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Tulsi Ram Sinha Vs. Akhara Panchayati Udasi and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany;Civil
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 14 of 1956
Judge
Reported inAIR1959All245
ActsCompanies Act, 1956 - Sections 509 and 528
AppellantTulsi Ram Sinha
RespondentAkhara Panchayati Udasi and ors.
Appellant AdvocateRajeshwari Prasad, Adv.
Respondent AdvocateA. Banerji and ;K.C. Agrawala, Advs.
DispositionRevision allowed
Cases ReferredEmployers Liability Assurance Corporation v. Sedgwick Collimsand Co.
Excerpt:
company - execution of money decree - sections 528 and 509 of companies act, 1956 - company in liquidation not dissolved - company through liquidator retains its existence - money decree can be executed against the company in liquidation-revision allowed. - - , and there was a failure to realise the decretal amount from the said judgment-debtor. 3. there can be no doubt that the compromise decree clearly indicated that execution was to be levied in the first instance against the benos sericum ltd. , and it was only upon failure to realise the decretal amount from benos sericum ltd. until and unless there was a failure by the decree-holder to realise his entire decretal amount after availing the procedure laid down under the companies act it could not be said that right arose in..........no longer exists as a separate entity capable of holding property or of being sued in court; but a company in liquidation, though the administration of its affairs has passed to the liquidator retains its complete existence. if the liquidation should be annulled, the company will resume its powers'. this is the exact position under the indian companies act also and it is only after the final meeting under section 509 of the indian companies act that a company is deemed to be dissolved.4. under section 528 of the indian companies act, debts of all description are to be proved. the section runs as follows :'debts of all description to be admitted to proof. in every winding up case (subject, in the case of insolvent companies, to the application in accordance with the provisions of this act.....
Judgment:
ORDER

R.N. Gurtu, J.

1. This small cause court civil revision under Section 25 of the Small Cause Courts Act arises out of an Execution Case No. 282 of 1955. An application for execution of the decree was made by the decree holder, the Akhara Panchayati, against Tulshiram Sinha the applicant in this revision. An objection was taken by the applicant that the decree was not liable to be executed against him until it had been put into execution against another judgment-debtor, namely, Benos Sericum Ltd., and there was a failure to realise the decretal amount from the said judgment-debtor. The applicant relied upon the decree itself. A plain copy of the decree has been handed over to me in regard to the correctness of which there is no dispute and which I am putting on the record. The relevant portion of the decree runs as follows:

'The suit for recovery of Rs. 1000/- is decreed against the defendants in terms of the compromise which shall form part of the decree-

SHARAYAT SULAHNAMA.

1. Yeh ki darmiyan muddai wa muddalya Nos. 1, 3, 4 hash zail musalihat ho gai. Ka. Yeh ki dawa muddai mai kharcha muqadma digree kiya jawai. Kha. Yeh ki muddai apna mutalba muddlah No. 5 se wasul karega. Agar muddalah No. 5 se mutalba muddai wasul na ho sake to us surat men muddai baqiya muddalahum ya jis muddalah se chahe apna mutalba wasul karne ka majaj hoga and yahi sharayat muddalah number do par bhi lagoo hoga. Ga. Yeh ki muddai wa muddalah number 1, 3, 4 aclalat se istudwa karte hain ki hash Sharayat munderja bala dawa digree kiya jawai.'

The Small Cause Court ordered execution against the applicant on the ground that Banos Sericum Ltd. had gone into liquidation and was of the view that the decree-holder was entitled to proceed against the applicant judgment-debtor.

2. In this revision it is contended that the Small Cause Court was in error in ordering execution as against the applicant.

3. There can be no doubt that the compromise decree clearly indicated that execution was to be levied in the first instance against the Benos Sericum Ltd., and it was only upon failure to realise the decretal amount from Benos Sericum Ltd., that execution could be had against other judgment-debtors. The apparent view of the court below that because the Company had gone into liquidation it had to be assumed that execution could not be had against it or that the decretal amount could not be realised from it, is obviously incorrect. When a Company goes into liquidation the effect is not to bring about a dissolution of the company.

As observed by Viscount Cave in Employers Liability Assurance Corporation v. Sedgwick Collimsand Co., 1927 A. C. 95 'a company which has been dissolved no longer exists as a separate entity capable of holding property or of being sued in court; but a company in liquidation, though the administration of its affairs has passed to the liquidator retains its complete existence. If the liquidation should be annulled, the company will resume its powers'. This is the exact position under the Indian Companies Act also and it is only after the final meeting under Section 509 of the Indian Companies Act that a company is deemed to be dissolved.

4. Under Section 528 of the Indian Companies Act, debts of all description are to be proved. The section runs as follows :

'Debts of all description to be admitted to proof. In every winding up case (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act of the law of insolvency), all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain value.'

It cannot, therefore, be said in this case that the decree-holder could not realise his debt against the company. He could avail himself of the provisions of the Companies Act. Until and unless there was a failure by the decree-holder to realise his entire decretal amount after availing the procedure laid down under the Companies Act it could not be said that right arose in him to execute the decree against the other judgment-debtors in terms of the compromise. In the circumstances, the order of the court below must be set aside. The applicant judgment-debtor's objection must be upheld and the execution application against him must be dismissed.

5. I, therefore, allow this revision, set asideorder of the court below and direct the dismissal ofthe execution application as against the applicant-judgment-debtor. There will be no orders as tocosts.


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