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TMI Blog1966 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition under section 46 of the Indian Income-tax Act, 1922. By not doing so, the company clearly neglected to pay the amount within the meaning of section 434 of the Indian Companies Act. In the present case, Narayanlal Bansilal was not only the karta of the joint family but was also the chairman of the board of directors of the company. In the partition suit he filed an affidavit wherein he stated from which it is manifest that the alleged dispute was not bona fide but was only a part of a scheme of collusion between the company and the karta of the joint family. There are, therefore, no merits in any of the contentions raised by the company. Appeal dismissed. - 569 OF 1965 - - - Dated:- 21-3-1966 - Judge(s) : V. RAMASWAMY., K. SUBBA RAO., J. M. SHELAT. JUDGMENT The judgment of the court was delivered by SUBBA RAO J.--The facts that gave rise to this appeal may be briefly stated : On January 3, 1933, Messrs. Harinagar Sugar Mills Ltd., hereinafter called the company, was incorporated under the Indian Companies Act, 1913 (VII of 1913). Narayanlal Bansilal was the chairman of the board of directors of the company. He was also the karta and manager of the joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and in the Government Gazette mentioning his order. The company preferred an appeal against that order and that was heard by a Division Bench consisting of Patel and Tulzapurkar JJ. The learned judges dismissed the appeal. Hence the present appeal, by special leave. Mr. N. C. Chatterjee, learned counsel for the appellant-company, raises before us the same contentions which were advanced unsuccessfully on behalf of the company in the High Court. We shall deal with the said contentions seriatim. The first contention of the learned counsel is that the court receiver had no power to file a petition in the court for winding-up of the company. Elaborating this contention the learned counsel contends that under Order XL, rule 1(d), of the Code of Civil Procedure a court can only confer on a receiver the power to bring a suit and that the expression " suit " does not take in a petition for winding-up of a company. Order XL, rule 1, of the Code of Civil Procedure reads : " Where it appears to the court to be just and convenient, the court may by order--..... (d) confer upon the receiver all such powers, as to bringing and defending suits and for the realisation, management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows that in terms of clause (d) of rule 1 of Order XL of the Code of Civil Procedure, a receiver can file a petition for winding-up of a company for the realisation of the properties, movable and immovable, including debts, of which he was appointed the receiver. In this view, the respondent had power to file the petition in the court for winding-up of the company. That apart, under Order XL, rule 1(d) of the Code of Civil Procedure the court can also confer on the receiver such of those powers as the court thinks fit. It is implicit in this apparently wide power that it shall be confined to the scope of the receiver's administration of the estate. If, for the proper and effective management of the estate of which the receiver has been appointed, the court thinks fit that it shall confer power on the said receiver to take steps for winding-up of the debtor-company, it must be conceded that the court will have power to give necessary directions to the receiver in that regard. On November 22, 1963, the receiver obtained the directions of the court empowering him to file the winding-up petition against the company. But, it is contended that the learned judge made that order wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to collect and receive goods comprised in a charge given to the plaintiffs by one of the defendants, including therein any balance of the proceeds of the goods so charged in the hands of the other defendant. An order was subsequently made for the payment by the last-mentioned defendant to the receiver of a specific sum, being money received by him in respect of the proceeds of the goods, and comprised in the charge. The Court of Appeal held that the receiver was not a " creditor " entitled to present a bankruptcy petition against such defendant within the meaning of section 6 of the Bankruptcy Act, 1883. Lord Esher M.R. in coming to the said conclusion described the legal status of a receiver thus : " The petitioner is a receiver. He is not a trustee. There is no debt due to him from the appellant. He could not sue for this sum of money in his own name either at law or in equity. Even if he could by the authority of the court sue for it in his own name is the money due to him personally either at law or in equity ? At law it is certainly not. The debt was due to another person for whom he is not a trustee. The money will not be his when he has got it. Would it be his in equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain an action at law. It is plain that Fry L.J. thought that he could ; and Lopes L.J. seems to have taken the same view-that is, the view that if the receiver were the holder of a bill of exchange he could be a good petitioning creditor. In the present case the receiver happens to be the assignee of a judgment, and I think that being the assignee of a judgment he can be a good petitioning creditor even though when the money is recovered it is recovered for the purpose of enabling the Court of Chancery to deal with it. " A comparison of these two decisions leads to the following legal position : If a receiver could maintain an action at law or in equity for the recovery of a debt, he would be a good petitioning creditor ; and, if he could not, he would not be one. In In re Sacker's case it was not possible for the receiver to bring an action to recover the debt either at law or in equity, whereas in Macoun's case, the receiver, having obtained the assignment of the debt, could maintain an action at law for the recovery of the debt. Therefore, even in England a receiver, who can maintain an action to recover a debt, would be a good petitioning creditor. In India, the scope o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtaining the decree he will certainly be a judgment-creditor. Such a receiver is a person to whom a debt is payable by the debtor. In the present case, the respondent was authorised to file suits to realise the assets of the joint family, including the debt. We hold that the respondent is a creditor within the meaning of section 439(1)(b) of the Indian Companies Act and, therefore, is competent to maintain the petition for winding-up of the company. It is then contended that the notice issued by the receiver was not in strict compliance with the statutory requirements of section 434 of the Indian Companies Act. Two main defects are pointed out, namely, the notice did not require the appellant to pay the debt to the joint family or the receiver but to the Additional Collector of Bombay, and the said notice put it beyond the reach of the company to secure or compound for the debt to the reasonable satisfaction of the court receiver. Section 434 of the Indian Companies Act has been quoted earlier. Under the section before a company shall be deemed to be unable to pay its debts two conditions must be satisfied, namely, (i) the creditor shall have delivered a demand in the prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to the respondent or to secure or compound for it to the reasonable satisfaction of the creditor within the meaning of section 434(1)(a) of the Indian Companies Act. After the statutory notice the company could pay the sum demanded or secure or compound for it to the reasonable satisfaction of the creditor. The section does not confer a right on a debtor but only gives him an opportunity to discharge the debt in one or other of the ways mentioned therein. The debtor could secure or compound for a debt only where the circumstances under which the demand is made permit such a mode of discharge. But whereas in this case both the debtor and the creditor were under an obligation to discharge the income-tax dues and, as the creditor directed the debtor to pay the entire amount due to him towards the income-tax dues, there is no scope for the debtor to approach the creditor for securing or compounding his claim. In this view, no right of the company is violated, as it has none under section 434(1)(a) of the Indian Companies Act. That apart, section 46(5A) of the Indian Income-tax Act does not in terms prevent the debtor from compounding his claim with the creditor. It only directs him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt into the hands of the Lord Mayor's Court. In that case the demand was that the debtor should pay the amount to the petitioning creditor and because of the attachment of that amount by Lord Mayor's Court the debtor could not pay the amount to the creditor. But that judgment cannot possibly be of any help to the appellant, for in the instant case the receiver asked the debtor to pay the amount due to the joint family to the Additional Collector, Bombay, towards the income-tax due from the joint family. The debtor was not only not asked to do something which was legally prohibited but was asked to comply with the Collector's requisition under section 46 of the Indian Income-tax Act, 1922. By not doing so, the company clearly neglected to pay the amount within the meaning of section 434 of the Indian Companies Act. Lastly, it is argued that there was a bona fide dispute in respect of the liability of the company to the joint family. It is said that the company's case was that the debt was due to four individuals mentioned in the conveyance, namely, the father and his three sons, whereas the receiver's case was that the amount was due to the joint family and, therefore, in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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