9911796707
TMI Blog1939 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... th the predecessor of Defendants Nos. 1 to 3, executed a mortgage bond in favour of the Plaintiff Company on taking a loan of Rs. 2,000 only. Certain sums were paid by these Defendants to the Plaintiff from time to time and by the end of April, 1933, the amount due to the Plaintiff on the mortgage bond stood at Rs. 1,098 and annas odd. The pro forma Defendant No. 6 had a current account with the Plaintiff Company and in the beginning of May, 1933, he had to his credit in this account a sum of about Rs. 1,550. The Plaintiff Company, being in financial difficulties, had just before this time embarked on a scheme of composition with its creditors under section 153 of the Indian Companies Act. An application under section 153, clause (1), was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dismissed the Plaintiffs' suit. On appeal the judgment was reversed and the Plaintiffs' suit has been decreed. The lower Appellate Court was of opinion that though the scheme allowed a set off in cases like this where the same person was both a. debtor and a creditor, yet the Defendants could not take advantage of that provision in the scheme inasmuch as the assignment by pro forma Defendant No. 6 in favour of these Defendants was not a bona fide transaction. It is conceded by Dr. Pal who appears on behalf of the Appellants, and this fact is apparent on the face of the record, that there was no provision in the scheme which allowed a set off when the creditor was also a debtor to the Company. The lower Appellate Court was obviously l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not demand any money due to him by the Plaintiff Company except in accordance with the conditions and terms contained in the scheme itself. The money due to Defendants Nos. 1 to 5 as creditors, on the basis of the assignment made by pro forma Defendant No. 6, was not therefore recoverable by these Defendants after the scheme had become operative on May 21st, 1933. The Appellants contend that it was recoverable on May 20th, 1933, while the assignment was made. But the Directors were not given any notice of the assignment either by the transferor or by the transferee prior to June, 1933, and at that time as the scheme had already become operative, they had no power left in them to make any adjustment which would be tantamount to paying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the purpose of this meeting by making an assignment of some portion of his debt to somebody else just before the meeting is held. The Defendants Nos. 1 to 5 who were debtors pure and simple up to this time could not, in my opinion, come to the picture at all when the meeting was actually held and it could not be said that as they belonged to a different class of creditors they should have been invited to hold meeting separately. We need not express any opinion on that class of cases where a right of set off is allowed in liquidation proceedings on the principle of bankruptcy laws between the Company and the creditor. The present case obviously is not one of that description. In these circumstances, we think that even though the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a creditor of the Plaintiff Company after notice had been issued on that creditor of the meeting to frame a scheme, and in fact the interest was acquired on the day before the meeting was held. It is clear that they must have done so with knowledge of the facts, as has been found by the lower Appellate Court. The real question in the case is whether we are impelled to hold that such persons are to be held to be a different class from the class of creditors from whom they acquire interest. I can see no requirement for us so to hold. There is no analogy here in the circumstances of bankruptcy and winding up such as are provided for in section 46 of the Provincial Insolvency Act, 1920 and section 47 of the Presidency Towns Insolvency Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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