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TMI Blog1936 (5) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... d on its true legal effect. The document is printed at page 1 of the second part of the paper book. The Sathgram Coal Company Limited went into liquidation and defendant 10 has been appointed Official Liquidator. On 3rd July 1923 A.T. Creet (defendant 3) brought a suit for recovery of royalties for the quarters beginning with 30th September 1921, and ending with 31st March 1932 for ₹ 30,329-13-6 and the plaint in this suit has been marked as Ex. J in the case which is to be found printed at p. 118 of the second part of the paper book. On 21st June 1924 there was a final decree for sale: see Ex. J (2) printed at p. 124 of the second part of the paper book. It appears that some time before April 1923 the Sathgram Coal Company Limited transferred 900 bighas of coal land to one Keshoram Poddar and this transfer was recognized by A.T. Creet, defendant 3. On 21st August 1924 there was a second suit by the lessor Mr. Creet for royalty: see Ex. K, printed at p. 203 of the second part of the paper book. This was for the royalties of the quarter ending with June 1923 for a period of 1 year and 3 months. In this suit there was a preliminary decree for sale dated 13th December 1924: see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On 14th October 1924 a resolution was passed for voluntary liquidation of the said Sathgram Coal Company, Ltd.: see Ex. P printed at p. 221 of the second part of the paper book. The resolution to which we will have to refer later is in these words: Resolved that the Sathgram Coal Company Ltd., cannot by reason of its liabilities continue its business, so the Company do wind up, and Mr. A.C. Bose, Attorney-at-law of 10 Hastings Street, Calcutta, be appointed liquidator. 4. On the following day, that is on 15th October 1924, according to the case made by the defendants in their written statement, Mr. A.T. Creet, defendant 3, re-entered into possession of the Colliery. As to whether the re-entry by Mr. A.T. Creet or by his agent or by some one who is not an agent is valid in law is a matter which is debated in this appeal. On 20th October 1924, there was a meeting of the co-sharers, in which the resolution, regarding the voluntary liquidation was challenged: see Ex. 10 (a) printed at p. 241 of the second part of the paper book. Both the creditors and share holders were asked to bring a suit for a declaration that the resolution for winding up of the Company purporting to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Official Liquidator. The books of the Company were all made over to the said Mr. S.N. Mukerjee, who is defendant 10 in the suit. It seems that the plaintiff, notwithstanding the purchase, was unable to get possession from the defendants and he consequently instituted the present suit in which he impleaded defendants 1 and 2 who were sub-lessees, defendant 3, as also the Sathgram Coal Company, Ltd., by their partners who were Chatterjee & Co. and co-partners the managing agents of the Sathgram Coal Company who were defendants 5, 6, 7, 8, and 9, and S.N. Mukerjee, defendant 10, who, as has already been said, is the liquidator appointed by this Court on 11th May 1926. 7. This suit was resisted by defendants 1, 2 and 3 and the main grounds of defence are contained in the written statement of defendant 1 in paras 22, 25, 26, 27 and 28. These statements were in answer to the statements made in the plaint by the present plaintiff that the voluntary liquidation proceedings were fraudulent and collusive. It is necessary to reproduce in substance the case made by the plaintiff about the fraudulent nature of the resolution regarding the voluntary winding up of the company on 14th October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s described in the plaint, be declared. He also asked for a decree for khas possession of the property in suit. There was also a prayer for mesne profits which is valued tentatively at ₹ 50,000. The other consequential prayers were also made. In answer to the case about the fraudulent nature of the resolution regarding the voluntary winding up of the company the defendants contended, in the paragraphs which have already been referred to, that the liquidation proceedings were in order and were not tainted by fraud as alleged by the plaintiff, that on 14th October 1924, Sathgram Coal Company, Ltd., having gone into liquidation, as they could not help doing, Mr. A.T. Creet re-entered into the property as he could in terms of the lease in the happening of such one of the above events and took khas possession thereof, that the said Mr. A.T. Creet executed a lease in favour of defendants 1 and 2 on 25th May 1925 in respect of the property in question on receipt of a bonus of ₹ 1,31,000 on terms and conditions mentioned therein. They also alleged that the suit of 1925 was instituted at the instance of Surendra Nath Dutt and that it was a collusive and fraudulent one and that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mportant evidence in regard to the nature of the resolution of 14th October have been wrongly rejected from evidence. We are told that the minute books of the company could have shown that the resolution was one which was in accordance with the provisions of the Companies Act and an application was made before us for the reception of the minute