9911796707
TMI Blog1958 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in section 439 of the Companies Act. The applicant Biswanath Mandal does not come within that classification. An application under section 560 for restoration under section 560(6) of the Act can only be made by the company, member or creditor. But the applicant Biswanath Mandal is neither the company nor the member nor the creditor It follows, therefore, that so far the application is an application by Biswanath Mandal it must be and is dismissed with costs. The applicant Nagendra Nath Mandal is a director of this company Rai Saheb U.N. Mandal's Estate Private Ltd. which has been struck off the register by the Registrar of Joint Stock Companies. This company is a private company. Its members and directors are all relations. Applicant Nagendra is a director and the two other directors who are opposing this application are Manindra and Baidyanath. Manindra and Baidyanath are the nephews of Nagendra. A genealogical table showing the relationship is set out in the affidavit of Baidyanath and Manindra Nath Mandal affirmed on the 24th June, 1957. The company was primarily a zemindari company. Its main purpose was to acquire, undertake zemindaris, putnis, taluks, etc. It was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any rate admits in this letter that he as director never did any work. The Registrar duly took the information from the respondent Baidya Nath Mandal. Baidya Nath Mandal on the 22nd May, 1956, informed the Registrar in reply to his letter of the 17th May, 1956, addressed to the company asking for a month's time to submit the statements on the ground of his father's death. Finally, on the 3rd July, 1956, respondent Baidya Nath Mandal wrote to the Registrar that the company since its inception did not function at all. It had no assets nor any liabilities and that the company should be treated as defunct and its name should be struck off the register. The Registrar thereupon followed the procedure laid down under section 560 of the Companies Act. On the nth July, 1956, he sent notice to the company under section 560(1) enquiring if the company was carrying on business or was in operation. He received the reply from Baidya Nath Mandal on the 26th July, 1956, stating that the company was not carrying on business nor was in operation and that its name should be struck off the register. As I have said, applicant Nagendra had already informed the Registrar that he had nothing to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting of the company, either of the directors or shareholders, was ever held but also the company never actually in fact went into possession of the lands purported to have been transferred to it. In fact, the original owners continued in their own possession. A list of joint properties was made between the members of the family including the present applicants. These lists mention schedules " Kha ", " Ga " and " Gha. " The properties mentioned in these three schedules were taken back by the original owners, namely, Upendra, applicant Nagendra and respondent Baidya Nath. The properties mentioned in schedule " Kha " were divided amongst the four brothers equally. This agreement was in 1933. Later in 1942, the four brothers made a list of the joint properties situate in the State of West Bengal which had been partitioned amongst themselves. A similar list was also made in 1946, in respect of the properties in Bihar. That these properties were divided amongst themselves is shown from these lists duly signed among others by applicant Nagendra himself. The original documents were produced in court. They are in Bengali. But the applicant had inspection of them before they were produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to admit again in his same affidavit that it was agreed that the house at Nersa and the Mauza Gangutia would be sold and the sale-proceeds would be paid to Nagendra. He, of course, again gives the excuse that all this was done in part satisfaction of Nagendra's alleged claim towards the rent collected by the company on his behalf. Lastly, Mauza Barbenda, Paturdih, Ratanpur, Haripur Chawk and Mera all became properties of applicant Nagendra. All these properties were acquired by the Government, but the entire compensation was enjoyed by the applicant Nagendra although the properties are supposed to be of and in the name of the company. Nagendra in his affidavit of the 17th August, 1957, does not dispute or deny this receipt of the whole of the compensation money. He gives a version which again makes the fact of partition very clear. In paragraph 22 of his affidavit of 17th August, 1957, Nagendra says that by consent the entire compensation was distributed amongst the shareholders and/or their legal representatives according to their shares in the company. I have never heard of a real or regular company, which is not an illusory one like the present, dividing according to shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty which was taken on settlement by Baidya Nath on the nth July, 1928, against Kabuliyat for a rent of Rs. 560 and which subsequently came to Rs. 532-3-3 for acquisition of some lands was all along paid in the name of Baidya Nath and not in the name of any estate or company. He found as a fact that the properties had long been partitioned and respective possession and enjoyment were exclusively for the respective parties. No objection was taken to this finding of fact. Then the proceedings in this court started ; and I find while these proceedings were pending in this court, applicant Nagendra immediately on discovery of the fact that the finding of the Attestation Officer, which was annexed to the affidavit here of Baidya Nath affirmed on the 29th November, 1957, would go against the whole contention of the applicant, filed a petition a year and a half later on the 14th January, 1958, for revision and used that with his affidavit in this court on the 15th January, 1958, the day following. It is obvious that it is an inspired document to challenge the facts found by the Attestation Officer so long after in the belief that with those findings staring him in the face he had no chanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. The