1976 (12) TMI 136 - HC - Companies Law

Winding up Suits stayed on winding-up order, Avoidance of certain attachments, executions, etc.

Issues Involved:
1. Claim against respondents 1 to 3 for dues under a hire-purchase agreement.
2. Claim against respondents 4 to 6 for alleged misappropriation of funds.
3. Validity of the ex parte order by the Civil Judge, Lucknow, in light of the winding-up order.
4. Legal effect of section 446 of the Companies Act, 1956, on the proceedings.
5. Recovery of the vehicle from police custody.

Detailed Analysis:

1. Claim Against Respondents 1 to 3 for Dues Under a Hire-Purchase Agreement:
The petitioner, M/s. United India General Finance Private Ltd., now in liquidation, claimed Rs. 39,126 from respondents 1 to 3 under a hire-purchase agreement for vehicle No. USU 445, along with Rs. 25,350 as interest, totaling Rs. 64,476, with future interest at 12% per annum. Despite several attempts, the respondents did not appear, and the case proceeded ex parte. The hire-purchase agreement could not be located, and the only document on record was the ledger account showing a debit balance of Rs. 4,710 and incidentals of Rs. 13,193.04. The vehicle was repossessed by the company in 1966 and later seized by the police. The court concluded that the first respondent took the vehicle on hire-purchase on 15th December 1965, with Rs. 26,900 payable in 24 instalments. The full amount of Rs. 26,808 was recoverable from the first respondent due to the seizure initiated by him. The claim for incidentals was disallowed due to lack of evidence. A payment order for Rs. 26,808 was passed against respondents 1 to 3.

2. Claim Against Respondents 4 to 6 for Alleged Misappropriation of Funds:
The official liquidator claimed Rs. 8,200 from respondents 4 to 6, the ex-directors, alleging they received this amount from the first respondent but did not account for it. The court did not delve deeply into this issue as the main focus was on the hire-purchase claim and the vehicle's recovery.

3. Validity of the Ex Parte Order by the Civil Judge, Lucknow, in Light of the Winding-Up Order:
The Civil Judge, Lucknow, passed an ex parte order on 9th November 1968, stating there was no arbitration agreement and the company had no right to the vehicle. This order was passed after the winding-up order on 12th August 1968, without obtaining leave from the winding-up court, potentially contravening section 446 of the Companies Act. The court noted this order was not a speaking order and did not explicitly state there was no hire-purchase agreement.

4. Legal Effect of Section 446 of the Companies Act, 1956, on the Proceedings:
Section 446(1) states no suit or legal proceeding shall continue against the company after a winding-up order without leave of the court. The court discussed whether the ex parte order was void or voidable. It concluded that such orders are voidable at the instance of the official liquidator, who can choose to treat them as non-binding. The court cited several cases, including Smt. Bhagwati Devi Bubna v. Dhanraj Mills Pvt. Ltd. and Roopnarain Ramchandra Pvt. Ltd. v. Brahmapootra Tea Co. (India) Ltd., supporting the view that the decree is not a nullity but voidable.

5. Recovery of the Vehicle from Police Custody:
The vehicle was seized by the police and remained in custody at Patel Nagar Police Station, New Delhi. The court ordered the release of the vehicle to the official liquidator, as the company was entitled to its recovery.

Conclusion:
The court passed a payment order for Rs. 26,808 against the first three respondents, disallowed the claim for incidentals due to lack of evidence, and ordered the release of the vehicle to the official liquidator. The ex parte order by the Civil Judge, Lucknow, was deemed voidable at the instance of the official liquidator, who chose to treat it as non-binding. No order for costs was made as the respondents did not appear.

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