books as additional evidence in this case. We are unable to admit these proceedings set forth in the minute books not only for the reasons given by the Subordinate Judge when rejecting this evidence when it was tendered (vide p. 225, part 1 of the paper book) but also for the reason that the defendants did not avail themselves of the opportunity to have these books proved when these books were brought into Court on 30th March 1933 by the clerk of the Official Liquidator. We will reproduce presently the reasons which have been given by the Subordinate Judge. The reason which the Subordinate Judge gave was that the reception of that evidence at that stage would operate to the prejudice of the plaintiff. The Subordinate Judge says: I am of opinion therefore, that the plaintiff has been prejudiced by the non-production of the book in proper ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mine of this colliery. 13. This means an average raising of more than 1,200 tons of coal per month. The balance sheets, Ex. 15 series, show that the monthly average risings from July to December 1921 was 4,997 tons, profits in that half-year were ₹ 1,31,977- 14 as, of course after deduction of all liabilities. This finding has been challenged by the defendants and it has been said that Ex. B on the basis of which the Subordinate Judge has arrived at this finding was not filed by them and it contains entries in red ink by some officer of the Mines office which are really interpolations and they show substantial alterations in the figures. In this connexion an application has been made before us for reception as additional evidence of the copy of the return which it is alleged was really filed by them. We do not think that we can allow the additional evidence of this kind to go in at the present stage. Ex. B on which the Subordinate Judge relied was a copy which was put in by the defendants themselves: see p. 106 of part 2 of the paper book. The figures referred to by the Subordinate Judge are taken from this Ex. B. Complaint has been made in this application for reception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wari is an independent and respectable witness who paid an Income Tax of ₹ 700 odd in 1932-33. 15. The evidence of Ram Chandra Marwari has been placed before us by the learned advocates on both sides, and when one closely examines the evidence it leaves no doubt as to what was intended to be done by the execution of these documents. The witness states this: After his interview with me, held on 10th October as stated above, Suresh Chatterji next saw me for the first time on the afternoon of the 14th at about 6 or 6-30 p. m. He did not see me any time between these two dates. No one came in his company when he came to see me on the 14th. He stayed at my place on that day for about ten minutes. I do not (know?) who else were present on that occasion. Even at this time I came to entertain a suspicion that Suresh Chatterji was trying to defraud the shareholders of the Sathgram Coal Company. I did not, however, raise any objection to advancing money on that ground, because I would not be injured in any way by that Act. 16. The witness then goes to say: I first heard the name of Mira Chatterji on the 10th. Suresh Chatterji told me then that the Colliery would be leased out to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Gupta v. Tiluckram Choudhury (1888) 15 Cal 533 and Bal Gangadhar Tilak v. Shrinivas Pandit AIR 1915 P C 7 that the use of such general words as 'fraud' or 'collusion' is ineffectual to give a fraudulent colour to the particular statements of fact in the plaint unless those statements taken by themselves are such as to imply that a fraud has actually been committed. In view of these pronouncements the particular circumstance in which the fraud has been committed or from which fraud can be inferred should be set forth in the plaint. In this particular case the plaintiff did give the particulars with regard to fraud such as was necessary for the purpose of sustaining their case that the resolution of 14th October 1924 was a fraudulent transaction and that it was altogether fictitious. They are not bound in the plaint to disclose the evidence by which fraud was to be established and we agree with the Subordinate Judge that the plaintiff firm has complied with the requirements of the Code in giving such particulars as were necessary to sustain a case of fraud. The Subordinate Judge has dealt with this part of the case in his judgment in the portion which is printed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a transaction under Section 13, Evidence Act. The judgment is the evidence of the fact that there was a suit in the High Court regarding the resolution of 14th October and the result of the suit was that the resolution was declared illegal or void. The findings may not be binding on the persons not parties to the suit. The fact that the resolution has been set aside reinforces the conclusion we arrive at in this case that the resolution of 14th October regarding voluntary winding up was fraudulent. 