9911796707
TMI Blog1974 (7) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... involved was an important point and of wide public importance and required full consideration of the various decisions hereinafter referred to. The applicant is a limited company and carries on business, inter alia , of manufacturing and supplying machinery, spare parts, etc., and these goods were, supplied to the company under liquidation, namely, the Krishnakumar Mills Company Ltd., which had its factory at Mahuva in Bhavnagar District of Gujarat State. The winding-up order against the company in liquidation was passed by this court on February 7, 1972, and the suit which is referred to in the prayer clause of the judge's summons was filed on March 13, 1972, by the applicant-company on the original side of the High Court of Bombay. In the suit the applicant before us prayed for a decree in the sum of Rs. 3,56,458.13, together with interest and costs and in the alternative they prayed that some goods mentioned in annexure "C" to that plaint should be returned to the plaintiffs in specie and they also prayed for a decree in the sum of Rs. 96,196.76, together with interest and costs and in the further alternative they have prayed that the defendants be ordered to return to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been rejected and had given a lot of trouble and put the company to a great loss. No credit note had been received by the defendant-company from the plaintiffs in respect of these goods. The defendants for the first time purported to reject the goods by this letter of July 6, 1971, that is, nearly 1 years after the last batch of goods mentioned in annexure "C" to the plaint was supplied to the defendant-company. It is in respect of these goods mentioned in exhibit "C" that the plaintiffs have specifically prayed for return in specie. It may also be pointed out that in the month of September, 1971, by their attorney's letter dated September 27, 1971, the plaintiffs again called upon the defendants to pay to them an aggregate sum of Rs. 4,18,747.13, which would include the price of a number of goods included in exhibit "C" and the plaintiffs' case as set out in paragraph 7 of the plaint was that the defendants in their letter dated July 6, 1971, were raising false objections to the claim of the plaintiffs. At the hearing of this judge's summons before us, Mr. Gandhi on behalf of the applicant-company has stated that if the leave which he has sought for is granted to him, he wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outsiders are involved in some dispute with the company, and it is desirable that the dispute should be decided in an action by the ordinary tribunals: for instance, in the case of an action against the company for damages under Lord Campbell's Act (Fatal Accidents Act) or for specific performance, or for trespass, or to proceed with an execution, where execution was delayed by a. trick or to bring anew action for the purpose of obtaining the fruits of an earlier action, leave must not be given on ex parte application. The Indian Companies Act, 19 5 3, had also a similar provision, namely, section 171. The provisions of section 171 have come up for consideration before the Supreme Court in Bansidhar Shankarlal v. Mohd. Ibrahim [1971] 41 Comp. Cas. 21 (SC) and it has been held that failure, to obtain leave before institution of the proceeding did not entail dismissal of the proceeding : the suit or proceeding instituted without leave of the court would be ineffective until leave was obtained, but once leave was obtained the proceeding would be deemed instituted on the date of granting leave. Mr. Shah for the liquidator has relied upon a decision of the Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the courts in India on the true interpretation of section 171 of the Indian Companies Act, 1913, and section 446 of the Companies Act, 1956 (which replaced section 171 of the Act of 1913)...". Therefore, this passage of the Supreme Court indicates that, according to the Supreme Court, section 446 of the 1956 Act replaced section 171 of the 1913 Act, and the two sections, according to the Supreme Court, were in pari materia . Even apart from these observations from the judgment of the Supreme Court which was primarily dealing with the provisions of section 171 of the 1913 Act, as we have pointed out above, there is no difference in substance between section 446 of the 1956 Act and section 171 of the 1913 Act. There is a difference only in framing the language of the section and in putting in more elaborate terms what was in a condensed form in the 1913 Act. Under these circumstances this contention urged on behalf of the liquidator must be rejected. Coming now to the merits of the application before us, it must be pointed out that the general principles as to when leave under section 171 of the Indian Companies Act, 1913, and section 446 of the Companies Act, 1956, could be gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n some dispute with the company, and it is desirable that the dispute should be decided in an action by the ordinary tribunals. In the instant case before us, from the plaint, a copy of which has been produced in the proceedings before us, it is obvious that the plaintiff was supplying goods to the defendant-company on approval or return basis because the applicant-company itself has said in the plaint that some of the goods which had been supplied by the applicant to the company in liquidation had been returned in specie and in respect of those goods returned or rejected in that fashion, credit notes aggregating to Rs. 2,00,000 and odd had been issued by the applicant-company to the company in liquidation. It is, therefore, not unreasonable to proceed on the footing that the course of dealing between the parties was on the footing of approval or return or sale or return. To such a course of dealings the provisions of section 24 of the Sale of Goods Act in terms apply and under clause ( b ) if the purchaser does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, on the expiration of the stipulated time, and, if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany regarding the goods min exhibit "C" to the plaint is correct or not. Under section 446(2)( b ), the court which is winding up the company has the jurisdiction to entertain and dispose of any claim made by or against the company and the words "any claim" are wide enough to cover even this claim for the goods mentioned in exhibit "C" to the plaint. We do not see any reason why the leave which has been sought for in the present judge's summons should be granted to the applicant-company when there is no prima facie case made out by the applicant. As pointed out by the Division Bench consisting of Chainani and Tambe JJ., in Balkrishna Mahacleo Vartak's case [1958] 23 Comp. Cas. 179 (Bom.), the company in winding up should be exposed to unnecessary litigation and unnecessary costs. There is not even a prima facie case made out by the applicant which wants to proceed against the company under liquidation and has applied for leave. We may point out that the same contentions can be dealt with by the court taking up company matters in dealing with the winding up but without any further costs being incurred by the company under liquidation in respect of this claim. The decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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