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Rajdhani Grains and Jaggery Exchange Limited Vs. the Punjab Exchange Limited - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberCompany Appeal Nos. 26 and 27 of 1975, Civil Miscellaneous Appeal No. 348 of 1976 and Civil Appeal N
Judge
Reported inILR1976Delhi22
ActsCompanies Act, 1956 - Sections 433
AppellantRajdhani Grains and Jaggery Exchange Limited
RespondentThe Punjab Exchange Limited
Advocates: Satish Chander and; Daljit Singh, Advs
Cases Referred(Madhusudan Gordhandas and Co. v. Madhu Wollen Industries Pvt. Ltd.
Excerpt:
.....of may, 1971. it was alleged in the petition for winding up that the appellants had been realizing license-fees from the occupants of the various portions of the concerned building and had been appropriating hose amounts to themselves, without paying any amounts due to the respondents. the appellant raised a dispute, as defense to the winding up petition, that (sic) were to pay the amount as rent and not as license-fee. the company judge admitted the winding up petition and appointed a provisional liquidator and hence this appeal :; that the appellants, without referring to any clause in any agreement in their favor to the effect that the appellants were to pay the amounts due from them as rent and not as license-fee, have not made out a case for interfering with the order admitting the..........of 1975. both the appeals are directed against separate orders made on 19th december, 1975, by the learned company judge. the order against which company appeal no. 27 of 1975 is directed was passed first and by it the learned company judge, finding that a prima facie case had been made out. admitted to hearing the petition for winding up the company and directed that the citation may be issued in the indian express, urdu milap and the official gazette. (2) by the second order made on 19th of december, 1975 against which company appeal no. 26 of 1975 has been filed the learned company judge disposed of the application preferred under section 450 of the companies act and appointed a provisional liquidator. both the appeals were heard together. after the judgment had been reserved civil.....
Judgment:

Pritam Singh Safeer, J.

(1) This judgment will dispose of Company Appeals Nos. 26 and 27 of 1975. Both the appeals are directed against separate orders made on 19th December, 1975, by the learned Company Judge. The order against which Company Appeal No. 27 of 1975 is directed was passed first and by it the learned Company Judge, finding that a prima facie case had been made out. admitted to hearing the petition for winding up the company and directed that the citation may be issued in the Indian Express, Urdu Milap and the Official Gazette.

(2) By the second order made on 19th of December, 1975 against which Company Appeal No. 26 of 1975 has been filed the learned Company Judge disposed of the application preferred under section 450 of the Companies Act and appointed a provisional liquidator. Both the appeals were heard together. After the judgment had been reserved Civil Miscellaneous Petition No. 239 of 1976 was moved in Company Appeal No. 27 of 1975 with the prayer that the appellant be permitted to advance further arguments which by mistake could not be made earlier. We allowed the application by our order dated 24th of February, 1976, and counsel for the parties have been heard again.

(3) The circumstances relevant to these appeals are that the respondents Messrs the Punjab Exchange Limited took on lease Kohi-Noor building situated in Katra Baryan, Chandni Chowk, Delhi, in 1948. On the 2nd of January, 1960, a document came into existence in terms whereof the appellants were allowed to use portions of the aforesaid building at Rs. 2700 per month. The permission was renewed for a further period of three years on the 1st of February, 1963, and the appellants were allowed to use the premises at the reduced rate of Rs. 2000 per month. Those were the amounts payable every month by the appellants to the respondents for the use and occupation of the premises. It is the admitted case between the parties that the appel- lants have not paid any amount whatsoever as from the 1st of May 1971, although they continue to remain in possession. In February 1972, a suit was filed by the respondents for recovery of Rs. 14000 towards the arrears of license-fee and for recovering Rs. 4000 as damages for use and occupation after the revocation of license. The total amount claimed was Rs. 18000.

(4) This makes it clear that as from the 2nd of January. 1960, the appellants had been paying the amounts due till the 30th of April, 1971, and that no controversy regarding the arrears due from the appellants or the nature thereof arose between the parties for the period which ended on the 30th of April, 1971.

(5) It is admitted that no payment has been made for the use and occupation of the building by the appellants after the period to which the aforementioned suit pertains. The appellants continued to become indebted to the respondents for the amounts due month by month at Rs. 2000 per month for the period beyond the period covered by the suit. In the petition filed for the winding up of the appellantcompany it was stated that the appellants were indebted to the extent of about Rs. I lac and that they had made no payments. It may be mentioned that the objects of the appellant-company were to conduct, register and regulate forward contracts for the sale and purchase of grains. Except for the objects and purposes for which the appellants came into being, they were not to do any other business.

(6) It was alleged in the petition for winding up that the appellants had been Realizing license-fees from the occupants of the various portions of the concerned building and had been appropriating those amounts to themselves, without paying any amounts due to the respondents.

(7) The learned Company Judge took into consideration a statement of income and expenditure for the months of May and June, 1975, and found that the amounts realised by the appellants were in fact payable to the respondents. It was not a part of the business activity of the appellants to collect license-fees from occupants of the property and to appropriate the same as their income.

(8) It may be stated that although the appellants came into being with an authorised capital of Rs. 5 lacs, their paid up capital amounted to Rs. 56,500. It was alleged in the petition for winding up that the appellants had become insolvent as they had suffered a loss of Rs. 59,000. After considering all the aspects the Company Judge in the course of the order by which he admitted the petition to hearing, observed:

'ALTHOUGHthis is denied in the reply, it is apparent from the facts of the case that the respondent-company is hopelessly indebted to the petitioner-company.'

