9911796707
TMI Blog1945 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept the facts set out in the order of the lower Court and for that purpose, quote the following passage from its judgment: "When it was found that the company could not carry on i.e ., it could not meet its liabilities, it was decided to go into liquidation, which would mean a creditors' voluntary liquidation. Under section 203, Indian Companies Act, this required an extraordinary resolution to the effect that by reason of its liabilities it cannot continue its business and it is advisable to wind up. A meeting for passing such an extraordinary resolution was called for June 2, 1940, and for want of quorum was adjourned to June 9, 1940, on which date it was resolved unanimously that the company should go into liquidation. Thereafter it was discovered with reference to section 209A of the Act that a creditors' meeting had not been called for the day of the meeting on which the extraordinary resolution was to be passed or the following day. The view was taken therefore that the extraordinary resolution of June 9 was invalid and a fresh meeting was convened. This was held on September 22, 1940, and the creditors' meeting was duly convened for the same day. The necessary re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the day, on which there is to be held the meeting at which the resolution for voluntary winding-up is to be proposed, and shall cause the notices of the said meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the said meeting of the company." This provision of the Act was lost sight of when the meeting which resulted in the resolution of June 9, 1910, was called. The creditors were ignored, and the question is whether the meeting was invalid for that reason. The directors of the company were of opinion that it was and therefore, at soon as they discovered their mistake, they issued fresh notices and this time complied with section 209A (1). This meeting was held on September 22, 1940, and the question we have to decide is which of these two meetings was the effective one for the purposes of the Act. That depends upon whether and how far section 209A (1) controls sections 203 and 204. On the one side, it is argued that all these provisions must be read as a whole and therefore, the meeting referred to in sections 203 and 204 means a meeting validly convened, and it is said that in the case of a creditors' voluntary winding- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors of the company and the estimated amount of their claims to be laid before them at this meeting. In the circumstances, seeing that the creditors cannot influence the right of the company to wind itself up voluntarily, we prefer the view which considers that an omission to convene the creditors' meeting as provided by section 209A (1) is only an irregularity which can be cured and not an illegality which vitiates the resolution winding up the company. We note in passing that section 209A (6) states what is to happen in the event of a default in complying with the provisions of section 209A (1). It prescribes certain penalties but does not invalidate the resolution. That is also a matter to be taken into consideration. On the whole, we agree with the learned District Judge, and our answer to the first question is that June 9, 1940, must be regarded as the date on which the liquidation commenced. The next question is this: "Does the amount of Rs. 6,491-5-3 standing in the joint current account of Messrs. F. Karim and V. B. Pandhare, who were the president of the company and the secretary of the company respectively, when the account was opened, form part of the assets of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expiry of three months from the commencement of this Act, continue to carry on such business, unless he has obtained from the Superintendent of Insurance a certificate of registration." As the certificate was not obtained, the company was prevented by law from carrying on its business. Part of its business was to obtain contributions from its members. Therefore, it was prohibited from receiving these contributions. Accordingly, if it continued to receive these moneys in spite of this prohibition, it could not, in our opinion, claim the moneys as its own, and provided the moneys can be separated from the rest of the company's assets and traced, they will have to be kept apart from the company's funds and will have to be dealt with separately. Now there is in this case no difficulty about the identity of these funds. They are clearly traceable. The company's accounts were audited' up to and including September 30, 1939; so we know exactly how the company's finances stood on that day. The company has transacted no further business; therefore, assuming that the company received these moneys and not the two individuals in whose names they now stand, the moneys are clearly traceab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be no difficulty; the assets would be apportioned according to the sources from which they came. Does it make a difference that the value has shrunk so that the two sets of claimants cannot be paid in full? I do not think so." In the case before us that problem does not arise because all that the company is entitled to is the assets to which it was legally entitled on September 30, 1939. We know what they come to and we know that they are there in full. Similarly, we know exactly what was contributed after September 30, 1939, and we know that that is also there in fall. Therefore, as the Lord Chancellor said in Sinclair v. Brougham [1914] AC. 398, no difficulty arises and the assets must be apportioned according to the sources from which they came. The fact that in this case those entitled to the first lot of assets, namely those standing in the company's books on September 30, 1939, possibly cannot be paid in full, cannot, we think, make any difference to the principle because these claimants are in no worse position than they would have been in if the law had been punctiliously obeyed and nothing further received by the company after September 30, 1939. Therefore, they have ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
