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indo-allied Industries Ltd. Vs. Punjab National Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAllahabad High Court
Decided On
Case NumberCompany Application No. 5 of 1964
Judge
Reported inAIR1968All594
ActsCompanies Act, 1956 - Sections 418 and 543; Indian Contract Act, 1872 - Sections 226
Appellantindo-allied Industries Ltd.
RespondentPunjab National Bank Ltd.
Appellant AdvocateRadha Krishan and ;V.B. Singh, Advs.
Respondent AdvocateS.K. Tewari and ;S.N. Misra, Advs.
DispositionApplications partly allowed
Excerpt:
banking - implied contract - section 226 of the indian contract act, 1872 - customer opening an account with branch office of the banking concern - duty of the bank to pay the customer, only at the branch subject to instruction to transfer the amount elsewhere - obligation to transfer subject to local legislation - held, section 226 permits enforcement of contracts as they stand and not heir substitution by fresh contract with different terms. - - 7, which the applicant had filed in this court, to put forward the plea that the rangoon branch was not satisfied that the applicant had legal authority to act on behalf of the company as no information from any court or other legal authority was received by the rangoon branch of the bank. a further plea is that payments to ram samujh singh.....m.h. beg, j. 1. this is an application under section 518 of the companies act, 1956 (hereinafter referred to as the act), filed by the voluntary liquidator of indo-allied industries ltd. the company under liquidation had its registered office at gorakhpur. its managing agent, ram samujh singh, opposite party no. 2 (now represented by his heirs), who was in charge of its business at rangoon, opened an account on behalf of the company in the rangoon branch of the punjab national bank ltd., new delhi, opposite party no. 1. the liquidator informed the manager of the rangoon branch of the punjab national bank ltd., by a letter dated february 6, 1957, that he had been appointed liquidator of the company in a voluntary liquidation on january 6, 1957. he sought information with regard to deposits.....
Judgment:

M.H. Beg, J.

1. This is an application under Section 518 of the Companies Act, 1956 (hereinafter referred to as the Act), filed by the voluntary liquidator of Indo-Allied Industries Ltd. The company under liquidation had its registered office at Gorakhpur. Its managing agent, Ram Samujh Singh, opposite party No. 2 (now represented by his heirs), who was in charge of its business at Rangoon, opened an account on behalf of the company in the Rangoon branch of the Punjab National Bank Ltd., New Delhi, opposite party No. 1. The liquidator informed the manager of the Rangoon branch of the Punjab National Bank Ltd., by a letter dated February 6, 1957, that he had been appointed liquidator of the company in a voluntary liquidation on January 6, 1957. He sought information with regard to deposits made at Rangoon on behalf of the company since July 1, 1953. The Rangoon branch of the Punjab National Bank gave details of various deposits made which showed that a sum of Kayats 16,101.75 (each K. is said to be worth roughly Re. 1 in Indian currency) stood to the company's credit up to 30th of June, 1957, The liquidator was also informed that, on the closing down of the company's Rangoon office, the account had become a 'non-resident' account automatically so that the Burmese Exchange Control Department had to be given a full account of the concern and of the circumstances leading to its liquidation before any transfer could be made to the liquidator in India. The liquidator gave the required details, but he was informed on November 25, 1957, by the Rangoon branch of the bank that an application made for the transfer of K. 16,101.75 to India had been rejected by the Burmese Exchange Control Department. For a long time the liquidator did nothing more. But in 1963 the liquidator learnt, as a result of further inquiries, that the account of Indo-Allied Industries in the Rangoon branch was closed on May 23, 1961. The liquidator protested against the closure of this account without his authority and after information given by him that he was the liquidator. The Rangoon branch of the bank had been nationalised and its assets and liabilities were taken over by the People's Bank No. 7 of Rangoon which, as the successor of the Rangoon branch of the Punjab National Bank Ltd., informed the liquidator, by a letter dated September 29, 1963, that the account was closed by payments made under three cheques, amounting to K. 16,056.75, to Ram Samujh Singh, the director of the company, who had been authorised, according to it, to operate the account singly. The petitioner claimed that the payments had been made collusively and wrongfully by the Rangoon branch of the Punjab National Bank Ltd. to Ram Samujh Singh, opposite party No. 2, after information given by the liquidator that the company had gone into liquidation and before its nationalisation by the Burmese Government. The applicant seeks to fasten liability to pay the amount thus realised by Ram Samujh Singh on both the opposite parties.

