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Gendalal Cotton Mills Ltd. and anr. Vs. Basant Kumaribai and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Company
CourtMumbai High Court
Decided On
Case NumberCivil Revn. Appln. No. 1252 of 1959
Judge
Reported inAIR1961Bom1; (1960)62BOMLR594
ActsCode of Civil Procedure (CPC), 1908 - Order III - Order XXIX - Order 33, Rules 1, 3 and 7 - Order 44, Rule 1; Indian Companies Act, 1913 - Sections 179 and 280; General Clauses Act, 1897 - Sections 3; Interpretation Act, 1889 - Sections 2(1); Companies Rules - Rules 4, 7 and 292
AppellantGendalal Cotton Mills Ltd. and anr.
RespondentBasant Kumaribai and ors.
Appellant AdvocateH.R. Gokhale, Adv.
Respondent AdvocateM.H. Chhatrapati, ;Bachubhai Kilkabhai and ;A.G. Kotwal, Advs.
Excerpt:
.....it would be better to consider those decisions which have found favour with the court below. (the word 'person') does include an artificial person, a corporation, if that is the presumption, is at all a strong one. the language used in the general clauses act is much stronger than that used in the interpretation act and, therefore, a strong case has to be made out for not according to the word 'person' the full meaning which is given to it in the definition. in my opinion these observations of the madras high court are a good and sufficient answer to the argument which was advanced both before that high court arid the calcutta high court to the effect that the impossibility of a corporation presenting an application before the court in person is not a circumstance to justify the..........singh, the learned judges observed that : 'in order to decide whether in a particular instance the word 'person' includes an artificial person or a corporation or a company, regard must be had to the setting in which the word 'person' is placed, to the circumstances in which it is used, and above all to the context in which it stands. the [cope and meaning of the word depends essentially on the connexion and circumstances in which it is used. if there is any presumption that the word 'person' includes a corporation, the presumption is no more than of a slight nature and therefore, easily displaced. one has to consider the subject-matter of the particular enactment in which the word 'person' appears and especially the immediate context in which it is used in order to decide whether that.....
Judgment:
ORDER

1. This is an application for revision under Section 115 of the Code of Civil Procedure of theorder of the Court below holding that the Official Liquidators of a limited liability company have no right to institute a suit in forma pauperis for obtaining possession of the property belonging to the Company.

2. As has been pointed out by the Court below there is a conflict of Judicial opinion on this question. There is a group of cases in which it has been held that a Corporation cannot be allowed to sue in forma pauperis, while there is another group of cases in which it is said that it can be so allowed. The learned Judge of the Court below accepted the view of the High Courts of Calcutta, Rangoon and Punjab which is to the effect that a Corporation cannot be allowed to institute a suit as a pauper and dismissed the application made before it by Official Liquidators for being permitted to institute a suit on behalf of the petitioners, The Gendalal Cotton Mills Ltd.

3. Mr. H. R. Gokhale, who appears for the petitioners, relies strongly upon the view taken by the High Court of Madras in ILR (1937) Mad 784 : AIR 1937 Mad 549, Swaminathan v. Official Receiver of Ramnad and ILR 41 Mad 624 : AIR 1918 Mad 362, Perumal Koundan v. Tirumalarayapurma Jananukoola Dhanasekhara Sanka Nidhi Ltd. as well as the view taken by the Hyderabad High Court in AIR 1951 Hyd 124, Syed Ali v. Deccan Commercial Bank, Ltd., and contends that a Corporation being a person in the eye of the law is entitled to the benefit of the provisions of Order XXXIII, Rule 1, C. P. C., and to institute a suit in forma pauperis. He also referred to three other decisions which support the aforesaid contention. Two of those cases are AIR 1944 Oud 248, Sripal Singh v. U. P. Cinetone, Ltd. and AIR 1930 Ran 272, D. K. Cassim and Sons v. Abdul Rahman. Before examining the decisions upon which Mr. Gokhale relies, I think it would be better to consider those decisions which have found favour with the Court below.

4. In : AIR1938Cal745 , Bharat Abhyudoy Cotton Mills Ltd. v. Karneshwar Singh, the learned Judges observed that :

'In order to decide whether in a particular Instance the word 'person' includes an artificial person or a corporation or a company, regard must be had to the setting in which the word 'person' is placed, to the circumstances in which it is used, and above all to the context in which it stands. The [cope and meaning of the word depends essentially on the connexion and circumstances in which it is used. If there is any presumption that the word 'person' includes a corporation, the presumption is no more than of a slight nature and therefore, easily displaced. One has to consider the subject-matter of the particular enactment in which the word 'person' appears and especially the immediate context in which it is used in order to decide whether that presumption will apply or whether it will not.'