company thereafter filed appeal at Burdwan and ultimately the company paid the dues of the Government. But no suit or proceeding is pending now against the company as such. This is all in relation to the 46 bighas and odd lands from the estate of Maharaja Srish Chandra Nandy for which the company paid rent under a leasehold and which I have already mentioned. This allegation, moreover, is fully controverted, and rightly in my view, in paragraph 21 of the affidavit of Baidya Nath Mandal affirmed on the 24th June, 1957, and I have already dealt with this question. The only other alleged pending proceedings are those mentioned in paragraph 20 of the petition. But they relate only to settlement proceedings and attestation. But none of these are for or against the company. I have already mentioned the Attestation Officer's decision after a full hearing and on enquiry and survey on the spot. But even here there is no proceeding pending for or against the company. In fact, in the very petition of revision of settlement records which is annexed in the affidavit of Nagendra Nath Mandal affirmed in January, 1958, he himself states that the properties are in the names of dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners. Applicant Nagendra Nath Mandal being himself the director had ample remedies in his own hands if he ever felt, as he now says he does, that he had been excluded from the company's management and access to records, books, papers and documents and transactions of the company. Then he could have asked long ago, when that happened, to intervene. He acquiesced in this management assuming it was bad as he says. Ever since 1929 and for these last 30 years, the company has never met either in a shareholders' or in a directors' meeting, has not filed for more than 10 years any summaries or lists of shareholders, has shown no balance-sheet or bank accounts ; it has treated company's properties as though they were properties belonging to the individual members of the family ; sales, transfers and various dealings with these properties have taken place for all over these 30 years as though the individual members were owners thereof. If such a company is not defunct I do not know which is. All that the Registrar has, under section 560 of the Companies Act, 1956, to do is to satisfy himself whether the company is carrying on business or is in operation. Putting the most liberal interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no good winding up this company. A winding up will mean setting up a whole machinery for liquidation. The liquidator has to be appointed, and his staff has to be provided. But what will such a liquidator do ? Every item of property claimed for the company is disputed. The liquidator, therefore, cannot take possession of any property without first initiating litigation. There is no bank money or fund which the liquidator can take possession of. There are no books, share register, minutes or any other papers which the liquidator can take charge of. No one is going to finance the liquidator's establishment. How then is such a liquidator going to work. He is to rely on the members of the family. But they are quarrelling with one another and the liquidator can get no assistance from them in those circumstances. It will be a mere farce and a paper order therefore to appoint a liquidator to wind up the company. I therefore decline to do so. I need only add to emphasise the points of construction that proviso ( b ) of section 560(5) of the Act gives the power to the court to wind up a company even without restoring the company to the register. The note on In re Cambridge Coffee Room ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he register, I would not do so for the practical reason that it would be idle to make such an order in the context of the present facts of this case. Before I conclude, it is necessary to refer to one argument which cropped up in course of the hearing of this application. Shortly put, it is this. What the applicant argued was that if there was any property or asset of the company, then there would be none to take it over and it will be a loss to everyone concerned. Mr. Das for the applicant contends that as the result of the effect of striking the company off the register and of the dissolution that follows, the company loses its character as an incorporated body and, therefore, cannot recover its own properties, if there be any. Now this point has become academic on the facts of this case as I have held that there are no assets of this company and no fund and no book debts which it can recover. But even if there were any, the situation may not be so hopeless as was argued on behalf of the applicant. Even if there were any property, such property will not be without an owner. The doctrine of bona vacantia, I think, is attracted or will be attracted in that contingency. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances but only laid down the obvious principle sufficiently made clear in the statute of 1948, that the Royal prerogative in respect of bona vacantia was cut down by the provisions of English Companies Act, 1948, in the sense that it was a defeasible title of the Crown liable to be defeated by winding up order which under the appropriate conditions could be made without the Crown's consent. If, therefore, without the express statutory provisions of sections 354 and 355 of the English Companies Act, 1948, the doctrine of bona vacantia applied in England it would be all the more, so here in India because of article 296 of the Constitution of India, which uses the words "any property in the territory of India which if this Constitution had not come into force would have accrued to His Majesty". Now if this property of a dissolved company could accrue formerly to the Crown in India then as bona vacantia it now belongs to and vests in the Union of India under article 296 of the present Constitution. Normally a defunct company would hardly have any assets or property, but there may in a few cases be some, however negligible. I asked Mr. Basu, who was the counsel appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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