2. Neither Ram Samujh Singh, opposite party No. 2, a permanent resident of Gorakhpur, who died during the pendency of these proceedings, nor his heirs, who reside at Gorakhpur, have filed any reply or put in appearance. The Punjab National Bank Ltd., New Delhi, opposite party No. 1, has contested the applicant's claim and asserted that the bank's Rangoon branch was taken over by the Burmese Government on February 23, 1963. It denied any knowledge of the circumstances in which any sum was deposited with its Rangoon branch or how the account was closed. It, however, relied on the correspondence of the applicant with the Rangoon branch of the bank, and, after that, with the People's Bank No. 7, which the applicant had filed in this court, to put forward the plea that the Rangoon branch was not satisfied that the applicant had legal authority to act on behalf of the company as no information from any court or other legal authority was received by the Rangoon branch of the bank. It also pleaded that, according to the law in Burma, a 'non-resident' account ceased to belong to the company. The bank denies all responsibility for the transmission of the amount to India as the Exchange Control Department of Burma had rejected an applicationfor the transfer of the amount to India. It pleaded that the authority of the liquidator appointed under the law of this country could not be recognised in Burma which is a foreign country. Its case also is that the applicant could only enforce his claim, if at all, in Burma against the successor of the Rangoon branch of the bank according to the law in Burma. It denied that the petitioner had any cause of action against it in India. It is also pleaded that the liquidator's claim was barred by limitation. A further plea is that payments to Ram Samujh Singh satisfied the demand which could be made against the Rangoon branch of the bank.

3. The liquidator had prayed for the determination of only three questions under Section 518 of the Act and did not ask for anything more, but, after an examination of the detailed pleas taken by the two sides, the proceedings practically assumed the form of a suit. Issues were framed and evidence was taken by my learned brother, Satish Chandra J., when he was the company judge of this court. The issues, as finally reframed, are as follows:

(1) Was the liquidator appointed in accordance with law

(2) Did the authority of Ram Samujh Singh, opposite party No. 2, to operate upon the account in dispute in the Rangoon branch of the Punjab National Bank come to an end on or after January 6, 1957.

(3) Was there any collusion between the opposite parties to allow Ram Samujh Singh to withdraw the amount in dispute after the bank had been informed that the company was in voluntary liquidation and the bank had agreed to transfer the amount to the liquidator

(4) On the proved facts and circumstances of the case, were both oreither of the two opposite parties, and, if so, which party was liable to paythe amount in dispute to the liquidator

(5) Was the claim of the applicant time-barred

(6) Has this court jurisdiction under Section 518 of the Companies Act to determine the liabilities of the opposite parties on the proved facts and circumstances

(7) To what relief, if any, is the applicant entitled

4. Issues Nos. 2, 3 and 4 reproduce the three questions contained in the application under Section 518 of the Act which the applicant wants to be answered. Issues Nos. 1, 5 and 6 have been raised by the pleas set up by the opposite party No. 1, the Punjab National Bank Limited, India.

5. On the first issue, there was no serious dispute. The applicant proved, from the regularly kept minutes book of the meetings of the shareholders of Messrs. Indo-Allied Industries Limited, that a resolution was passed, at the annual general meeting of the shareholders, held on 6th January, 1957, that the company be wound up and Sri K.P. Misra be appointed its liquidator. This fact was published in the official gazette dated January 19, 1957. Ram Narain Pandey, the accountant of the company, proved the passing of theresolution. He was not questioned on the point. It has, therefore, been duly proved that the applicant was appointed liquidator of the company in voluntary liquidation in accordance with Section 485(1) of the Act.