The ultimate decision reached by the learned Judges was that :

'The word 'person' in Order 33, Rule 1 and so the word 'person' in Order 44, Rule 1 does not include a limited company incorporated under the CompaniesAct and it is not possible for and competent to such a company to sue as pauper or to prefer an appeal as pauper under Order 44, Rule 1.'

In coming to this conclusion the learned Judges relied upon two English decisions, Pharmaceutical Society v. London and Provincial Supply Association (1880) 5 A.C. 857, and Charles P. Kinnell and Co. v. Harding, Wace and Co. (1918) 1 K. B. 405. The learned Judges also relied upon the decision of the Rangoon High Court in AIR 1930 Ran 259, S. M. Mitra v. Corporation of the Royal Exchange Assurance. In (1880) 5 A.C. 857, Lord Blackburn observed that :

'I do not think that the presumption that it. (the word 'person') does include an artificial person, a corporation, if that is the presumption, is at all a strong one.'

The view of Lord Blackburn found favour with the learned Judges of the Calcutta High Court. The learned Judges, however, pointed out that the definition of 'person' contained in Clause (39) of Section 3 of the General Clauses Act, 1897, is much wider than that of the same word contained in Section 2, Sub-section (1) of the Interpretation Act, 1889, which is the English law on the subject. That being the position in seems to me that Lord Blackburn's observations about the flimsiness of the presumption cannot be imported for considering how the word 'person' occurring in the Indian Statute is to be interpreted, According to the definition contained! in the General Clauses Act, the word 'person' wherever occurring in an Indian Statute shall, subject to the context, include any company or association or body of individuals whether incorporated, or not. According to the English definition contained in the Interpretation Act that word! shall, unless the contrary intention appears, include a body corporate. It will thus he seen that the inclusion of a body corporate within the expression 'person' is to be presumed under the English Statute, unless a contrary intention appears. Whereas under the General Clauses Act the expression shall include any company or association or body of individuals whether incorporate or not. The language used in the General Clauses Act is much stronger than that used in the Interpretation Act and, therefore, a strong case has to be made out for not according to the word 'person' the full meaning which is given to it in the definition..

5. In the other English decision (1918) 1 K.B.405 on which reliance was placed by the learnedJudges of the Calcutta High Court, it was pointedout that from its nature a Company cannot appearin person, not having as a legal entity any visibleperson. Relying upon this observation the learnedJudges held that this circumstance is also materialfor considering whether a corporation, can be allowed to sue as a pauper under Order 33, Rule 1 becauseunder that Order 33, Rule 1 a person who wants to sueas a pauper has to present his application for leaveto sue as a pauper in person. This obviously is notpossible where the corporation does not have alegal entity as that of a visible person. This aspect)of the matter was considered in ILR 41 Mad 624 : AIR 1918 Mad 362. The learned Judges have observed asfollows :

'As regards Rule 3 which requires personal presentation of the application to sue in forma pauperis, it seems to us that where the law in consequence of personal appearance in Courts being impossible either by reason of the party being a company or an infant or lunatic, allows appearance by somebody else appearance by such person would be sufficient. For example, Order XXXIII of the Civil Procedure Code which relates to minors and persons of unsound mind authorises appearance by the next friend and guardian ad litem and it cannot be said that where the minor or lunatic is a pauper, the presentation of a petition to sue in forma pauperis by the next friend would be invalid or contravening the provisions of Order XXXIII, Rule 3. So far as companies are concerned, the Companies Act provides for the mode in which the company is to be represented. Under Section 179 of the Indian Companies Act the liquidator may institute any suit or other legal proceedings in the name and on behalf of the company and under Order XXIX of the Civil Procedure Code the principal officer of the company may act in legal proceedings on behalf of the company and may be required to appear when personal appearance is necessary. The liquidator can therefore fulfil all the obligations required of a pauper petitioner under Order XXXIII. Rule 3 of Order XXXIII of the Civil Procedure Code, in our opinion, only prohibits a pauper who is competent in law to appear in person from taking advantage of Order III of the Civil Procedure Code and appearing by a pleader or recognised agent instead of being present personally. It does not cover cases where from the nature of the case physical presence is impossible or where the law, owing to any disability, directs that all acts required by the Code should be performed by next friend. We are of opinion that there is nothing in Rule 3 to prevent an official liquidator from appearing and presenting the petition.'

