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R. Ranganathan Vs. Veerakumar Trading Chit Funds Pvt. Ltd. (In Liquidation) and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai High Court
Decided On
Case NumberCivil Revision Petition No. 1175 of 1975
Judge
Reported in[1976]46CompCas637(Mad)
ActsCompanies Act, 1956 - Sections 537
AppellantR. Ranganathan
RespondentVeerakumar Trading Chit Funds Pvt. Ltd. (In Liquidation) and ors.
Appellant AdvocateS. Nainar Sundaram, Adv.
Respondent AdvocateOfficial Liquidator
DispositionPetition dismissed
Cases ReferredBansidhar Shankarlal v. Mohd. Ibrahim
Excerpt:
- - nainar sundaram, learned counsel, would submit before me that under section 446 though leave is required to continue the proceedings against the official liquidator, the failure to obtain leave would not be fatal to the proceedings nor do the proceedings become void on that score......above, the order of winding up was passed on august 18, 1973. it is rather unfortunate that the decree-holder did not obtain the leave of the court as required under section 537 of the companies act (hereinafter referred to as the act). it may be because he was ignorant of the winding up proceedings. the sale of certain movables belonging to the company under liquidation took place on february 28, 1974, which resulted in realisation of a sum of rs. 2,700 odd and less poundage the net proceeds realised was rs. 2,567.50. out of that amount rs. 1,777.20 was paid over to the decree-holder. under these circumstances, e.a. no. 201/1974 was taken out and the learned subordinate judge allowed that petition.3. mr. nainar sundaram, learned counsel, would submit before me that under section 446.....
Judgment:

Mohan, J.

1. This revision is directed against the order of the learned Second Additional Subordinate Judge of Coimbatore, passed in E.A. No. 201/74 in E.P. No. 359/1973 in S.C. No. 721 of 1972, whereunder the relief of the official liquidator to hold that the sale held on February 28, 1974, without the leave of the court was void and to direct respondents Nos. 2 to 4 to restore to the petitioner the assets purchased by them in the sale held on February 28, 1974, was granted.

2. The short facts are as follows : Veerakumar Trading and Chit Funds Private Limited was directed to be wound up by an order of this court passed in Company Petition No. 13/1973 on August 18, 1973. Prior to this S.C. No. 721 of 1972 was filed by the revision-petitioner (R. Ranganathan). On December 23, 1972, he attached the immovable properties belonging to the company under liquidation. The small cause suit resulted into a decree on February 22, 1973. As seen above, the order of winding up was passed on August 18, 1973. It is rather unfortunate that the decree-holder did not obtain the leave of the court as required under Section 537 of the Companies Act (hereinafter referred to as the Act). It may be because he was ignorant of the winding up proceedings. The sale of certain movables belonging to the company under liquidation took place on February 28, 1974, which resulted in realisation of a sum of Rs. 2,700 odd and less poundage the net proceeds realised was Rs. 2,567.50. Out of that amount Rs. 1,777.20 was paid over to the decree-holder. Under these circumstances, E.A. No. 201/1974 was taken out and the learned Subordinate Judge allowed that petition.

3. Mr. Nainar Sundaram, learned counsel, would submit before me that under Section 446 though leave is required to continue the proceedings against the official liquidator, the failure to obtain leave would not be fatal to the proceedings nor do the proceedings become void on that score. For this submission he places reliance upon the decision of the Supreme Court reported in Bansidhar Shankarlal v. Mohd. Ibrahim, : [1971]2SCR476 . In the submission of the learned counsel, the same principle must be made applicable to acts arising under Section 537 also.

4. These submissions are repelled by the learned official liquidator by contending that under Section 537 there is no escape for the revision-petitioner because the words occurring under that section are ' shall be void '. I have little hesitation in upholding the contention of the learned official liquidator. Bansidhar Shankarlal v. Mohd. Ibrahim dealt with a situation arising under the old Companies Act and even otherwise that case is of no assistance to the revision-petitioner. In order that a decree may be binding upon an official liquidator, leave will have to be obtained to continue the proceedings under Section 446 or the corresponding section under the old Companies Act of 1913, viz., Section 171. But the situation here is very different. The sale has undoubtedly taken place without the leave of the court. In such a case, Section 537 will have its full force. As rightly contended by the learned official liquidator, there is no escape from the imperative language of that section which says that the sale shall be void. Therefore, I am unable to see any error in the order of the court below. Hence, I hold that there are no merits in this civil revision petition which shall stand dismissed. However, I make it clear that the attachment, as noted from the above facts, was long before the order of winding up was made. If that be so, there cannot be any valid objection to the attachment being continued. Though, normally speaking, the effect of setting aside the sale by the learned Subordinate Judge and my upholding that order would mean that the status quo ante should be restored, inasmuch as what were the subject-matter of the sale were only movables, I do not think it necessary to direct the prevalence of status quo ante. Instead, the entire sale proceeds will be paid over to the official liquidator. As seen above, a sum of Rs. 1,777.20 has been paid over to the decree-holder-revision petitioner. It will be paid back by him to the official liquidator within two months from today. It is needless for me to state that the balance lying to the credit of the small cause suit (S.C. No. 721/1972) will also be paid over to the official liquidator.

5. It is further represented by the learned official liquidator that pursuant to the attachment certain other movables not forming the subject-matter of the execution were handed over to the decree-holder. Concerning them, undoubtedly status quo ante can be restored. Therefore, I hereby direct the revision-petitioner to hand over all those movables not forming the subject-matter of the sale in E.P. No. 359/1973 (S.C. No. 721 of 1972) to the official liquidator within two months from today. However, the attachment of the decree-holder will continue. With these observations, the civil revision petition shall stand dismissed. However, I make no order as to costs.


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