6. The second issue raises a question which is difficult to answer. The liquidator sent a letter dated 16th February, 1957, to the manager of the Rangoon branch of the Punjab National Bank Limited informing him that the company had gone into liquidation and that he had been appointed its liquidator by the creditors and shareholders of the concern. The letter contained a request for details of all the depositors and amounts deposited in the account of the company from July 1, 1953. In his reply, dated 8th March, 1957, the manager of the Rangoon branch asked for a letter duly signed by all the directors of the company. With a letter dated 12th of March, 1957, the liquidator sent a copy of the resolution of the meeting duly certified by the chairman of the board of directors and a duly certified copy of the information published in daily newspapers in India showing that the applicant had been acting as the liquidator of the company. On 19th of August, 1957, the manager of the Rangoon branch sent information about the deposits made showing a balance of K. 16,101.75 standing in the account of the company at Rangoon. The manager also informed the liquidator that the account had been opened as a ' resident account' on July 25, 1950, but that it had become a ' non-resident ' account after the closing down of the company's Rangoon office. Further details relating to the company, from its inception to its liquidation, were asked for to satisfy the Burmese Exchange Control Department. Presumably, the Rangoon branch wanted to transmit the money to the liquidator after having been duly satisfied that the liquidator and not Ram Samujh Singh had the authority to receive the amount in deposit in a ' non-resident' account. On August 26, 1957, the liquidator sent the required information, but he never wrote that the authority of Ram Samujh Singh to operate on the account was terminated. The liquidator even referred the bank to Ram Samujh Singh for further information. It appears that the Rangoon branch of the bank applied for the transfer of the amount to India after obtaining the applicant's signature on an application for it. Then, the manager of the Rangoon branch informed the applicant that his application for the transfer of K. 16,101.75 to India had been rejected by the Burmese Exchange Control Department without assigning any reason.

7. Periodic intimation was, however, sent by the Rangoon branch of the bank addressed to the office of Indo-Allied Industries Ltd, at Gorakhpur (but not to the liquidator). The intimations sent show that on 19th February, 1960, an amount of K. 16,071.75 stood to the credit of the company. Evidence reveals a long and unexplained gap in correspondence after this. The liquidator apparently made no further attempts either to get or toinquire about the deposits until 3rd of February, 1963, when he suddenly sent an enquiry, by a registered acknowledgment due letter, addressed to the manager of the Rangoon branch of the bank, asking for information about the account of the Indo-Allied Industries Ltd. On 12th February, 1963, the manager of the Rangoon branch sent a reply informing the liquidator that the account had been closed on 23rd May, 1961. Subsequent letters by the liquidator to the Rangoon branch of the bank failed to elicit any reply. After enquiries made by the liquidator through the Indian Embassy at Rangoon, the liquidator addressed a letter dated 16th July, 1963, to the manager, People's Bank No. 7, at Rangoon, asking for information relating to the account of the company. The People's Bank No. 7 sent a reply on 27th July, 1963, showing that it had taken over the Rangoon branch of the Punjab National Bank and would look into the matter. On 29th October, 1963, the manager of the People's Bank No, 7, at Rangoon, as the successor to the rights and liabilities of the Rangoon branch of the Punjab National Bank Ltd. at Rangoon, sent the information that the account of the company was closed by Mr. Ram Samujh Singh, the director of the company, who had been ' appointed to operate singly on the account ' and who had withdrawn the whole amount.

8. There is no dispute about the genuineness of the correspondence which has been filed in this court. It is evident from the above-mentioned correspondence that the Rangoon branch of the Punjab National Bank at first recognised the authority of the liquidator rather hesitatingly, but, after the rejection, by the Burmese Exchange Control Department, or the application for transmission of the amount to the liquidator, the Rangoon branch did not consider itself bound to retain the money for the liquidator but treated Ram Samujh Singh as duly authorised to withdraw the deposits. It did not even address any letters or send any intimation about the account, to the liquidator after that. It had permitted the director, Ram Samujh Singh, opposite party No. 1, who was then residing at Rangoon, to withdraw the whole amount on behalf of the company. In other words, the Rangoon branch of the bank recognised the authority of Ram Samujh Singh to operate on the account as continuing notwithstanding the appointment of a liquidator in this country whose application to transmit the deposits of the company to him had been turned down by the Burmese Exchange Control Department.