(9) In order to test the bonafides of the defense raised by the appellants that they were not indebted the learned Company Judge put to the appellants whether they had paid any amount. In terms of the answer given to him he recorded his finding as under :

'THErespondent-company does not claim to have paid the amount and it is not even willing to pay the amount but the learned counsel for the respondent-company stated that they are willing to pay only if a rent receipt is given.'

(10) In order to find out whether the appellants were really solvent and competent to pay any amount, the learned Company Judge suggested that the appellants may deposit a sum of Rs. I lac in court without prejudice to the rights of either party. He made v. clear that the deposit would be without prejudice to any controversy prevailing between the parties. The appellants failed to make any deposit and raised the plea that the court had no jurisdiction to try the case. The learned company Judge had to observe :

'THElearned counsel for the respondent-company stated that they were not willing to make such a deposit and even contested the jurisdiction of this court to try this case.'

(11) No argument has been preferred before us questioning the jurisdiction of this court.

(12) We do not find that the law laid down in 1944 Company Cases 224 (Dittoo Mal Aidan and others v. The Om Press Company Ltd. (1) cited by the appellants' counsel has any applicability to the present case. The case then cited on behalf of the appellants is : [1974]3SCR556 (Union of India v. Remon Iron Foundry) (2). There the Supreme Court was dealing with the provisions of sections 10, 73 and 74 of the Contract Act and the observations in the judgment bear no relevance to the present controversy.

(13) The observation made in 1976 Company Cases 25 (Sales Tax Officer, Petlad v. Rajratna Naranbhai Mills Ltd. and another) (3) was to the effect that under section 530(1)(a) of the Companies Act, 1956, in a winding up, there shall be paid in priority to all other debts, inter alia, all revenues, taxes, cesses and rates due from the company to the Central or a State Government. The Supreme Court held that words 'due' and 'due and payable' meant the same thing, namely, presently due and presently payable. In the case before us the appellants are unable to deny the liability to pay. The only ground urged time and again is that the amount can be paid only as rent. As already observed, there is no document whatsoever containing any stipulation that the respondents had ever created any tenancy in favor of the appellants. The debt due by the appellants is presently payable.

(14) The other cases cited including 1954 Comp Cas 507 (Bukhtiarpur Bihar Light Railway Co. Ltd. v. Union of India and another) (4), 1965 Comp Cas 456 (Amalgamated Commercial Traders (P) Ltd. v. A. C. K. Krishnaswami and Another) (5) and 1972 Comp Cas 125 (Madhusudan Gordhandas and Co. v. Madhu Wollen Industries Pvt. Ltd.) (6) do not help the appellants at all. We have gone through those cases and do not find any relevance of the facts in those cases or the law laid down therein to the controversy between the present parties.

(15) It was admitted before the learned Company Judge and it is admitted before us that the debt is due. The learned Company Judge had to observe :

'ONthe other hand, the fact that money is due is admitted by the respondent-company and in view of this admission the petitioner-company cannot be held to be not a creditor.'

(16) After hearing detailed arguments, we are convinced that the appellants were liable to pay the amounts which became due to the respondents and they are not solvent to pay the same. The appellants, attitude that it must be determined first that the amount is payable as rent cannot be appreciated. We also made the suggestion that the appellants in order to prove that they are solvent may deposit an amount of Rs. I lac in court subject to the result of the final adjudication, but they have not done that. The argument that the amount is payable as rent and not as license fee has no substance for the reason that the appellants are unable to show any term contained in any document permitting it to be urged that the appellants are tenants. No writing has been pointed out which may have created any tenancy in favor of the present appellants.

(17) We agree with the finding in the order under appeal that the appellants are debtors and the respondents are creditors. The learned company Judge was right in concluding that a Prima facie case had been made out for admitting the petition for winding up to hearing. It is admitted before us by Mr. Satish Chander, Counsel for the appellants in both these appeals, that the only source of income available to the appellants is that of the license fees payable by occupants of the property in Katra Baryan, Chandni Chowk, Delhi. The appellants, as has been observed earlier, have not shown that they have made any payments whatsoever towards the debt which they have been incurring as from the 1st of May, 1971. The amount claimed by the respondents as debt is due and every month the debt is increasing. No amount has been paid by the appellants to the respondents, although they have been collecting license fees from the occupants in the building. They have appropriated the amounts to themselves. The appellants were bound in law to make payments of their debts to the respondents. By raising the dispute that they were to pay the amount as rent and not as license-fee the appellants, without referring to any clause in any agreement in their favor in that respect have not made out a case for interfering with the order admitting the petition for winding up to hearing and we decline to interfere with the same.

(18) Company Appeal No. 26 is directed against the order dated 19th of December, 1975, by which the official liquidator was appointed as the provisional liquidator. The learned Company Judge noticed the facts which have been enumerated above and found that the appellants were connecting amounts from the occupants of the premises in Katra Baryan and appropriating the same to themselves. He apprehended hat the appellants might at any time, in case any portion of the premises fall vacant, transfer the possession to another person and create complications. In order to prevent further appropriation of the amounts due from the occupants of the building in Katra Baryan and to safeguard against the parting with the possession of any portion of the premises which may fall vacant, the learned Company Judge was justified in appointing the provisional liquidator. No case has been made out before us for interfering with the order under appeal in Compare Appeal No. 26 of 1975.

(19) Both the appeals are dismissed without there being any order as to costs. C.M. No. 348 of 1976 in Company Appeal No. 26 of 1975, preferred under section 151 of the Civil Procedure Code by the respondents for vacation of the stay order is not pressed and the same is also dismissed.


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