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TMI Blog1965 (8) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Lakshmiji was incorporated as private limited company in the State of Delhi and the directors, inter alia , were Ram Rattan, Kishori Lal, Badri Pershad, Shadi Lal, Ramji Dass and Parshotam Pershad. National Industries was incorporated in the year 1942. Amongst others Ram Rattan and Ramji Das were its promoters. Messrs. Seth Brothers (Private) Ltd. (hereinafter referred to as Seth Brothers) were the managing agents of the National Industries and Kishori Lal, Ram Rattan and Parshotam Pershad were the directors of Seth Brothers. It may be, however, stated that most of the directors in all these companies are inter-related. They have now split up into two groups, one is headed by Ram Rattan and Kishori Lal and the other by Ramji Das. Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Industries to that extent. In addition to this Lakshmiji supplied steam and electricity, etc., to the National Industries for which payment in cash or by adjustment is made from time to time. According to the balance-sheet of 1963, marked exhibit P-10, a sum of Rs. 2,35,787.89 nP. was payable by the National Industries to Lakshmiji. This included the amount transferred on April 30, 1963. Exhibit P-25 is a voucher by which the above-mentioned transfer was made by the National Industries. By this Messrs. Seth Brothers' account was debited with a sum of Rs. 2,16,122.37 nP. and a corresponding credit was given to the Ajudhia Distillery from the Bilari office in the account of Lakshmiji. It may be stated here that Lakshmiji owns two sugar mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, The latter opposed the action contemplated under section 434 of the Act and suggested that a period of two years be given to the company for the repayment. The Board, however, did not agree to the suggestion, and it was resolved that an application as stated in the notice be moved in the High Court. At an earlier stage, parties took several adjournments to arrive at a mutual settlement and this was allowed because, as already stated, the persons interested, on both sides, are inter-related and it was obvious that Seth Ramji Das's group had the controlling block of shares in the National Industries and Seth Ram Rattan's party had the controlling block in Lakshmiji and it was in the interest of both the parties that the shares of the min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Seth Brothers. The position taken, however, is that under a certain agreement to which not only all the directors of Seth Brothers but also some of the directors of Lakshmiji were parties, Seth Brothers could not claim this amount from the National Industries till 1967, that the alleged transfer to Lakshmiji is mala fide and collusive and that the petitioner-company being an associate of the managing agents got this transfer with full knowledge that the managing agents could not enforce to recover this debt and consequently Lakshmiji is in the same position as the managing agents. It was urged that the National Industries had taken a loan from the Uttar Pradesh Financial Corporation to the extent of Rs. 4,50,000 on 16th of May, 1958, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t carried interest. It was, therefore, argued that the entire amount must be treated as deposit within the meaning of this agreement. It is significant that soon after the transfer of this debt of Seth Brothers by the National Industries to Lakshmiji a demand notice was given and formal proceedings initiated for winding up of this company. It is further clear that Seth Ram Rattan, who is the managing director of Lakshmiji, was himself a party to the agreement that was entered into between Seth Brothers and the Financial Corporation through himself being a director of Seth Brothers Lakshmiji, therefore, in my opinion, cannot acquire better right than Seth Brothers would have in respect of the debt transferred. That being the case the sole po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng agents or its associate. If the debt was of a type which the managing agents could not enforce against the respondent-company till the entire loan of Financial Corporation has been repaid, it would make no difference if the transfer is made to an associate of the managing agents, having common directors, apparently with the full knowledge of the restriction on the recovery of the debt by which Seth Brothers were bound. In any case even if there be some doubt about the question whether this debt could be recovered by Seth Brothers even prior to 1967, it cannot be said that this matter is beyond doubt and if there does exist a bona fide dispute about the quantum of the debt or qua the question whether it is immediately recoverable or not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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