9. The terms of the actual contract between the Rangoon branch of the bank and Ram Samujh Singh were only available, if at all, to the People's Bank No. 7 at Rangoon or to R. S. Singh who did not appear here. The last letter sent by the People's Bank to the liquidator shows that its stand is that, on the terms of that contract, the authority of Ram Samujh Singh to operate on the account continued, in the circumstances mentioned above andeven after the appointment of the liquidator, and that payment to Ram Samujh Singh by the Rangoon branch of the bank was a discharge of its liability to pay to the company. The People's Bank is not a party to these proceedings. Neither the head office of the Punjab National Bank at Delhi nor the liquidator could prove the terms of that contract. It may be mentioned that the only witness examined on behalf of the liquidator was Ram Narain Pandey, the accountant of the company, who had continued in service after liquidation commenced, and he stated that the authority of Ram Samujh Singh to operate solely on the company's account at Rangoon was continued.

10. The rule found in statutory provisions dealing with voluntary liquidation in England, on which our statutory provisions on the subject are based, is that the powers of the directors or of any single director to carry on the normal business of the company or to act on its behalf terminate on the appointment of a liquidator in a voluntary liquidation, but they may be continued or renewed by the liquidator or by a general meeting of members or in a creditors' voluntary winding up, by the committee of inspection or by the creditors (see Halsbury's Laws of England, 3rd edition, vol. 6, para. 1503). Section 487 of our Act provides that, in the case of a voluntary winding up, the company shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up of such business. But the corporate state and corporate powers of the company continue until it is dissolved. Section 491 provides that, on the appointment of a voluntary liquidator, the powers of the board of directors, the managing or whole-time directors, managing agent, secretaries, treasurers and manager, shall cease except in so far as their continuance is sanctioned by the company's general meeting or by the liquidator. Under Section 512(1)(b) of the Act the liquidator in a voluntary liquidation exercises the same powers as the liquidator in a winding up by the court. Under Section 456 of the Act, the liquidator, in a winding up by the court, has the power to take charge of and to assume control over all the properties and claims to which the company is or appears to be entitled. Therefore, a bank in this country will be bound to recognise the authority of the liquidator as superseding that of a director after the winding up has commenced and the liquidator appointed. But our Companies Act does not provide for the recognition of the authority of a liquidator in another country. It is not possible to assume that there is some statutory rule in Burma on the subject. Such a question will, in the absence of a specific provision in the laws of a country, be governed by international law.

11. The rule of Private International Law, adopted by the English courts, is stated in Dicey's Conflict of Laws (7th edition, page 491), as follows:

' Rule 82.--A liquidator duly appointed and authorised under the law of the place of incorporation can act on behalf of the corporation in England, but a foreign winding up order has no other effect in England.'

12. Comments on the rule indicate that the first part of the rule is based on the principle that the law of the place of incorporation determines who is entitled to act on behalf of the corporation.

13. Thus, it seems that the right of a liquidator appointed in another country and authorised by the law of his country to exclude others from exercising any control over the property of the company would be recognised if he appears before an English court to assert rights on behalf of a foreign company in liquidation over property situated in England. Courts in this country would also, I presume, adopt such a reasonable rule of international law, but it is not possible to predict what rule courts in Burma would adopt if such a question arose there.

14. Apparently, the People's Bank of Burma acknowledged that it had taken over the rights and obligations of the Rangoon branch of the bank, but it disputed the authority of the voluntary liquidator appointed in this country on the ground that it had a special contract with Ram Samujh Singh. In the absence of proof of the terms of that contract or the state of the law on the subject in Burma, it cannot be determined whether the authority of Ram Samujh Singh to operate on the account in Rangoon came to an end after January 6, 1957. Issue No. 2 cannot, therefore, be determined on the material on record. It has to be left unanswered. But this could not affect .any liability of Ram Samujh Singh to account to the liquidator for money had and received on behalf of the company.

15. Before deciding issues Nos. 3 and 4, a question, an answer to which will largely determine these issues, may be considered. This is : what is the responsibility and position of the head office of a banking concern or corporation with regard to deposits made by customers who open current accounts at its branches The applicant relies on Section 226 of the Indian Contract Act, which reads as follows :

' Enforcement and consequences of agent's contracts.--Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person.'

