. Bhivraj Devi Chand to support their conclusion.

However, the Privy Council opined that the Indian Courts had taken a narrow view in this case. They highlighted the provisions of section 199 of the Companies Act, which state that orders made by a Court under the Act can be enforced in the same manner as decrees of the Court in a pending suit. This provision effectively allows a company holding an order under section 186 of the Companies Act to utilize the enforcement procedures available for decrees, including section 73 of the Civil Procedure Code. The Privy Council also referenced section 36 of the Code, which deems the provisions relating to the execution of decrees applicable to the execution of orders.

The Privy Council emphasized that the appellant's application for the execution of the order under the Companies Act should be treated as an application for the execution of a decree for the purposes of section 73(1) of the Code. They aligned with the views expressed in Radhesham Beopar Co. Ltd. v. Karam Chand, emphasizing that the company's enforcement application should be deemed equivalent to an application for a decree, despite not strictly meeting the definition of a decree under the Code. The Council clarified that the appellant's judgment-debtor was the same as the judgment-debtors against whom the 17 decrees were passed, reinforcing the appellant's entitlement to share in the rateable distribution.

Consequently, the Privy Council allowed the appeal, overturning the decisions of the lower Courts, and directed the matter to be remitted to the District Judge for the adjustment of the parties' rights in accordance with the judgment. The Council also ordered the costs to be repaid to the appellant and advised His Majesty accordingly. The appellant's costs for the appeal were to be borne by the respondent, the Punjab National Bank Ltd.