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TMI Blog1974 (1) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to them, averted further proceedings in execution of the money decrees. After the said mortgage was executed moneys were paid thereunder. The plaintiff unsuccessfully made a demand under exhibit A 9 for the repayment of the amount and, thereafter, instituted the action. The defendant-company denied liability under the mortgage and put the plaintiff to strict proof of the execution of the same. Their second contention was that G. P. Raju Mudaliar did not have the competence to execute the same and, therefore, it is not binding on the company. In support of this contention, it was alleged that on the date when the mortgage was executed, one Mallikarjuna Iyer was in custody and control of all the properties of the company as "provisional liquidator" appointed by the High Court, Madras, in 0. P. No. 82/56. Since the provisional liquidator was so functioning on the date when the mortgage was executed in favour of the plaintiff, the mortgage deed is assailed on the ground that it does not bind the company. It was also sought to be made out that there was no resolution by the board of directors of the company which authorised G. P. Raju.Mudaliar to execute the said mortgage. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant facts which happened during the pendency of the application for winding up filed by a creditor against the company. One Kalappa Chettiar filed an application, O.P. No. 82/56, on the file of this court praying that the company may be wound up for the reasons stated by him in his petition and contemporaneously in an Application No. 774/55, sought for the appointment of a provisional liquidator pending disposal of the main application for winding up. Balakrishna Iyer J., dealing with the said application, ordered that Mr. M. Mallikarjuna Iyer, Advocate, Coimbatore, be appointed the provisional liquidator of the company and that he do take possession of, collect and protect all the properties, effects and actionable claims to which the company above named appears to be entitled to, but not to distribute or part with the same until further orders of court. This order is dated March 27, 1956. On November 27, 1958, the petitioning-creditor did not press the main application for winding up. Subramanyam J. disposed of O. P. No. 82/56 by passing the following order: "This petition is not pressed. The provisional liquidator will convene a general meeting of the members of the company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and its affairs to G. P. Raju Mudaliar and Natarajan, the partners of the managing agents' firm in question. The learned judge also made it clear that the modification should be incorporated in the order passed by him on November 27, 1958. It is, therefore, obvious that the direction to the provisional liquidator to hand over the properties and other assets of the company, if they were in his physical custody, to G. P. Raju Mudaliar and another should be deemed to have been made even on November 27, 1958. The provisional liquidator, Mr. Mallikarjuna Iyer, in this connection, filed a report and wanted further directions to hold a meeting of the shareholders. But the learned judge by his order dated January 15, 1959, specifically directed that he need not hold any meeting but, on the other hand, he should hand over charge of the company to the persons named in the order dated January 2, 1959. On a fair reading of the orders of this court, we are of the view that it was a direction of this court exercising jurisdiction under the Companies Act that the provisional liquidator should hand over possession of the properties of the company, including the immovable properties belonging t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional liquidator by orders of court, the argument of Mr. Nainar Sundaram has been characterised by us as fallacious. The next contention of Mr. Nainar Sundaram is that there is an initial vesting of the properties of the company in the liquidator on the date when the provisional liquidator is appointed, in an application for winding up, and that the text of the order of appointment of the provisional liquidator also is to the same effect. It is by now well settled that there is some marked distinction between cases arising in insolvency and those arising under the Companies Act for winding up of companies. Under the former, when the official assignee or the official receiver is appointed as interim receiver, even though the main application for adjudication is still pending disposal on the file of this court, yet by reason of the provisions of law as to insolvency, there is an automatic vesting of the properties of the debtor (the proposed insolvent) in the official receiver or the official assignee, as the case may be. Mr. Parasurama Iyer, the learned counsel for the respondent, rightly invited our attention to a decision of the Division Bench of the Travancore-Cochin High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes with the official liquidator. His office is not an equation to that of an official liquidator but he is an officer of court who has to take directions of court in the matter of exercise of his powers attached to his office and he cannot assume the role of an official liquidator and invoke the provisions of the Companies Act and the Rules made thereunder and claim that he is a receiver and in physical, juridical and sole custody and control of the properties of the company and that no one can interfere with such alleged possession of his and create instruments such as mortgages to his prejudice and to the prejudice of the company. Here it is conspicuous to note that on November 27, 1958, there was no application for winding up at all since it was withdrawn as not pressed by the petitioning creditor. In these circumstances, we are of the view that on January 2, 1959, G. P. Raju Mudaliar as a partner of the managing agency firm should be deemed to be in lawful custody of the properties and affairs of the company and that the mortgage created by him as such managing agent and pursuant to the resolution of the general body on January 10, 1959, in exhibit A-1 is a valid instr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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