16. On the other hand, the opposite party No. 1 relies on the special position under an implied contract of each branch of a bank in relation to a customer who opens an account at that branch.

17. Apart from the complication introduced by the fact that the Rangoon branch, where deposits were made, functioned in a foreign country whose Government restricted transfer of deposits and then took over the branchas a State-owned bank, the very opening of an account at a particular branch of a bank connotes reciprocal obligations circumscribed by the fact that the account was opened at that branch. The position is thus stated in Hart's Law of Banking (4th edition, volume 1, page 96):

' In the absence of special agreement upon the matter, a banker is only bound to recognise a balance in favour of his customer at the office upon which his cheque is drawn ; and the customer is entitled to draw cheques only upon the office at which he keeps an account and to have them paid only at that office. From the nature of the case the undertaking on the part of the banker implied by the opening of an account must be limited in this way,'

18. In Henry Prince v. Oriental Bank Corporation the Privy Council held that, although the branch banks are in principle and in fact 'agencies of one principal banking corporation or firm', yet 'they may be regarded as distinct for special purposes, e.g., that of estimating the time at which the notice of dishonour should be given or of entitling a banker to refuse payment of a customer's cheque except where he keeps his account.' In Clare & Co. v. Dresdner Bank Rowlatt J. went so far as to hold :

' I come to the conclusion, therefore, that, although the question seems never to have been raised before, probably because such a thing has never been dreamt of, there is no obligation on a bank to pay in one country a debt due to a customer on current account in another country.'

19. In that case, the plaintiffs, who had an account at the Berlin branch of the defendant bank, wrote to a London branch demanding payment of the amount due on the account at the Berlin branch. The plaintiffs had made no request to the Berlin branch to remit the money to London. The courts held that there had been no breach of obligation to pay as the plaintiffs were not entitled to demand payment from the London branch.

20. Arab Bank Ltd. v. Barclays Bank was a case of a claim made upon the head office of the Barclays Bank in England for an amount deposited in the current account of the Arab Bank Ltd. kept at a branch of the Barclays Bank at Allenby Square in Jerusalem. After the termination of the British mandate over Palestine, the Arab Bank Ltd. requested the local 'head office' of Barclays Bank in Cyprus to transfer the amount to its account at the Midland Bank Ltd. in London. This request was refused by the Barclays Bank on the ground that the Jewish authorities, which were in de facto control over the area in which the Jerusalem branch of the bank was situated, would not permit the transfer. As a result of outbreak of war and the passing of a law by the State of Israel, the amount was paid to the Custodian of Absentee Property appointed by the local Jewish authorities. The Arab Bank sued the head office of Barclays Bank in England for return of money ' had and received '. It was held by the House of Lords that the right to be paid the credit balance, being ' locally situate ' in the State of Israel, became subject to the legislation of that State. The Arab Bank could not, therefore, recover from the head office of the bank in England. In addition to the plea of frustration of the contract with the branch in Jerusalem, due to war and local law, a plea which was upheld in this case was that there was no effective initial demand for payment upon the branch in Jerusalem.

21. The position, therefore, is that, in the absence of an express contract to the contrary, there is an implied contract in such cases, which carries with it the duty of the bank to pay the customer only at the branch where the account is kept subject to instructions to transfer the amount elsewhere. If the obligation to transfer is frustrated by local legislation or governmental action of the country where the account is kept, the remaining implied obligation to pay at the branch or office where the account is kept cannot be substituted automatically by an unconditional obligation of the principal to pay elsewhere by resorting to Section 226 of the Contract Act. Section 226 permits enforcement of contracts as they stand and not their substitution by fresh contracts with different terms.

22. Moreover, our Contract Act has no extra-territorial operation. The rule of Private International Law on the subject is thus stated in Dicey's Conflict of Laws (7th edition, page 875):

'Rule 171.--The rights and liabilities of the principal as regards third parties are, in general, governed by the proper law of the contract concluded between the agent and the third party.'

