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Bank of Upper India Ltd. Vs. Fanny Skinner and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1927All681; 103Ind.Cas.293
AppellantBank of Upper India Ltd.
RespondentFanny Skinner and ors.
Excerpt:
.....particular case, or generally in all cases in which he thinks it desirable, for leave to bid as a decree-holder under order 21, rule 72. it is clearly covered by clause (a), which deals with the institution of any suit in the name of a company, and clause (b), which deals with the carrying on of the business of the company so far as it may be necessary for the winding up. in the application before me the liquidator makes out a very strong case. everybody knows that in india, at any rate, hotel property particularly outside the large capitals, is a very special class of property, and the business or good will of a hotel is not one which readily finds a market among the general public, and inasmuch as the liquidator, having been in possession of some of these properties and having had the..........and in these provinces sub-rule 1, rule 72, no longer exists. permission is not necessary to a decree-holder in these provinces; but as the execution court in which this question has been raised is not in these provinces, this point is not very material. what the state of this rule may be in the punjab, i do not know, because i have no information as to what amendments have been made in the first schedule in the punjab, but a little reflection will show that the matter must be solely in the jurisdiction of, and governed by, the execution court, which is seized of the matter.4. in the first place a liquidator who becomes a litigant, either as plaintiff in a mortgage suit to enforce a mortgage, or in any other capacity, while he still remains a liquidator, and an officer of the court.....
Judgment:

Walsh, J.

1. This is an application by the sole liquidator of the Bank of Upper India asking me, as the Judge in winding up, to issue an order sanctioning the liquidator bidding for all properties which may be put up for sale at any future time, under execution proceedings taken for the sale of properties under mortgage-decree, which the liquidator may obtain on mortgages given to the bank now in liquidation, and also asking for sanction to bid in the case of those properties which have already been put up for sale, and in which the sales have been set aside, and in which the properties have to be put up for sale again. In the first place I am asked to issue notice to all whom it may concern. Who is meant by that very general phrase I have not the slightest idea, nor has the learned Counsel making the application. He suggests that I should issue notice to all alleged mortgagors, who may be parties to pending suits in which decrees for sale may possibly be granted, or who may hereafter become parties to suits brought by the liquidator as mortgagee.

2. I am certainly not going to do anything of the kind. I have never heard before of a roving notice to a large class of persons, who are not parties at all, merely on some hypothetical contingency, which may or may not become a question of practical importance. In the second place, I am of opinion that I have no jurisdiction to make any order giving the liquidator leave to bid. I can, of course, give any direction to him to take such legal steps as he desires to take, in accordance with the general provisions of the law, in a matter in which he is a litigant like any other ordinary litigant, but the granting or refusing of permission to bid at a sale is clearly a matter for the execution Court. Rule 72, Order 21, provides, as originally enacted that

no holder of a decree in execution of which property is sold shall, without the express permission of the Court, bid for or purchase the property,

3. But these rules in Sch. I are subject to the respective Sigh Courts' powers of amendment, and in these provinces Sub-rule 1, Rule 72, no longer exists. Permission is not necessary to a decree-holder in these provinces; but as the execution Court in which this question has been raised is not in these provinces, this point is not very material. What the state of this rule may be in the Punjab, I do not know, because I have no information as to what amendments have been made in the first schedule in the Punjab, but a little reflection will show that the matter must be solely in the jurisdiction of, and governed by, the Execution Court, which is seized of the matter.