Though this decision was cited before the learned Judges of the Calcutta High Court they have not considered the aforesaid observations of the Madras High Court. In my opinion these observations of the Madras High Court are a good and sufficient answer to the argument which was advanced both before that High Court arid the Calcutta High Court to the effect that the impossibility of a corporation presenting an application before the Court in person is not a circumstance to justify the inference that the legislature did not intend to extend the provisions of Order XXXIII, Rule 1 to corporations.

6. As already stated the learned Judges of the Calcutta High Court have relied upon the decision in AIR 1930 Ran 259. In that case it was held by Heald Ag. C. J. that the word 'person' as used in Order XXXIII, Rule 3 was intended to mean nothing hut a natural person and was not intended to include a juridical or an artificial person. He further held that the provisions of Rules 4 and 7 regarding the examination of the applicant and the reference to 'wearing apparel' in the explanation to Rule 1 tend in the same direction and that consequently the word 'person' wherever it occurs in Order XXXIII-means a natural person, that is a human being, and does not include a juridical person such as a receiver. I may mention that the learned Ag. C. J. had based his decision on the observations of Lord Blackburnto which I have already referred. Otter J., who delivered the concurring judgment in the Rangoon case observed :

'We agree that the word 'person' in the provisions under review must be considered in its ordinary and plain meaning, and we see nothing in the context in which it stands to indicate that the legislature meant that the word 'person' should or might have the meaning of a juridical person'.

7. It will thus be seen that apart from the observations of Lord Blackburn, the Rangoon decision is based upon the circumstance that there would be a difficulty in complying with Rules 3, 4 and 7 of Order XXXIII if the word 'person' occurring in Order XXXIII were deemed to include a juridical person such as a Receiver or an Official Receiver or a Corporation. The observations of the Madras High Court, which I have already quoted partly answer the points raised by the learned Judges of the Rangoon High Court. In addition I may quote the further observations of the Madras High Court at pages 625 and 626 (of ILR Mad) : (at p. 363 of AIR):

'The explanation to Rule 1 no doubt states that where no court-fee is prescribed the petitioner should not be entitled to property more than Rs. 100 other than his necessary wearing apparel. The explanation simply allows deduction of the value of wearing apparel and can only mean that if the applicant has necessary wearing apparel he can deduct its value. We do not think it can be construed to mean that only persons who in law can possess wearing apparel, can sue as paupers.

....Where the applicant is a company, which ex-hypothesi, can have no wearing apparel, then it will not be entitled to deduct anything on account of wearing apparel and will not be a pauper if it has property worth Rs. 100 and the suit is one for which no fee is prescribed.'

8. The third and last decision upon which the Court below relies is that of AIR 1951 Punj 447, Associated Pictures Ltd. v. National Studios Ltd. This decision is based upon the two decisions referred to above and does not contain anything new on the point.

9. It seems to me that the view taken by the Madras High Court in ILR 41 Mad 624 : AIR 1918 Mad 362 which also was a case where an application under Order XXXIII Rule 1 was made on behalf of an incorporated company by an official liquidator is the correct one. This decision as well as the decision in AIR 1930 Ran 259 and several other decisions were considered by the Full Bench of the Madras High Court in ILR (1937) Mad 784 : AIR 1937 Mad 549 and it was held that the word 'person' occurring in the Explanation to Order XXXIII Rule 1 would include both natural and Sega) persons, and therefore, an official receiver is a person within the meaning of the above Explanation. I may point out that the view taken in ILR 41 Mad 624 : AIR 1918 Mad 362 was not only fully endorsed by the Full Bench but the reasons given in the earlier decision were also endorsed fully by the Full Bench. In AIR 1951 Hyd 124 the learned Judges have taken the same view as that taken in the two Madras cases and after quoting at considerable length from Salmond's Jurisprudence they cameto the conclusion that the word 'person' includes not only a natural person but also a juristic person and there is nothing in the Code to prevent a juristic person from filing a suit. They further held that if such a person has no sufficient means to pay the court-fee. Order XXXIII will apply as its object is to facilitate the filing of a pauper suit and on principle that facility should be given to all litigants entitled to it. The learned Judges further pointed out that even if it is assumed that there was no provision in the Code laying down a procedure for a corporation to file a suit in forma pauper is, on general principles of justice, equity and good conscience, the provisions of the Code applicable to natural persons suing as paupers will apply to such corporations or juristic persons subject to the circumstances of the case.