23. It may be possible to infer an implied contract in cases such as the one before me, by applying some generally accepted principles, such as those discussed in Prof. Cheshire's Private International Law (6th edition, page 213) under the 'Doctrine of Proper Law' but I find it difficult to see how particular provisions of our Contract Act would apply to a contract formed outside India with regard to deposits beyond our territories. There was no express contract to that effect in this case.

24. Issue No. 3 may now be taken up. If there was any collusion between Ram Samujh Singh and the Rangoon branch of the opposite party No. 1 after the Burmese Government had refused to allow the transmission of the amount to the liquidator in India, such a collusion has not been shown to be authorised by opposite party No. 1 which had no knowledge of it. 'Collusion' is a strong term. It had been denned as :

'A deceitful agreement.........between two or more persons............to some evil purpose such as to defraud a third person of his right.'

25. Collusion may be either apparent and patent, or, what is more common, secret and covered by an apparent show of honesty. In either case, collusionimplies a community of purpose and intention between the parties colluding. There is no evidence in this case of the means employed by Ram Samujh Singh for obtaining payment from the Rangoon branch of the bank. It is possible that he may have prevailed upon the Rangoon branch that he was legally entitled to draw the amount. Even if the conduct of Ram Samujh Singh was fraudulent, it could not be assumed that the Rangoon branch of opposite party No. 1 was a party to that fraud.

26. It was, however, contended that the collusion was apparent in this case. I do not think that this would be a correct inference from the facts proved. A collusion to be apparent must be based on facts which must be incapable of any other reasonable explanation. In the present case, the facts are not inconsistent with other possibilities. Therefore, there was no patent collusion between Ram Samujh Singh and the Rangoon branch of the opposite party No. 1 and the evidence of secret collusion is practically absent. All that could be said is that there are suspicious circumstances in the case, so that it is possible that the Rangoon branch of opposite party No. 1 had not dealt quite honestly with the account in allowing Ram Samujh Singh to withdraw the amount lying with it. This could, however, not amount to collusion of the principal in any action of the branch at Rangoon.

27. Issue No. 4 raises the question of the liability of either or both of the parties to the alleged collusive payment to Ram Samujh Singh. It has to be borne in mind that the Rangoon branch had not refused to pay the liquidator. Even before the liquidator made any demand for the transmission of the amount to India, the Rangoon branch seems to have taken steps on behalf of the liquidator and applied to the Burmese Exchange Control authorities for transmission of the amount to India. A copy of the Exchange Control Manual issued by the Rangoon Gazette shows that there were Foreign Exchange Regulation Rules. Rule 9 reads as follows :

' No person shall remit any money to any place outside the Union of Burma except under a permit or the approved application granted in his own name by the Controller.'

28. After the Controller had rejected whatever application was made by the Rangoon branch of opposite party No. 1, the liquidator himself made no demand upon the Burma branch to transmit the amount to India. No doubt, if he had made that demand, the Rangoon branch would have pleaded inability to send the amount to India. It had already indicated its inability 'before any demand was made. The fact, however, remains that the liquidator did not make the demand.

29. An important principle, resulting from the implied contract between a customer and banker, was laid down in Joachimson v. Swiss Bunk Corporation by the Court of Appeal in England, after an elaborate discussion of case law on the subject. This was that:

' Where money is standing to the credit of a customer on current account with a banker, in the absence of a special agreement, a demand by the customer is a necessary ingredient in the cause of action against the banker for money lent.'

30. This rule was also relied upon by the House of Lords in the Arab Bank':s case. In the present case, I find neither a demand upon the Rangoon branch of opposite party No. 1 nor upon opposite party No. 1 made by the liquidator. And, before any cause of action could accrue in favour of the liquidator, by the making of a demand for payment, the Rangoon branch of the bank had been nationalised and its assets and liabilities had passed on to the People's Bank No. 7 of Rangoon.

31. Even if the payment by the Rangoon branch of the opposite party No. 1 to Ram Samujh Singh was unjustifiable or wrongful, the effect would be that the amount would be deemed to be still in deposit with its successor, the People's Bank No. 7 of Rangoon. It could not be said, on the facts stated above, that the liability devolved upon the principal without even a demand for payment made either upon the agent or upon the principal before the liability, if any remained, till then was transferred to the People's Bank No. 7 of Rangoon. But the People's Bank No. 7 of Rangoon is neither before this court nor the question of its liability to pay is raised here. The question can only be decided in Rangoon in such proceedings as may still be open to the liquidator.