4. In the first place a liquidator who becomes a litigant, either as plaintiff in a mortgage suit to enforce a mortgage, or in any other capacity, while he still remains a liquidator, and an officer of the Court of companies winding up, becomes, in his capacity as party to the suit, an ordinary litigant. In the case said to be pending in appeal in the Punjab High Court, he is a mere decree-holder, with rights and obligations no different from those of an ordinary litigant who is a decree-holder, and, therefore, Order 21, Rule 72 applies to him, and the execution Court can give or refuse permission to him to bid at a sale if the original form of the rule is in force and permission is necessary to a decree-holder. It would be a strange thing if, in a simple administrative matter like permission to bid at a sale, there should be two Courts with concurrent jurisdiction to give or withhold permission, and it certainly would be extremely embarrassing, and it is unlikely that the legislature ever intended any such contingency, that a Court in one province may give permission while in another province the execution Court may refuse it or, vice versa. I understand that whereas the Execution Court in the matter now pending gave permission, a Subordinate Judge in a declaratory suit had held that the sale is null and void, because the decree-holder who got the permission was a liquidator. With all respect it seems to me that consideration is totally irrelevant. It does not matter who the decree-holder is, and it does not matter, for the purpose of the validity of the sale, whether the liquidator has, or has not approached the Court exercising winding up jurisdiction. If the liquidator has done as a liquidator anything improper, that is a matter between him as an officer of the winding up Court and the Judge in winding up, and has no bearing upon his rights as a litigant and decree-holder, and if considerations of this kind have obtained upon the mind of the Court in setting the sale aside, it seems to me that it is a matter which demands the reconsideration of an appellate Court.

5. I mention this matter because it is made the foundation of this application by the liquidator. The liquidator reasonably appeals to this Court for assistance because he says that although he obtained permission to bid from the execution Court, it has been held that because he is a liquidator the sale is invalid, and that, therefore, he is liable, so often as he obtains permission and successfully bids and purchases the property, to have the sale set aside by a constant succession of declaratory decrees. He has therefore, asked me to give him a general authority to bid hoping that this will cure defect. To my mind it will do nothing of the kind. His right to bid, or not to bid must be adjudicated upon as of any other decree-holder is adjudicated upon, under Order 2l, Rule 72, and cannot be affected by anything which I can say or do. In order to prevent, if possible, the embarrassment and misfortune of conflicting decisions, I venture to suggest that it might be as well if the liquidator, in the hearing of the appeal before the Punjab High Court, applied to the High Court for permission to report what has happened to the matter in this Court and to read this order, holding definitely, as I do, that I have no jurisdiction and that the jurisdiction is vested under the code in the execution Court.

6. On the other hand I have jurisdiction, under Sections 179 and 215, Companies Act, to sanction any reasonable step which the liquidator may desire to take in the interests of the winding up, in which of course the primary concern is the interest of the creditors and the shareholders, and, therefore, I have power to sanction his applying to the execution Court either in a particular case, or generally in all cases in which he thinks it desirable, for leave to bid as a decree-holder under Order 21, Rule 72. It is clearly covered by Clause (a), which deals with the institution of any suit in the name of a company, and Clause (b), which deals with the carrying on of the business of the company so far as it may be necessary for the winding up. In the application before me the liquidator makes out a very strong case. In the particular instances in which the difficulty has arisen the properties are hotels. Everybody knows that in India, at any rate, hotel property particularly outside the large capitals, is a very special class of property, and the business or good will of a hotel is not one which readily finds a market among the general public, and inasmuch as the liquidator, having been in possession of some of these properties and having had the business under his control, had derived experience, therefore, and is not only a likely buyer but probably one of the most, if not the most likely buyer, it seems to me essential for the satisfactory conduct of the winding up, that he should take every possible step to realise the assets, and if the asset is one like a hotel, which may become unsalable unless he is able to purchase it himself, he ought in the interests of the shareholders and creditors to do his best to purchase it, and to do so at a reasonable figure, and as a means to that end, to apply to the execution Court as a decree-holder for permission to bid. The reasons seem to me to be overwhelming and as a Judge in the winding up I sanction his making the necessary application from time to time as a decree-holder for permission from the execution Court to bid at any such sales leaving it in his discretion not to do so if he is satisfied that no benefit would accrue.

7. I ought to mention one other matter. Inasmuch as I am only acting in winding up for a short time in the absence of Mr. Justice Mukerji, and inasmuch as this application has already been before him and has been adjourned from time to time at the request of the parties apparently pending the decision of the Punjab High Court, I think it right to mention that in his absence and without the opportunity of consulting him, I thought it right not to delay the matter further by another adjournment, but to give the necessary direction to the liquidator without delay, so that he may take such steps as he considers right with regard to future sales and, if the High Court of Lahore during the hearing of the appeal permits, to mention to the High Court what has been done in the winding up Court. The matter seems to me one of urgency, and I have, therefore, dealt with it to-day in order to put the liquidator in a position to do what is right in the matter.


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