1955 (8) TMI 22 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the suit in the name of V. B. Sarwate.
2. Necessity of court sanction for the liquidator to start legal proceedings.
3. Jurisdiction of the court to try the suit.
4. Limitation period for the claim.

Issue-wise Detailed Analysis:

1. Maintainability of the suit in the name of V. B. Sarwate:
The applicant argued that the suit should be dismissed as the liquidator could not be the plaintiff. The court referred to the case of *Gulam Muhammad v. The Himalaya Bank Limited* and its subsequent overruling by a Full Bench in *Muhammad Yusuf v. The Himalaya Bank Limited*. The Full Bench held that the description of the plaintiff as "The Official Liquidator, Himalaya Bank, Limited, in liquidation" was in substantial compliance with the provisions of the Act. The court found that the description of the plaintiff in the present case, "Shri Vishnu Baburao Sarwate, liquidator for and on behalf of the National Aluminium Company of India, Ltd. (in voluntary liquidation)," was in accordance with the statute and sufficient to show in what capacity Shri Sarwate was acting. Any mis-description could be corrected without dismissing the suit.

2. Necessity of court sanction for the liquidator to start legal proceedings:
The applicant contended that the liquidator required court sanction to bring the suit. The court clarified that under section 179(a) of the Indian Companies Act, the liquidator in a voluntary winding up does not require court sanction to exercise the powers given by section 179, including instituting a suit. The specific reference to clause (a) in section 212(1) does not imply a limitation on the liquidator's power to institute suits in a voluntary winding up. Therefore, the liquidator did not need the court's sanction before instituting the suit.

3. Jurisdiction of the court to try the suit:
The applicants argued that the court lacked jurisdiction as no part of the cause of action arose within its territorial jurisdiction. The court noted that the winding up of the company and the appointment of the liquidator were decided at Nagpur. Since the suit aimed to enforce a new liability arising from the company's winding up, and this event occurred at Nagpur, part of the cause of action arose within the jurisdiction of the trial court. Thus, the court at Nagpur had jurisdiction to try the suit.

4. Limitation period for the claim:
The applicants contended that the claim was barred by time, arguing that the liability arose when the memorandum of association was subscribed in 1947. The court held that the liability sought to be enforced arose by operation of law, not out of contract. Under section 156 of the Indian Companies Act, the liability of a contributory is a statutory debt payable at the time specified in the calls made by the liquidator. This statutory debt is distinct from any pre-existing contractual liability. The court cited various cases, including *Hansraj Gupta v. Asthana*, which established that the liability on a winding up is a new liability created by statute. Therefore, the suit was governed by article 120 of the Limitation Act, with limitation running from the time specified for payment of the calls made by the liquidator. The plea of limitation was rejected.

Conclusion:
The revision applications were dismissed with costs, affirming that the suit was maintainable in the name of the liquidator, did not require court sanction, fell within the jurisdiction of the Nagpur court, and was not barred by limitation.