32. Ram Samujh Singh, as a director of the company in liquidation, could not, however, set up the plea that he was dealing with the company's funds outside India or that he had made a contract with respect to the company's funds outside India. He would certainly be liable to account because the relationship which made him accountable for the company's funds and properties was created in India. It is immaterial where he misappropriated or realized the funds of the company. Against him, the courts in this country could proceed in personam. Ram Samujh Singh, opposite party No. 2, who died in the course of the proceedings, did not even come forward to deny the claim of the liquidator. Under all the facts and circumstances stated above, it is clear to me that the opposite party No. 1 was not liable, but Ram Samujh Singh, opposite party No. 2, was accountable to the liquidator for the amounts realized by Ram Samujh Singh in Rangoon on behalf of the company.

33. The fifth issue raises the question of limitation against the opposite parties. As I have held that there is no liability of opposite party No. 1, on the facts and circumstances found above, to pay the amount realized by Ram Samujh Singh and that the liability, if any, was transferred to the People's Bank No. 7 of Rangoon, which was only enforceable in Rangoon, the question of limitation for any action against opposite party No. 1 does not arise in this case. So far as Ram Samujh Singh is concerned, it is not necessary to determine here whether any claim against his heirs would be barred by time if a suit was filed against them. It is enough to point out that, so far as proceedings under Section 543(1) of the Companies Act are concerned, for assessment of damages for misappropriating any funds of the company, the proceedings would be barred by Section 543(2) of the Act. Such action can be taken only on an application under Section 543(1) which has to be made within five years from the date of the appointment of the liquidator or of misapplication, retainer or misfeasance, whichever is later. No such application under Section 543(1) of the Act has been made to this court so far. Therefore, action under Section 543(1) of this Act against Ram Samujh Singh is barred by time.

34. The sixth issue raises the question of jurisdiction of this court under Section 518(1) of the Act which enables the liquidator or any contributory or creditor to apply to the court ' (a) to determine any question in the winding up of the company.' This is the jurisdiction which has been invoked. This provision occurs in the part dealing with voluntary winding up. Section 518(1)(b) enables the court, inter alia, to exercise in regard to 'any other matter, all or any of the powers which the court might exercise if the company were being wound up by court '. I do not think that it would be justifiable to unduly curtail the ambit of a power conferred in such wide and general terms. The only limitation upon the power is that the question to be decided must arise ' in the winding up '. The statutory powers of the court in a winding up proceeding are meant to be exercised on just and equitable grounds. It is not possible to state categories of justice and equity exhaustively. Therefore, the power is wide, but its exercise is made to depend, by Section 518(4), upon the satisfaction of the court that it will be ' just and beneficial ' to exercise it. Thus, there is scope for the exercise of a discretion on judicially determined grounds.

35. With due respect, I am unable to accept the view expressed in Koshal Industries Development Syndicate v. Koshal Transport and Trading Co. that the court's power under Section 518 of the Act does not extend to deciding disputed questions of fact. Section 518(1)(b) expressly enables the court to exercise all powers which it may exercise in a winding up by the court and this often involves determination of disputed questions of fact, although these are generally decided on evidence taken by means of affidavits. In In re Union Bank of Kensington-upon-Hull Jessel M. R. refused to unduly curtail the court's power under a corresponding provision in Section 138 of the companies Act of 1862, in England. I prefer to adopt a similar view of this court's powers under Section 518 of the Act. The jurisdiction of this court to consider a matter in a winding up is also determined under Section 10 of the Act by the place of registration of the company which is being wound up. I, therefore, hold that this court has jurisdiction to determine questions raised between parties before this court. It has determined only such questions as could, in my opinion, be justly and properly determined here.

36. Coming to the seventh and last issue, I hold that, for reasons already stated, the applicant can obtain no relief beyond the determination of two of the three questions raised by him. He had prayed for no further relief. This application, therefore, partly succeeds and partly fails. The parties will bear their own costs.


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