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R. Saraswathi and ors. Vs. Shakthi Beneficial Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKarnataka High Court
Decided On
Case NumberCompany Petition No. 14 of 1979
Judge
Reported in[1980]50CompCas562(Kar)
ActsCompanies Act, 1956 - Sections 439(1), 445(1), 454, 582, 583(1), 583(2) and 583(4)
AppellantR. Saraswathi and ors.
RespondentShakthi Beneficial Corporation and ors.
Excerpt:
.....to be effected, the deduction can be in terms thereof only and not otherwise. award is justified. - the petitioners have prayed that the firm be wound up under the provisions of the act, as the respondent-firm and its partners have failed to pay each of the petitioners the balance of their subscription amounting to rs......and the proceedings were continued placing them ex parte. this court has appointed the official liquidator as the provisional liquidator of the company on august 10, 1979, in company application no. 76/1979. 8. in these circumstances, accepting the case of the petitioners, the 1st respondent-firm shall be wound up in accordance with the provisions of the act as an unregistered company. 9. therefore, this court both hereby order that the respondent-firm be wound up in accordance with law and provisional liquidator is hereby appointed as the official liquidator of the respondent-firm. 10. in the result, this court directs that the petitioners do advertise the winding-up order in the deccan herald within 14 days from today. the respondent-firm shall further file a copy of this.....
Judgment:

Chandrakantaraj Urs, J.

1. This is a petition under s. 583(1), (2) and (4)(b) read with s. 582 and s. 439(1)(b) of the Companies Act, 1956 (hereinafter referred to as 'the Act'), presented by five petitioners. They have alleged that they were subscribers to the respondent-firm, Shakthi Beneficial Corporation, a firm registered under the Indian Partnership Act, 1932, carrying on the business of chit fund transactions at Bangalore. The petitioners have prayed that the firm be wound up under the provisions of the Act, as the respondent-firm and its partners have failed to pay each of the petitioners the balance of their subscription amounting to Rs. 4,000 in each case together with bonus thereon in the sum of Rs. 341.65. Balance due to each of the petitioners is indicated as follows :

----------------------------------------------------------------------------------------------Petitioner Membership Amount Plus Bonus Amount BalanceNo. subscribed Paid bythe 1strespondent.----------------------------------------------------------------------------------------------Rs. Rs. Rs. Rs.Petitioner No. 1 48 4,000 plus 341.65 1,000 3,341.65Petitioner No. 2 287 4,000 plus 341.65 ----- 4,341.65Petitioner No. 3 31 4,000 plus 341.65 2,000 2,341.65Petitioner No. 4 49 4,000 plus 341.65 ----- 4,341.65Petitioner No. 5 2 4,000 plus 341.65 2,000 2,341.65----------------------------------------------------------------------------------------------

2. Thus, the petitioners are entitled to a sum of Rs. 16,708.25 together with interest as the balance due from the respondent-firm and its partners respondent Nos. 2 to 11. In spite of repeated demands, the firm has not paid the said amounts to each of the petitioners. Therefore, the petitioners allege that the respondent-firm and its partners are unable to pay its debts.

3. They have further alleged that the partners are not carrying on the business, as it ought to be carried on, on account of their internal quarrels. It is further alleged that the 1st respondent has informed the subscribers under Scheme 'E' group that it would not receive installments and not conduct prize chits. It is relevant to note that the petitioners belonged to the earlier group, namely, group 'D'. In the said circumstances, they have made the prayer for liquidating the respondent-firm so that the petitioners can derive such benefits as such liquidation may bring about.

4. Respondents Nos. 7, 9, 10 and 11 are represented by counsel and have filed their statement of objections on July 27, 1979. In the said statements of objections they have averred primarily that the respondent-firm is not an unregistered company within the meaning of s. 582 of the Act and, therefore, it is not liable to be wound up under the Act. They have further alleged that respondents Nos. 2 to 11 are not partners in the firm on October 20, 1969, or on May 2, 1979, which latter dated is the date of filing of the petition. They have set out in detail that the respondent-firm was formed by respondents Nos. 2 to 4 and registered under the Partnership Act on October 20, 1969, together with one Shyamalal and another Shri P. S. Radhakrishna Shetty. It is further alleged that Shyamalal died and the firm was continued with the remaining partners. Later, respondent No. 5 was inducted in the year 1975. The aforementioned Radhakrishna Shetty, it is alleged, got himself released from respondent No. 1. It was only on October 5, 1978, that respondents Nos. 6 to 11 were inducted as partners and, therefore, they claim no liability for the transactions entered into by the firm prior to that date. It is further alleged that at the meeting held on March 4, 1979, respondents Nos. 5 to 11 have retired and a release deed was not executed in their favour. It is on the basis of these allegations, that the respondents have filed their objections, namely, respondents Nos. 7, 9, 10 and 11, raising the preliminary objection that seven members constituting the partnership to attract the provisions of s. 582 of the Act.

5. It is most unfortunate thereafter filing the statement of objections, the respondent hearings. In that position, the petition was reserved for orders. But noticing the preliminary objections on the maintainability of the petition, counsel for the petitioners was called upon to prove the constitution of the firm on the date of the petition. In response to the same, a certified copy of the register of firms maintained by the Registrar of Firms in Karnataka, Bangalore, has been filed in the court in which the constitution of the respondent-firm as on August 9, 1979, discloses 11 partners. In the absence of any rebuttal of the evidence, the constitution of the firm as certified has to be accepted and the preliminary objection overruled.

6. Apart from the other objections summarised earlier, there is no other objection offered by respondents Nos. 7, 9, 10 and 11. The other objections are technical in nature and are not borne out by the records nor substantiated as the respondents have not chosen to pursue the defence.

7. Respondents Nos. 3 and 8 had been served and have remained represented. Respondents Nos. 1 to 5 were also served and have remained unrepresented and the proceedings were continued placing them ex parte. This court has appointed the official liquidator as the provisional liquidator of the company on August 10, 1979, in Company Application No. 76/1979.

8. In these circumstances, accepting the case of the petitioners, the 1st respondent-firm shall be wound up in accordance with the provisions of the Act as an unregistered company.

9. Therefore, this court both hereby order that the respondent-firm be wound up in accordance with law and provisional liquidator is hereby appointed as the official liquidator of the respondent-firm.

10. In the result, this court directs that the petitioners do advertise the winding-up order in the Deccan Herald within 14 days from today. The respondent-firm shall further file a copy of this order with the register of Firms in Karnataka, Bangalore, within 30 days from today, in accordance win s. 445(1) of the Companies Act, 1956. The respondent-firm do file the statement of affairs with the official liquidator as required under s. 454 of the Act.

11. The official liquidator shall take all steps to recover the debts and other amounts due to the firm from its debtors in accordance with the details available in the books and records of the firm which he has seized or otherwise taken possession of. The official liquidator shall exercise all the powers under the Act and the Rules thereunder to discharge his duties as official liquidator.

12. The costs of liquidation shall be borne out of the funds of the firm, realised from time to time. It is ordered accordingly.


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