21. The next point that was taken is that the decision of the Subordinate Judge that possession was not taken by defendant 3, A.T. Creet, but by L.A. Creet, defendant 1, is wrong. It is common ground that Mr. A.T. Creet, defendant 3 was in England at the time, that is on the crucial date, viz. 15th October 1924, when L.A. Creet purports to have taken possession under a power of attorney which has not been produced in this case, and an endeavour was made after the final reply to get this document admitted in evidence. We have rejected that application by an order which has been recorded separately with regard to that application. This surely is a document which ought to have been prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idance. The relevant passage is to be found in the last paragraph of p. 258 of the report. That paragraph is as follows: My Lords, I think it follows that only in the rarest cases and always contrary to the contemplation of the Act is it possible for proceedings to have continued in fact during these three months when the company is moribund, and further that after dissolution, which is an event calculable by anybody from a date of which public notice has been given whatever is done at the actor's peril. The legislature would never have bestowed on the Court a power to declare a dissolution void, without imposing terms, as by the section, it certainly is empowered to do, if the effect of this order of avoidance might be to undo the reversion of freeholds to an original grantor or the acceleration of a reversioner's immediate title to leaseholds in the case of lands accidentally undisposed of in the winding up: Co. Litt 136; Hastings Corporation v. Letton (1908) 1 K B 378, In re Working Urban Council (Basingstoke Kanal) Act (1914) 1 Ch 300, In re Albert Road Norwood (1916) 1 Ch 289; yet such would be the effect of the construction contended for, with a consequent avoidance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and equitable which would bind the debtors. We have been referred to in this connexion to the decision of their Lordships of the Judicial Committee of the Privy Council in Wickham v. New Brunswick & Canada Rly., Co. (1866) 1 P C 64. The passage occurs at p. 76 of the report. We have also been referred to the decision in Madell v. Thomas & Co. (1891) 1 Q B 230. Reference has also been made to the decision in Fateh Ali v. Gobardhan Prasad AIR 1929 Oudh 316. These authorities no doubt support the contention of the appellant and we think that the view taken by the Subordinate Judge must be taken not to be the correct views of the matter. The Subordinate Judge held that the plaintiff is not affected by the charge decrees. As a large sum of money was due to the landlord on account of rents and royalty and the landlord was in wrongful occupation of the property since October 1924, he directed that when accounts would be taken in the final decree Stage there should be an adjustment, if necessary, as against the plaintiff's claim for damage and mesne profits and the plaintiff would get a decree for the balance only after such adjustment after payment of additional court-fees if necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one point which was pressed in the argument that the right of re-entry by the lessor would be justified on another ground, namely the contravention of the covenant with regard to the payment of royalties. We have already found that the entry was by L.A. Creet and not by defendant 3(A.T. Creet); but even assuming that the entry was not by A.T. Creet, i. e. defendant 3, it does not appear that possession was taken for the breach of the covenants regarding the payment of rent and royalties. On the other hand it appears to be the case of defendants 1 and 2 that on 14th October 1924, as soon as the company voluntarily wound up and went into liquidation defendant 3 being entitled to re-enter into the property and take possession thereof under the terms of the lease, took khas possession: see para. 22 of the written statement of defendants 1 and 2. It is no doubt true that in the written statement filed by defendant 3 there is a paragraph which states that by the terms of the lease the defendant had a right to re-enter on the rent and royalties falling into arrears for more, than a year. But the whole course of events shows that defendants 1 and 2 did take possession because the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , even if it was by defendant 3, was wrongful. I find that in a recent case, Dhavle, J., with whom Sir Courtney-Terrell, C.J. concurred, has preferred to follow Costello, J.'s view: see Ram Chandra Naik v. Ajodhya Singh AIR 1935 Pat 508, at p. 13. We may state that the appellants have given the following undertaking which they desire should be incorporated in the judgment: In the event of the appellants filing an appeal to His Majesty in Council they undertake not to apply for the stay of further proceeding regarding the ascertainment of mesne profits or delivery of possession as ordered by this Court during the pendency of this appeal to His Majesty's Privy Council. 29. The respondents also give an undertaking that they desire this to be made a part of the decree that the respondents would put in costs of the Commissioner or any other costs necessary for the enquiry within a fortnight from the date of demand. It remains to notice an argument advanced on behalf of the appellants, that in taking accounts, the sum spent by the defendants in effecting improvements in the colliery should be set off against the sum due to plaintiff for mesne profits. This argument would have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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