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TMI Blog1971 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... y court and applied for allowing the Government to manage the mills under orders of the court. In September, 1953, the court passed an order ; and in October, the mills were handed over to the Government. In January, 1954, the order for winding up was also passed. Subsequently, on a suggestion by the court, the Government agreed to advance up to Rs. 8,25,000, if a mortgage with possession was executed by the liquidator in favour of the Government. This was sanctioned by the court; and in March, 1956, a mortgage with possession was also executed. The Government, in terms of a provision contained in the mortgage deed, insured the mills for Rs. 5,53,820, the book value of the assets. A fire broke out in the mills; and a good portion of the mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreted to mean persons from whom money is due under section 185. Section 185 contemplates two things: that the court can direct only such persons mentioned in the section to pay or deliver money or property or documents to the official liquidator, and (2) such an order could be passed only if the court finds that such money, property or documents the official liquidator is prima facie entitled to. A few decisions have been brought to our notice by the counsel on both sides on the interpretation of section 185. The first decision is the Division Bench ruling in John Bros. v. Official Liquidator, Agra Spinning and Weaving Mills Co. Ltd. [1936] 6 Comp. Cas. 219 ; AIR 1936 All. 808 , wherein it has been laid down that there is no p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re relevant; and that was a case under section 185 of the Companies Act the decision in P. S. Venkatarama Ayyar v. K.P. Sarvothama Rao [1937] 7 Comp. Cas. 66 ; AIR 1937 Mad. 401 . There, Varadachariar J., who spoke for the Division Bench, has observed that section 185 of the Companies Act does not contemplate an elaborate enquiry, but the discretion must be left to the court to decide whether any particular claim can or cannot be conveniently dealt with under that section. And then comes the decision of the East Punjab High Court in Liquidators, Janda Rubber Works Ltd. v. Collector of Bombay [1950] 20 Comp. Cas. 141 ; AIR 1950 EP 204. In this case as well, a Division Bench of the East Punjab High Court has laid down that the powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e styled as preference trustees, sold the shares of the other company and came by the sale proceeds. Subsequently, the company went into liquidation ; and the official liquidator sought to recover the moneys in the possession of the trustees under section 185 of the Companies Act. The Supreme Court upheld the claim and observed that the trustees were agents of the company and, hence, they were amenable to the proceeding contemplated by section 185. The Supreme Court observed : "The relationship of principal and agent need not be expressly constituted and can be brought about by implication of law on a particular situation arising or from the necessity of a case." In the circumstances pointed out by us hereinbefore, where we narrated the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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