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TMI Blog1935 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Further leave was granted to them to raise a loan not exceeding Rs. 6,000 to meet the expenses of liquidation and the costs of suits in which the Company was concerned. On March 16, 1931, the liquidators obtained a further order entitling them to raise a loan of Rs. 13,000 and sanctioning a loan of Rs. 4,596 which they had already incurred. The petition sets out in para. 11 the charges on which the petitioning creditor relies for saying that the liquidators should be removed from their office. The first charge is that the liquidators have never opened any account with a bank. The order of December IB, 1929, under which the liquidators were appointed expressly ordered that all monies to be received by the said Official Liquidators be paid by them into the Imperial Bank of India to the credit of the account of the said Official Liquidators within seven days after the receipt thereof, and it was further ordered that all the cheques upon the said banking account drawn by the Official Liquidators should be countersigned by the Registrar before being passed for payment by the bank. That provision is in conformity with rules 76 to 91 of the Rules under the Indian Companies Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carrying on of a liquidation. Mr. Palmer in the 14th Edition of Company Precedents in page 322 refers to the banking account as follows: - "An important part of the machinery of winding-up under the present system is the Company's Liquidation Account. Irregularities by the liquidators and trustees in bankruptcy when they occur are generally due to the temptations incident to the uncontrolled possession of large sums of money. To avoid this danger, and also to facilitate administration of the assets, the Winding-up Act of 1890 imported into winding-up from bankruptcy the scheme of the Bankruptcy Assets Account under the title of the Company's Liquidation Account." That is the scheme in England and that is the scheme which it has been sought to follow in this country. The next matter which is relied upon by the petitioner is the failure on the part of the liquidators to use monies borrowed for the purposes for which the loan was sanctioned. By the order of March 16, 1931, the liquidators were empowered to borrow up to Rs. 15,000 and sanction was given to a sum of Rs. 5,000 which had already been borrowed by the liquidators. The petition on which that order was made set out the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uits. They state that they have been in communication with the second mortgagee to sell their first mortgage to him. They point out that much of the mortgaged property is scattered and that the properties are patni properties which it is doubtful whether it would be worthwhile to acquire. With regard to a mortgage suit which the liquidators got eave to institute against Kairunnessa, their neglect to institute such suit they attribute to the fact that they took legal advice and allowed the property to be sold for default of payment of the superior landlord's dues and purchased it at a patni sale for a comparatively small amount accepting four jotes of which they state the value is negligible. Objection is then taken by the petitioner to the Suspense Account which has been kept by the liquidators, and it is shown that throughout 1932 up to the present time large sums varying from Rs. 11,000 to Rs. 14,000 have been maintained in this account. The liquidators contend that that they are bound to keep large sums in this account pending adjustment and they give various instances where large sums have been claimed and have been partially adjusted by payments which have been entered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor then the Court has power to remove the present liquidator and of course then to appoint some other person in his place." Bowen, L.J., referring to the language of Sir George Jessel in In re Sir John Moore Gold Mining Co. says: - "To my mind the Lord Justice has correctly intimated that the due cause is to be measured by reference to the real, substantial, honest interest of the liquidation, and to the purpose for which the liquidator was appointed. Of course fair play to the liquidator himself is not to be left out of sight, but the measure of due cause is the substantial and real interest of the liquidation." The words "due cause" to which the learned Lord Justice was referring are the same words which are used in section 176 of the Indian Companies Act which provides that any Official Liquidator may be removed by the Court on due cause shown. In resisting this application Mr. Roy has urged that these liquidators have been in charge of this Company's affairs for the past six years, they have managed during a very difficult time to get in a large quantity of assets. Almost all the assets are zamindari properties which at the present moment and for some years past have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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