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In Re: Globe United Engg. and Foundry Co. Ltd. : Ex Parte V. Rajaraman - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberC.A. No. 26 of 1971 in C.P. No. 8 of 1969
Judge
Reported in8(1972)DLT470
ActsCompanies Act, 1956 - Sections 490
AppellantIn Re: Globe United Engg. and Foundry Co. Ltd. : Ex Parte V. Rajaraman
Advocates: N.S.K. Rao,;Adv. for the liquidato
DispositionApplication dismissed
Excerpt:
- - 1. the interesting question that falls for decision in this application is whether a liquidator appointed in the course of voluntary winding-up whose remuneration was fixed (at rs......that falls for decision in this application is whether a liquidator appointed in the course of voluntary winding-up whose remuneration was fixed (at rs. 3,000) could apply for revising the said remuneration on the ground that the voluntary winding-up, without supervision of the court, has since come under the supervision of the court.2. the registrar of companies has pleaded in bar of the application section 490 of the companies act, which reads as follows :490. power of company to appoint and fix remuneration of liquidators.--(1) the company in general meeting shall- (a) appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company ; and (b) fix the remuneration, if any, to be paid to the liquidator or liquidators. (2) any.....
Judgment:

S. Rangarajan, J.

1. The interesting question that falls for decision in this application is whether a liquidator appointed in the course of voluntary winding-up whose remuneration was fixed (at Rs. 3,000) could apply for revising the said remuneration on the ground that the voluntary winding-up, without supervision of the court, has since come under the supervision of the court.

2. The Registrar of Companies has pleaded in bar of the application Section 490 of the Companies Act, which reads as follows :

490. Power of company to appoint and fix remuneration of liquidators.--(1) The company in general meeting shall-

(a) appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company ; and

(b) fix the remuneration, if any, to be paid to the liquidator or liquidators.

(2) Any remuneration so fixed shall not be increased in any circumstances whatever, whether with or without the sanction of the court.

(3) Before the remuneration of the liquidator or liquidators is fixed as aforesaid, the liquidator, or any of the liquidators, as the case may be, shall not take charge of his office. '

3. It is necessary to note that this section does not prohibit the remuneration being reduced, it shall not be increased under any circumstances whatever. Sub-sections (2) and (3) of the said Act are new, Sub-section (2) being based on the recommendations of the Company Law Committee, which stated that the remuneration of a voluntary liquidator, when once fixed, should not be increased at any subsequent stage :

' We have got only two important recommendations to make. First, that the remuneration of a liquidator in voluntary winding-up should be remuneration fixed at the time of his appointment and such remuneration should not be increased under any circumstances......As theshareholders take very little interest in these cases, the liquidators often succeed in securing sanction to increase in their remuneration with the help and support of the management of the company, while the proceedings dragon in a leisurely manner. We consider this practice wholly improper. Apart from the fact that it reduces the assets of the company concerned, the further point that this practice enables the liquidators to receive benefits from the erstwhile management of a company, must necessarily derogate from their independent position. '

4. Shri N.S.K. Rao, learned counsel for the applicant, invites my attention to the decision in In re Mortimers (London) Ltd., [1937] Ch. 289, [1937] 2 All E.R. 364 [1938] 8 Com. 56 , where Bennett. J. held that :

' The court has power, in any case where a voluntary winding-up is superseded by a compulsory order, to review the remuneration which the members in a members' voluntary winding-up or the committee of inspection or the creditors in a creditors' voluntary winding-up have fixed as payable to the liquidator.'

But this decision is of no assistance to him because there has been no winding-up by, court in this case. The voluntary winding-up has been brought under court's supervision ; this is not the same thing as winding-up by the court itself.

5. Shri Rao urges that the bar of Section 490 of the Companies Act will not apply in the instant case because that section is concerned with only a voluntary winding-up in the ordinary course and not voluntary liquidation under the supervision of the court. My attention has not been drawn to any specific provisions either in the Act or the Rules which will enable a voluntary liquidator to get a higher remuneration than the one fixed by the members at the time of resolving to voluntarily wind up the company merely because voluntary winding up comes under court's supervision. The scale of fees payable to an official liquidator in the case of winding up through court cannot obviously be paid to a voluntary liquidator whose remuneration was fixed. There is, thereforee, a causus omissis in this regard; the court thereforee cannot enhance the remuneration which has already been fixed by the members themselves.

6. Shri Rao next contended that the work of the liquidator had increased, he having to take steps even by filing suits, for recovery of Rs. 27 lakhs. It would not be correct to say in the first instance that his work has increased because the amounts due to the company in winding up have always to be collected whether it is with or without court's supervision. The mere fact that the supervision of the court has been interposed could not by itself be said to increase the quantum of work of the liquidator, his work is only to be supervised by the court and he is answerable to the court for his actions.

7. It is further contended by Shri Rao that the liquidator would have at least to be compensated on the basis of work done on a quantum meruit basis. He relies upon In re Allison, Johnson & Foster Ltd.: Ex parte Birkenshaw [1904] 2 K.B. 327 in support of this contention. In that case the voluntary winding-up of a company by resolution was subsequently set aside by the court as invalid and the appellant was appointed liquidator. The voluntary winding-up itself having been found to be invalid there could not be said to be a valid compact between the shareholders and the liquidator in this regard and hence the liquidator would be entitled to be paid not the amount which was fixed but only on a quantum meruit basis. This decision has no application to the present case because the voluntary winding-up has not been set aside. In the result the compact between the shareholders and the liquidator in the matter of payment of remuneration to him for his work as a liquidator has not become irregular. When there is a valid subsisting compact between the liquidator on the one side and the members of the company on the other pertaining to his remuneration as liquidator, there is no legal basis for a claim on the basis of quantum meruit. The claim of quantum meruit, in other words, could arise only in the absence of a valid compact for payment of remuneration or the compact being subsequently discovered to be invalid or irregular.

8. In these circumstances, the application is dismissed but without costs.


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