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In Re: the Indian Companies Act 1882; in Re: the Ganges Steam Tug Company Limited; in Re: Ex-parte the Delhi and London Bank Limited - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata
Decided On
Judge
Reported in(1891)ILR18Cal31
AppellantIn Re: the Indian Companies Act 1882; in Re: the Ganges Steam Tug Company Limited; in Re: Ex-parte T
Cases ReferredCalder v. Dobell L.R.
Excerpt:
company - voluntary liquidation--liquidator, borrowing powers of--assets--principal and agent--election--subrogation--indian companies act (vi of 1882), sections 144(f) and 177(g). - .....it was certainly an account of the moneys of the company.12. that there were at the time of the loan assets of the company liable to be charged, and that there are such still, is, i think clear, for the 25 per cent. divided amongst the shareholders, under the resolution of the 24th december 1885, is part of the assets and available to satisfy creditors.13. i think the appeal should be allowed and the claim admitted with costs in both courts.pigot, j.14. i am of opinion, as i was at the close of the first argument in this case, that this appeal should be allowed and the claim admitted.15. as to the question whether the loan was in fact made to the company, and that both the bank and the liquidator so intended, i have been throughout unable to see how any doubt could exist upon it. the.....
Judgment:

W. Comer Petheram, Kt., C.J.

1. I am of opinion that this appeal must be allowed, and the appellants' claim against the company admitted. I agree with the learned Judge that Ramkissen was, upon the face of the account, the customer of the bank; but I think that whatever was the form of the account, or by whatever machinery the loan was carried out, it has been proved that the account was in fact the account of the company, and that the advance was made to them.

2. This is not the ordinary case of a liquidator whose only duty is to collect the assets of an insolvent company and to distribute them, but of the liquidator of apparently a solvent company who was to carry on the business for the company for an indefinite term, and for that purpose required and kept a banking account in his own name, but which was used only for the company's business.

3. It is a well-established law that a person who has made a contract with an agent may if and when he pleases, look directly to the principal, unless by the terms of the contract he has agreed not to do so; and that, whether he was or was not aware when he made the contract, that the person with whom he was dealing was an agent only. Calder v. Dobell L.R. 6 C.P. 486.

4. In the present case I think that the bank have shown that the real borrowers of their money were the company, and that the claim must be admitted.

5. The appellants will get the costs in all the Courts.

Wilson, J.

6. Two questions arise on this appeal: first, what power had the liquidator to borrow so as to charge the company; secondly, was the loan in question within those powers. By Section 144 of the Indian Companies Act (VI of 1882) the liquidator of a company which is being wound up by the Court has power, with the sanction of the Court, amongst other things, 'to raise, upon the security of the assets of the company, from time to time, any requisite sum or sums of money (clause f).' The forms of orders made under the corresponding section to this in the English Act, collected in Palmer's Precedents, 4th ed., p. 707, show that the borrowing need not be on mortgage or pledge or charge of specific property, but may be on the security of the assets generally. The liquidator of a company being voluntarily wound up-and that is the case with the company before us--may, by Section 177, Sub-section (g), without the sanction of the Court, exercise all powers by this Act given to the Official Liquidator, including of course the power of borrowing.

7. In the present case the right of the liquidator to borrow is strengthened by the facts of the case. The resolution for the voluntary winding up of the company was passed on the 30th November 1885. That resolution was confirmed on the 18th December 1885, and the first liquidator appointed. At another meeting on the 24th December 1885, the shareholders came to the following resolutions:

The Columbus, Pilot, and the Docks should continue working until they are disposed of.

The meeting considers that the liquidator should arrange terms as to commission with Messrs. Mackenzie, Lyall & Co. If this firm agrees to undertake the sale without charging any commission in the event of the steamers and docks, together with machinery, stores, etc., not being sold, the same should be put up for sale by public auction at an upset price to be fixed by the liquidator. Sale to take place within a month from the first advertisement: liquidator to be at liberty in the meantime to accept offers for private sale of the same.

8. Having regard to the facts that there is now in the hands of the liquidator a sum of about Rs. 1,75,000 in cash and in 4 per cent. Government securities, this meeting considers that the liquidator should sell off the Government securities and declare a dividend of 25 per cent., or Rs. 25 per share, having regard to the fact that the declaration of dividend will leave a sufficient balance in the hands of the liquidator to pay off the whole of the debts of the company.

9. From these resolutions it would seem that the shareholders directed the liquidator to continue working two steamers and some docks, and provided him with no working capital to work with, leaving apparently no alternative, in case the current receipts should at any time be insufficient to carry on with, except borrowing. This is strong evidence to show that they authorized him to borrow. 1 think it clear, then, that the liquidator had power to borrow for the purposes of the winding up, including the working of the steamers and the docks, on the credit of the assets of the company.

10. The second question is, did he do so. He certainly borrowed the sum in question. He borrowed it for the purposes of the company and applied it to those purposes. Did he borrow on the credit of the assets of the company? His letter of the 21st December 1887 to the manager of the claimant bank was--

11. 'Will you be so good as to let me know if you will allow me to overdraw to the extent of Rs. 10,000 on account of the Ganges Steam Tug Company, Limited. It will only be for a short time, and I will be personally responsible for the same.' And the answer was--'I shall be happy to allow you to overdraw on account of the Ganges Steam Tug Company, Limited, to the extent of Rs. 10,000, and it is understood that you will be personally responsible for the debt.' I think this was a borrowing on the credit of the company so far as the liquidator could charge it, that is, on the credit of the assets, though the liquidator also made himself personally liable; and 1 do not think any difficulty arises from the fact that the money advanced was passed through an account with the bank, the heading of which is ambiguous, so that it might be doubted whether it was primarily the account of the company or of the liquidator: it was certainly an account of the moneys of the company.

12. That there were at the time of the loan assets of the company liable to be charged, and that there are such still, is, I think clear, for the 25 per cent. divided amongst the shareholders, under the resolution of the 24th December 1885, is part of the assets and available to satisfy creditors.

13. I think the appeal should be allowed and the claim admitted with costs in both Courts.

Pigot, J.

14. I am of opinion, as I was at the close of the first argument in this case, that this appeal should be allowed and the claim admitted.

15. As to the question whether the loan was in fact made to the company, and that both the bank and the liquidator so intended, I have been throughout unable to see how any doubt could exist upon it. The letters seem to me to show that it was, and was intended by both parties to be, such a loan, fortified by the personal liability of Ramkissen.

16. No question arises as to the fact that the money was borrowed and was applied to pay debts incurred in the working of the business of the company, the carrying on of which by the liquidator was expressly authorized by the company: nor is there anything to show that the business, so far as it was carried on by the liquidator, was not carried on legitimately for the purposes of the winding up.

17. A question was raised in the first argument (not, I think, in the second) as to the power of a liquidator to pledge, as security, for a loan contracted by him, not merely realized assets of the company, but even the liability of members of the company for calls, such liability being, it was argued, assets of the company within the meaning of the section.

18. The facts of the present case do not give rise to such a question: for the realized assets of the company, divided among the shareholders in pursuance of the resolution referred to by him, stand on a different footing from the liability to calls on shares in the company, and are in any case, I think, assets within the meaning of the section.

19. It is not necessary to determine the question whether the principle of Baroness Wenlock's case applies to the present. But I may say that had it been necessary, I should myself have been prepared to hold that that case did apply.


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