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Kashi Prasad Vs. the Union Bank of India Limited - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Judge
Reported inAIR1919All337; (1919)ILR61All432
AppellantKashi Prasad
RespondentThe Union Bank of India Limited
Excerpt:
.....act), section 171 - civil procedure code (1908), section 47--transfer of decree against a company in liquidation--application by transferee to be substituted for original decree-holder--procedure. - - of course the applicant could not execute the decree without getting his name upon the record in that capacity, and to that extent the application was a perfectly proper one. in spite of that section we think the application was well founded. the liquidator is only an officer of the court, like an official receiver, vested with the assets and management of the company during the liquidation. when it comes to a question of attachment, distress or execution, section 232 of the indian companies act shows clearly that the hands of the court in which the decree is obtained or in which..........capacity, and to that extent the application was a perfectly proper one. the judgment-debtor was a company in liquidation. the liquidation was voluntary and was going on while the suit was pending. subsequently, however, to the decree somehow or another a petition was presented to the winding-up court, which is in another province, and an official liquidator was appointed on the 10th of april, 1917. it looks as though an order for the compulsory winding up of the company had been made. that being so, section 171 was brought into operation, in other words, no suit or other legal proceeding could be proceeded with or commenced against the company except by the leave of the winding-up court and on such terms as such winding-up court should direct. in spite of that section we think the.....
Judgment:

Piggott and Walsh, JJ.

1. This is an application, dated the 24th of April, 1917, by an alleged transferee of a decree, to have his name substituted as decree-holder of the decree which was dated the 3rd of December, 1915. The application was made to the execution court in which the decree had been obtained and was obviously based upon Section 47, Sub-section (3), of the Code of Civil Procedure, asking that court to determine whether the applicant was, or was not, the representative of the decree-holder. Of course the applicant could not execute the decree without getting his name upon the record in that capacity, and to that extent the application was a perfectly proper one. The judgment-debtor was a company in liquidation. The liquidation was voluntary and was going on while the suit was pending. Subsequently, however, to the decree somehow or another a petition was presented to the winding-up court, which is in another province, and an official liquidator was appointed on the 10th of April, 1917. It looks as though an order for the compulsory winding up of the company had been made. That being so, Section 171 was brought into operation, in other words, no suit or other legal proceeding could be proceeded with or commenced against the company except by the leave of the winding-up court and on such terms as such winding-up court should direct. In spite of that section we think the application was well founded. The applicant is only an alleged creditor. He is not the original party to the suit. He was not, at the time of the application, on the record. His capacity as decree-holder by transfer might be disputed by the liquidator in the liquidation and if the applicant had applied to the winding-up court to admit his debt in his capacity of decree-holder he might have been told by the winding-up court that he must first put his tackle in order by applying to the execution court under Section 47(3). Having occasion to adjudicate in winding-up matters I am inclined, to think that I should have taken that view, in other words, I should have thought that in entertaining an application for admission of a debt based upon a decree by an applicant who was not on the record, I was usurping the function of the execution court under Section 47. At any rate we think the applicant would have run considerable risk of being met by this objection unless he had first applied to the execution court.

2. Both courts have fallen into an error which is not uncommon, and which ought to be removed as quickly as possible. I myself have had to correct it on more than one occasion. The suit was brought against the company, the original debtor. The fact that the company is in liquidation does not change the party, but only its legal character and description. It continues to be the company, but in liquidation. The liquidator is only an officer of the court, like an official receiver, vested with the assets and management of the company during the liquidation. He does not become a party unless he is sued in his personal capacity for something in respect of which he has made himself personally liable. We think that the application ought to be granted and that we ought to confirm the order made by the first court. In order to make the matter clear we would add a few observations. When the applicant gets on the records as representative of the decree-holder he will be then in a position to make his claim, for what it is worth, before the winding-up court, that is to say, if the liquidator rejects it, he will be able to apply to the court to overrule the liquidator and to admit it. That Court is in another Province altogether. So far as the courts subordinate to this High Court are concerned we would merely point out that leave under Section 171 to bring a suit means leave by the winding-up court, and when once given, must be taken to cover all subsidiary legal proceedings necessarily arising out of the suit. When it comes to a question of attachment, distress or execution, Section 232 of the Indian Companies Act shows clearly that the hands of the court in which the decree is obtained or in which execution proceedings must be taken, are tied. Any order is void which is not made with the leave of the winding-up court. That court has the duty of seeing that the assets of the company are distributed rateably amongst the creditors according to law. It is not bound even by decrees of other courts. It can go behind decrees, or transfers of decrees, and decide for itself whether there is a debt, and what is the amount of it, which ought to be admitted to proof. Presumably it will only allow, if at all, execution by any single creditor against the assets of a company in liquidation, in its discretion upon the principles upon which English winding-up courts have occasionally allowed execution, but as will appear from the decided cases those occasions are very rare.

3. The order of the court below will therefore be set aside, the appeal is allowed, and the order of the first court restored with costs. So far as we are concerned, we must order the costs to be recovered against the official liquidator personally. Whether he eventually gets them out of the assets of the company must depend on the view which the winding-up court takes of his decision to fight the application.


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