10. I entirely concur with this view. As pointed out in ILR 33 Cal 927, Hukumchand v. Kamlanand, the Civil Procedure Code is not exhaustive and, therefore, where there is no specific provision in the Code it is the duty of the Courts to act according to justice, equity and good conscience and that purpose is served by applying analogous provisions as far as circumstances permit. While dealing with the case the learned Judges further observed :

'In interpreting a statute the principle has to he borne in mind that the Legislature is not capricious but that when it confers a right, it should be presumed that the right is conferred not only on a few persons entitled to that right, but that the right is conferred on all persons entitled to it. The right to sue in forma pauperis is a privilege given to a litigant provided certain conditions are fulfilled. Hence it should be presumed that every litigant coming within those conditions is entitled to the benefit of the privilege and the legislature does not make any distinction between one litigant and another provided those conditions are fulfilled.'

These observations have my respectful concurrence.

11. Two more cases referred to by Mr. H. R. Gokhale, that is AIR 1944 Oud 248 and AIR 1930 Rang 272 proceed more or less on the same reasoning as the other Madras and Hyderabad cases referred to above.

12. The learned Judge of the Court below has referred to a decision of this Court in ILR 36 Bom 279, Manaji Rajuji v. Khandoo Baloo. That was a decision of a Single Judge of this Court on the original side. In that case the learned Judge has expressed tile view that :

'The privilege of maintaining a pauper suit is a personal privilege granted to people who have no means of carrying on or continuing litigation, and there seems to be no authority whatever for holding that a representative of a pauper is entitled to continue the suit of his testator or testatrix in forma pauperis, even though admittedly he is not a pauper, simply because his testator or testatrix was a pauper.'

This case is distinguishable on the simple ground that here the real applicant before the Court is the Corporation, that is, the Gendalal Cotton Mills Ltd., and the Official Liquidators have made the application merely on behalf of the Corporation becausethe Corporation must of necessity act through some-One.

13. In the above case a reference is made to ILR 18 Bom 237, In the matter of the will of Dawubai. In that case Starling J., has taken the view that where an executor is not in possession of the property of his testator and cannot get possession of it, and where he has not himself the means of paying the necessary fees, he may be allowed to petition for, and, if entitled thereto, to obtain probate in forma pauperis. That decision was distinguished by Davar J. upon the ground that the petitioner before Starling J. was himself a pauper. However, as pointed out, the decision of Davar J. is not quite in point here and, therefore, it is not necessary to consider the decision of Starling J. either.

14. I omitted to mention that Mr. Gokhale placed reliance upon the decision in 26 Bom LR 380 : AIR 1924 Bom 440, Nemichand Bhickchand v. Kevalchand Jasrai which supports him to some extent. In that ease it was held that under the provisions of the Civil Procedure Code, it is sufficient to show that the party who applies to sue in forma pauperis is a pauper. In the case of a minor applicant who is a pauper, his pauperism is not affected by the resources of his next friend in the suit. Though this decision does help Mr. Gokhale to this extent that what has to be ascertained is the financial capacity of the actual applicant it does not touch the main point which has been raised before me and, that is, whether a corporation is entitled to make an application under Order XXXIII, Rule 1.

15. Having considered all the authorities I have no doubt that the view taken by the Court below I is wrong.

16. Mr. Chattrapati, who appears for the opponents, however, says that Rule 292 of the Rules framed under the Companies Act would indicate that the intention of the legislature was not to allow a corporation to institute a suit as a pauper. That Rule is as follows :

'292. Where the company has no available assets : 'Where a company against which a winding up order has been made has no available assets, the Official Liquidator may, with the leave of the Court, incur any necessary expenses in connection with the winding up out of any permanent advance or other fund provided by the Central Government, and the expenses so incurred shall be recouped out of the assets of the company in priority to the debts of the. company.'

(Proviso is omitted as it is not material) It is sufficient to say that this is merely an enabling rule and it does not in any way affect the rights which the Corporation may have under the Code of Civil Procedure to institute a suit.

17. Then Mr. Chattrapati contended that under Section 280 of the old Companies Act a defendant is entitled to move the court for requiring a limited liability company to furnish security for costs and that it Will not be possible to secure compliance with such a rule if the company were allowed to sue as a pauper. All that I need say about this argument is that the provisions of Section 280 do not either expressly or by implication take away the right conferred by OrderXXXIII Rule 1, Civil Procedure Code. It may be thata party may not be able to obtain security for costsunder Section 280 from a company which has been permitted to sue as a pauper but those provisions merelyconfer A power upon a Court to require security tobe given in appropriate cases and do not make itobligatory upon it to order security to he given inevery case.

18. For the reasons which I have stated above I make the rule absolute and allow the application for revision. The matter will now go back to the lower Court for being determined on merits. At that stage it will he open to the opponents to raise such contentions on merits as are open to them under Order XXXIII, Code of Civil Procedure.

19. As regards costs of this Court they willabide the result of the application by the petitionersfor leave to sue as pauper.

20. Revision allowed.


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