9911796707
TMI Blog1960 (4) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act and that in spite of the notice the company failed and neglected to pay the dues of the debenture-holders. The appellants presented this winding up petition on 15-9-1958. They contend that the company is unable to pay its debts and also that it is just and equitable to wind up the company. 3. The company has its registered office in Calcutta. It has an oil and rice mill and factory at Buxar. In this appeal we shall have to notice three sets of transactions entered into by the company viz. (a) the debentures and the debenture trust deed, (b) a lease of lands and machineries in Buxar executed by the company in favour of one Shahabad Industries (Private) Limited, (c) a transaction of loan of ₹ 65,000/- obtained by the company from the respondent Sitaram Bhartia. 4. The respondent Sitaram Bhartia, who is an unsecured creditor of the company, opposed the winding up order. No other creditor appeared at the hearing of the application. Apparently, the company also opposed the winding up order. On 17-2-1959, P.B. Mukharji, J., refused to make the winding up order. The case of Sitaram Bhartia is that the debentures were issued without consideration and that the debenture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on 14-7-1956 and the lease in their favour was executed on 9-8-1956. The directors of the lessee company are Badridas Jain, father's sister's son of Bhagwandas Bajoria, Chairman of the Board of Directors of the lessor company and Chandrama Roy and Parasram Roy employees of the lessor company. The decree in favour of Sitaram Bhartia was actually transferred to the Arrah Court in September 1956 and at about the same time by a letter dated 15-9-1956 the lessor company requested the lessee company to pay rent to the appellants. It is again to be noticed that Sitaram Bhartia applied in the Court of the second Subordinate Judge, Arrah on 7-11-1956 for execution of his decree by attachment of the movable and immovable properties of the judgment debtor and on 13-11-1956 Shahabad Industries (Private) Limited obtained a katcha receipt from G. G. Debey, one of the attorneys for the appellants for ₹ 9000/- representing six months' rent payable under the lease and on the same day filed a petition under Order XXI, Rule 58 read with Section 151 of the Code of Civil Procedure in the executing court objecting to the attachment. The petition of Shahabad Industries (Private) Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipt for ₹ 9000/- on 13-11-1956 and producing the original debenture trust deed in the Arrah Court on 15-11-1956 G. G. Dubey wrote to the Nazir, Civil Court, Arrah, on 18-11-1956 stating that the properties sought to be attached were in possession of the appellants and were not in possession of the judgment debtor. It seems that the appellants and the company had fallen out by December 1956 and during December 1956 and January 1957 we find a set of correspondence between them in which the appellants, for the first time, contradicted the statement in the letter dated 15-9-1956 and stated that they had not taken possession of mortgaged properties. The appellants also stated that the lease dated 9-8-1950 was a bogus lease and denied that they had collected any moneys from the lessee. The case of Sitaram Bhartia is that the appellants were watching the proceedings in the Arrah Court and that because the Arrah Court on June 27, 1957 dismissed the objection of the Shahabad Industries (Private) Limited and made an order for sale of the attached properties, the appellants filed a petition of objection in the Arrah Court on January 30, 1958 with the object again of delaying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n actual possession thereof and G. G. Debey, their attorney, in a letter written to the Nizir of a Court of Justice stated on November 18, 1956, that the appellants were in possession of these properties. Either the case now made by the appellants is untrue or they and their attorney were parties to documents containing materially false statements. The case of the appellants now is that the lease in favour of Shahabad Industries (Private) Limited is a fictitious and bogus lease; but at one point of time their attorney recognised the lease and helped the lessees in their objections filed before the Arrah Court. The appellants are not credible witnesses. I am not prepared to find merely on the strength of their affidavit that there are valid debentures and a valid and operative debenture trust deed. But it is said that there are admissions made by the company in the debentures and in the debenture trust deed and in the affidavit filed on its behalf. Here again comes the question whether we should act upon the affidavit of Bhagwandas Bajoria or upon the admissions made by the company. The conduct of the company and its directors do not at all inspire confidence. The company has tried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay its debts. But before an order for winding up is made on the petition of an alleged creditor, it must be made out that the petitioner is in fact a creditor of the company. 13. In Bowes v. Hope Life Insurance and Guarantee Co. (1865) 11 HLC 389 at p. 401, Lord Cranworth observed: The real question here is, whether the Master of the Rolls, before whom the matter originally came had before him a case in which there was such a clear proof of a valid debt, both at law and in equity, that he had no other course to take but immediately to direct the winding up; because I agree with what has been said, that it is not a discretionary matter with the Court when a debt is established, and not satisfied, to say whether the company shall be wound, up or not; that is to say, if there be a valid debt established, valid both at law and in equity. One does not like to say positively that no case could occur in which it would be right to refuse it; but, ordinarily speaking, it is the duty of the Court to direct the winding up. But here I must confess I cannot say that this debt is so clearly made out to my mind as being a valid debt at law and in equity that think the Court was bound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is made they will get nothing unless they prove in the winding up and unless the winding up Court is satisfied that there is a debt due to them. In support of his contention he relied upon the dictum of Jessel, M.R., in Moor v. Anglo-Italian Bank (1879) 10 Ch. D. 681 at p. 690 that The petitioning creditor gets nothing unless he proves. He also relied upon the following observations of Sanderson, CJ. in Keotokey Churn Banerjee v. Sarat Kumari Dabee 20 CWN 995 at p. 996: AIR 1917 Cal 39 at p. 39 (FB)) (a decision under the Presidency Towns Insolvency Act); In my opinion, it must be open to the Official Assignee after the insolvency to examine the claim of the petitioning creditor and if he finds that in fact there is no debt due to the petitioning creditor, he surely must say so and strike out his or her name from the list of creditors. 16. The decisions relied upon do not establish that the Court will make a winding up order on the petition of a person who claims to be a creditor of the company without satisfying itself that the petitioner is in fact such a creditor. The Court has the power and the duty to see that the machinery of winding up is set in moti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the winding up order ought not to be made, because (a) the appellants have an ample security and as such they will not obtain any practical advantage by the winding up order; (b) before presenting the winding up petition they should exhaust all their remedies under the debenture trust deed; (c) there are no assets other than those covered by the debenture trust deed and the general body of creditors will not benefit by the winding up order; (d) the petition suppressed the proceedings in the Arrah Court and material facts regarding possession of the mortgaged properties and (e) the statutory notice is dated August 7, 1957 and called upon the company to pay the debt within three weeks from the date of the notice, but the notice was in fact served on August 7, 1958 and in the circumstances it was impossible to comply with the notice and consequently the notice was not a valid notice under Section 434 of the Indian Companies Act and as such the inability to pay the debts has not been proved by recourse to Section 434(a) of the Indian Companies Act that there is no other proof of such inability. Having regard to our conclusions on the main question, we do not consider it ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
