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TMI Blog1967 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidation. The applicant, in his letter, exhibit R-1 dated December 27, 1966, expressed certain administrative difficulties and stated that he was not still aware of the exact position as to the affairs of the company and requested the respondents to furnish details of the allotment of11,513 shares to the company in liquidation. He has also stated as follows : "In the circumstances, in order to obtain the directions of the High Court in the matter after ascertaining the particulars of the investment of Raka Corporation in your company, I request you to extend the time for payment of the first call by two months from January 1, 1967, the date. prescribed in the notice, under article 65 of your articles of association." Apparently, on a reminder by the respondent company, the applicant again wrote exhibit R-2 dated February 17, 1967, stating that it will take some more time for him to examine the position with reference to the statement of affairs and asked for further time for payment of the first call towards the shares. The applicant points out certain discrepancies in the matter of the actual amount paid by the company to the respondents as and towards the share value; but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany and if the disclaimer is allowed, the respondents, will not be able to adjust the said amount from the amounts which they expected the company to pay to them as a result of the contract of allotment as above. Their contention is that this application seems to have been filed only for the purpose of claiming the moneys due by the respondents and disown the liabilities of the company to the respondents. They conclude by saying that the contract to take shares is complete and there is a legal obligation on the part of the applicant to respect the contract. The official liquidator in his further report in reply reiterates what he has stated in the opening affidavit and contends that the application is maintainable. He is emphatic that, as far as he could gather, no information is available from the records of the company about any application to the Madras Industrial Investment Corporation for a loan to the respondents -and thus he states that the Madras Industrial Investment Corporation is not a necessary party. As the interests of the body of creditors of the company is paramount to him, he states that the company should not be further burdened with any liability arising out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r affidavit stating that the Corporation is an interested person by themselves would not suffice to bring to court the Industrial Investment Corporation, who according to me, must have taken all necessary precautions at the time when they advanced the loan. The persons interested referred to in section 535(3) should be persons who are not only commercially interested, but should also be interested directly and substantially in the issue raised in the application for disclaimer. It is not easy to conceive that the Corporation, at the time of granting loan to the respondents, relied mainly on she anticipated shareholding of the company 'in the respondents-company. I am not satisfied, on the evidence placed before me, that the Madras Industrial Investment Corporation is a necessary party or a person interested within the meaning of section 535(3) of the Companies Act. The other contention of the respondents is that this application is not maintainable in law. They rely upon exihibits R-1 and R-2 and section 535(4) in support of their contention. Section 535(4) reads as follows: " The Liquidator shall not be entitled to disclaim any property in any case where an application in writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, does not rest here. One has to look into section 535(1) of the Act to find out whether the application" for disclaimer notwithstanding the writings as disclosed in exhibit R-l and exhibit R-2 is maintainable by the official liquidator. Section 535 deals with disclaimer of onerous property, including contracts in case of a company which is being wound up. It says: "Where any part of the property of a company (including a contract) which is being wound up consists of.......unprofitable contracts; the liquidator of the company, notwithstanding that he has...... done anything in pursuance of the contract, (the underlining is mine ) may, with the leave of the Court and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the Court, disclaim the property." The corresponding section in the Companies Act of 1913 is section 230A. It does not contain this parenthesis "or done anything in pursuance of the contract". Whatever may be the reason for the omission of this clause in the old Act, the significant departure therefrom and the inclusion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the applicant is that the contract is one which will not be of any benefit to the company, its creditors or shareholders. It is not in dispute their the financial position of the respondents-company is not very bright. These shares being those in a private limited company, cannot even be quoted publicly. The liquidator is positive that there is no possibility of getting any return from the investment and the future liability under the contract is bound to be onerous to the company and burdensome. Excepting for a certain self-serving statement in the counter affidavit, the respondents have not chosen to disprove such bona fide statements made by the liquidator in his report. The argument of the respondent that if the disclaimer is allowed, they will not be in a position to adjust the amount due and owing by the company is one without any substance. They are begging the question if such an argument were to be advanced in support of their contention that the disclaimer ought not to be allowed. Their case is that the contract is complete and therefore the company is bound to take up the shares. This again is an argument ad misericordiam and without any basis. Any contract whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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