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In Re: the Indian Companies Act, 1913 - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in85Ind.Cas.626
AppellantIn Re: the Indian Companies Act, 1913;In Re: Morrisons (India) Ltd., Imperial Bank of India
Respondent;
Excerpt:
companies act (vii of 1913), sections 229, 230, 233 - presidency towns insolvency act (iii of 1909), section 52--floating charge created by company--applicability of section 52--agent for sale--liquidation--principal whether has priority--debt before conversion into limited company, whether binding. - .....therein will be added rs. 21 costs allowed to abdur rahaman on his application as regards rent. as regards schedule b, there is also no dispute as items referred to therein are sums payable in connection with income-tax and to the postmaster general for customs duty. schedule c refers to certain claims made by the imperial bank of madras and to certain sums due to the overseas export and import co., and the hongkong and shanghai banking corporation. items nos. 1 and 2 of schedule c refer to the imperial bank of madras. the imperial bank obtained a floating charge on the properties of the morrison and co. ltd., by deed dated the 12th december 1921. this deed has been marked ex. a in the liquidation proceedings. it appears from ex. a that it was filed with the registrar of joint stock.....
Judgment:
ORDER

C.V. Kumaraswmi Sastri, J.

1. This is an application by the Liquidator for directions as to various matters set out in the Judges Summons. The first question is as regards the charges set out in schedule A to the Liquidator's affidavit. Schedule A is a list of preferential charges which under the Act have to be paid first and there is no dispute about schedule A. The amounts in schedule A will be paid first by the Liquidator and to the sums mentioned therein will be added Rs. 21 costs allowed to Abdur Rahaman on his application as regards rent. As regards Schedule B, there is also no dispute as items referred to therein are sums payable in connection with income-tax and to the Postmaster General for customs duty. Schedule C refers to certain claims made by the Imperial Bank of Madras and to certain sums due to the Overseas Export and Import Co., and the Hongkong and Shanghai Banking Corporation. Items Nos. 1 and 2 of Schedule C refer to the Imperial Bank of Madras. The Imperial Bank obtained a floating charge on the properties of the Morrison and Co. Ltd., by deed dated the 12th December 1921. This deed has been marked Ex. A in the liquidation proceedings. It appears from Ex. A that it was filed with the Registrar of Joint Stock Companies and registered on the 21st December 1921, so that the provisions of Section 109, Clause (e), of the Companies Act have been satisfied. It is clear from Sections 230 and 233 of the Companies Act that the Imperial Bank can have a charge over the assets of the Company. I do not think that Section 52 of the Insolvency Act has any application to cases of floating charges created by a Company in favour of the Bank. Section 229 refers to the Insolvency Act only as regards the rights of secured and unsecured creditors. It is obvious that a floating charge, if, created, must leave the possession with the Company, as otherwise it cannot carry on business at all. The Imperial Bank will be paid the amounts of items Nos. 1 and 2 of Schedule C to the affidavit of the Liquidator first. Item No. 3 of Schedule C refers to the Oversea Export and Import Co., and the question is whether the goods were sold to Morrison & Co. Ltd., or whether Morrison & Co. were only the agents for the Oversea Export and Import Co. The, Company does not appear and prove its claim to priority. It appears from the agreement that they were to deal interse as principal and agent, and that drafts were drawn against the goods and I, therefore, do not think it is proved, that the Oversea Export and Import Co. have any priority. As regards item No. 4 which relates to Honkong and Shangai Banking Corporation, it appears from the letters written by Morrison and Co., Ltd., to the Imperial Bank which represented the Honkong and Shanghai Banking Corporation that Morrison and Co. Ltd., were only agents for sale, that goods were to be sold and that the sale-proceeds were to be paid over in due course, that the unsold goods were to be returned and that the property was lo be at the disposal of Honkong and Shanghai Banking Corporation. In these circumstances I think that Honkong and Shanghai I Banking Corporation has got a priority in respect of Rs. 3,500 and Rs. 2,309-8-0, items Nos. 4 and 5. As regards the other Schedules, I accept the statements referred to in the affidavit of the Liquidator, Mr. M.O. Alasingarachariar, who is one of the persons mentioned in Schedule F and who claims Rs. 739, states that this sum is due for professional services rendered by him and that he has filed an affidavit proving the amount due. The difficulty, however, in his case is that they were services rendered to Morrison and Co. Ltd. before it was turned into a limited liability Company and there is nothing to show that Morrison and Co. Ltd., undertook to pay the debts of Morrison and Co. On the contrary the proceedings of the Directors which are referred to by Mr. Mockett show that the debts were not payable by the Company. As, however, it is clear that excepting the Imperial Bank and the Honkong and Shanghai Banking Corporation who have 1 got priority, there would not be assets to pay other creditors, it seems to me that he has not much hardship in the matter. The next question is as regards the remuneration of the Liquidator. The liquidation proceedings have been going on for the last two years and I think that Rs. 200 a month would be fair remuneration for the trouble taken by Liquidator during the period of liquidation. I allow him Rs. 200 a month from the date he assumed charge up to this date. I direct that schedules A and B and the Liquidator's remuneration and the costs of this application will be paid first and out of the balance the Imperial Bank and the Honkong and Shangai Banking Corporation will be paid rateably.

2. The taxed costs of the Liquidator as between attorney and client and of the Imperial Bank will be paid out of the funds in the Liquidator's hands. I certify for Counsel.


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