1967 (6) TMI 33 - HC - Companies Law

Summary

Issues Involved:
1. Whether the High Court should grant leave to the official liquidator to break open the locks for taking possession of the rooms at 42, Haralal Das Lane, Calcutta, in view of section 456 of the Companies Act, especially sub-sections (1A) and (1B).
2. Interpretation and application of section 456 of the Companies Act.
3. The jurisdictional conflict between the Magistrate's court and the liquidation court.

Detailed Analysis:

1. Granting Leave to Break Open Locks:
The official liquidator sought an order from the court to break open the padlocks for taking possession of the rooms at 42, Haralal Das Lane, Calcutta. The Assistant Registrar of Companies referred to section 456 of the Companies Act and expressed that no order should be made on this application. The main issue was whether the court should grant leave to the official liquidator to break open the locks, considering section 456, particularly sub-sections (1A) and (1B).

2. Interpretation and Application of Section 456:
Section 456(1) mandates the liquidator to take custody or control of all properties, effects, and actionable claims of the company. Sub-sections (1A) and (1B) introduced by the 1960 Amendment Act provide that the liquidator may request the Chief Presidency Magistrate or the District Magistrate to take possession of such properties, and the Magistrate may use necessary force to secure compliance. The court noted that the liquidator is a statutory custodian of the company's property, and the court has notional custody from the date of the winding-up order. The court discussed the statutory amendments and their implications, emphasizing that the Magistrate's court has the express power to use force under sub-sections (1A) and (1B).

3. Jurisdictional Conflict:
The court addressed whether the liquidator is confined to the statutory remedy and procedure or can invoke the general powers of the court. It was argued that the liquidation court has residual jurisdiction and supervisory control over the liquidator. However, the court highlighted that allowing the liquidator to bypass the statutory procedure would render sub-sections (1A) and (1B) ineffective. The court referred to established legal principles, including the rule that where a statute provides a specific remedy, that remedy is the only one available (Taylor v. Taylor, Nazir Ahmed v. King Emperor).

The court concluded that the liquidator must normally follow the procedure prescribed in section 456, requesting the Magistrate to take possession and use force if necessary. However, the liquidation court retains residual jurisdiction and can intervene in exceptional cases with special reasons. The court directed the official liquidator to follow the statutory procedure in this case, as no special grounds were provided for bypassing the Magistrate.

Conclusion:
The court emphasized the importance of adhering to the statutory procedure under section 456(1A) and (1B) for taking possession of the company's property. The official liquidator should approach the Magistrate for assistance and use of force, and only in exceptional cases with special reasons should the liquidation court be approached. The application was dismissed, and the official liquidator was directed to follow the statutory procedure. The costs of the proceeding were to be retained by the official liquidator from the assets in his hands.