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Ganeshilal Gupta Vs. Bharatpur Oil Mills Through Official Liquidator - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtRajasthan High Court
Decided On
Case NumberS.B. Miscellaneous Company Application No. 51 of 1971 in S.B. Company Case No. 4 of 1958
Judge
Reported in1972WLN68
AppellantGaneshilal Gupta
RespondentBharatpur Oil Mills Through Official Liquidator
Cases ReferredT.R. Rajakumari v. Motion Picture Producers Combine Ltd.
Excerpt:
.....by section 474 of the companies act according to which a creditor, who does not prove his debt or claim within the time fixed by the court, has to be excluded from the benefit of any distribution made before his debt or claim is proved. - section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed the age of 16 years and 13 days on the date of alleged occurrence - appellant was arrested on 30.11.1998 when the 1986 act was in force and under clause (h) of section 2 a juvenile was described to mean a child who had not attained the age of sixteen years or a girl who had not attained..........by section 474 of the companies act according to which a creditor, who does not prove his debt or claim within the time fixed by the court, has to be excluded from the benefit of any distribution made before his debt or claim is proved. a perusal of rules 177 & 178 of the rules lends support to this view, for the reason that while rule 177 provides for relief by the court to a creditor who fails to file proof within the prescribed time-limit, rule 178 lays down that a creditor who has not proved his debt before the declaration of any dividend shall not be entitled to disturb the distribution of any dividend declared before the proof of his debt by reason of the fact that he did not participate in it. he is however, entitled to be paid out of any money for the time being in the.....
Judgment:

P.N. Shinghal, J.

1. This is an application of Ganeshilal, one of the ex-Directors Bharatpur Oil Mills (P) Ltd., for relief under Rule 177 of the Companies (Court) Rules, 1959, hereinafter referred to as 'the Rules'. An order for the winding up of the Company was made on October 4, 1960, and the petitioner claims the recovery of his remuneration as director for the period May 20, 1957 to January 4, 1960, at the rate of Rs. 400/-per month, amounting to Rs. 12, 600/-, on the strength of two resolutions of the Company dated May 20, 1957 and September 12, 1958. He has stated that after the winding-up order was made he asked the other directors to file a claim on his behalf also because he was not in a position to undertake the journey to Jodhpur on account of his old age and illness, and that be remained under the impression that they had done so. He came to know from one of the ex-directors that the claims of the other three directors were allowed by the Official Liquidator on September 25, 1971, and he therefore filed the present application on October 29, 1971. As a dividend had already been declared by then, the applicant has stated their he may be paid out of the surplus in the hand of the liquidator. An affidavit has been filed in support of the application.

2. The Official Liquidator has opposed the application on three main grounds. He has contended that the last date for the submission of claims was January 30, 1961, that the applicant has not given any 'cognent reason' for the delay and that a dividend of 50 paise in the rupee has been declared and paid in the meantime. Then he has stated that the applicant is not entitled to claim remuneration because at the time when he was called upon to file the statement of affairs of the Company under Section 454 of the Companies Act, he denied his responsibility on the ground that he had resigned already. Lastly, it has been contended that the application is premature because the applicant has not filed a claim with the Official Liquidator in the first instance.

3. Now, it cannot be doubted that the present application for relief has been filed after a long period of time inasmuch as January 30, 1961 was the last date fore the filing of proof. The applicant has however stated on oath that he is an old and sick man and that he remained under the impression that the other directors had filed a claim on his behalf also as requested by him. There is nothing on the record to show that this contention is not factually correct It has to be remembered that the applicant had a claim for a substantial sum of money, and there is no reason to think that he would have delayed it wilfully. As has been stated, there has been a long delay in filing the proof, but a the claim is within the period of limitation prescribed by the Limitation Act, the only consequence of the delay will be that prescribed by Section 474 of the Companies Act according to which a creditor, who does not prove his debt or claim within the time fixed by the court, has to be excluded from the benefit of any distribution made before his debt or claim is proved. A perusal of Rules 177 & 178 of the Rules lends support to this view, for the reason that while Rule 177 provides for relief by the Court to a creditor who fails to file proof within the prescribed time-limit, Rule 178 lays down that a creditor who has not proved his debt before the declaration of any dividend shall not be entitled to disturb the distribution of any dividend declared before the proof of his debt by reason of the fact that he did not participate in it. He is however, entitled to be paid out of any money for the time being in the hands of the Liquidator available for distribution of dividend The scheme of the law therefore does not prescribe any other penalty in the case of a belated claim. I am fortified in this view by the decision in In re General Rolling Stock Company 1871 (7) Ch. Appeal 646. There the winding up order was made in February 1865 and the certificate of debts and claims was made in December 1870 A dividend was paid on the established debts in January, 1871. In March 1871, the holder of some bills of exchange to a large amount, which had become payable in February, 1865, gave the first notice of his claim and applied for leave to prove, not disturbing the previous dividends. It was held on appeal that he was entitled to do so without disturbing the previous dividends. I am in respectful agreement with that view. A similar point arose for consideration in In re Metcalfe 1879 (13) Ch. D. 236 and it was held that a creditor may come in as long as there are undistributed assets still available. That decision has been followed In re Kit Hill Tunnel 1880 (16) Ch. D. 590. The position of the law on the point is thus quite clear and has been stated as follows in Buckley on the Companies Acts, thirteenth edition, page 544:

A creditor may come in and prove at any time before the company is dissolved; the penalty of not coming in before the day fixed by the Court is not exclusion altogether, but exclusion from the benefit of any distribution made before proof.

4. The same view has been expressed in Palmer's Company Law, twenty-first edition, at Page 761. Reference may also be made to the decisions in Isack Jesudasen Pillai v. Divan Bahadur Ramsamy Chhetty ILR 1904 Mad. 496 which appears to have been based on the decision in In re General Rolling Stock Company 1871 (7) Ch. Appeal 646, and to T.R. Rajakumari v. Motion Picture Producers Combine Ltd. AIR 1942 Mad. 349. it is thus a well settled proposition of the law, a creditor may come in and prove his debt at any time before the final distribution of the assets, but he cannot disturb any dividend which has already been paid, The first objection of the Official Liquidator is therefore futile.

5. It has next been urged that as the applicant had denied his responsibility to file a statement of affairs under Section 454 of the Companies Act on the ground that he had resigned from the off ice of Director, he should not be allowed to claim his remuneration in that capacity. The learned Counsel for the applicant has urged, on the other hand, that the applicant sent his resignation to the Company to be effective from February 12, 1959, and that as it was not accepted to his know ledge, there is no reason why he should not be entitled to his Remuneration for the entire period. It appears to me, however, that this is really a matter which concerns the question of sufficiency of the proof in respect of the claim and it will be for the Official Liquidator to examine as I am not inclined to adjudicate upon the applicant's debt myself.

6. The third objection is, that the application is premature inasmuch as the claim has not been filed with the Official Liquidator in the first instance It will be sufficient to say in this connection that as a provision has been made in Rule 177 of the Rules permitting a creditor who fails to file proof of his debt with the liquidator within the time specified for the purpose to apply to the court for relief, it. is not possible to take the view that an application for such relief should be rejected merely because the creditor has not approached the Official Liquidator in the first instance.

7. The Official Liquidator is therefore directed to adjudicate upon the debt of the applicant according to the law. The applicant shall pay Rs. 200/- as costs to the Official Liquidator.


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