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United Bank of India Vs. Tatanagar Foundry Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberSuit No. 463 of 1971
Judge
Reported inAIR1974Cal213,[1975]45CompCas171(Cal)
ActsCompanies Act, 1956 - Section 453; ;Code of Civil Procedure (CPC) , 1908 - Section 80
AppellantUnited Bank of India
RespondentTatanagar Foundry Co. Ltd.
Cases ReferredAbdul Ghani v. Anjuroan Dehi Imdad Bahmi
Excerpt:
- .....thereafter and the inspection forthwith thereafter and the suit to appear in the warning list a week after the long vacation.5. costs of this application will be costs in the suit. official liquidator will retain the cost out of the assets.
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. This is a suit filed on 8th November, 1971 by the United Bank of India. This application is an application for appointment of Receiver in respect of properties alleged to be charged and hypothecated in favour of the plaintiff bank by Tatanagar Foundry Co. Ltd. prior to its liquidation. Tatanagar Foundry Co. Ltd. is now in liquidation and has been sued through the Official Liquidator. The plaintiff claims in this suit a decree against the said company for a sum of Rs. 15,43,437.79, interest at the agreed rate and declaration that all plant and machinery, goods and movable assets mentioned in Part I and their book debts and bills mentioned in Part II of annexure-E of the plaint are charged and hypothecated in favour of the plaintiff bank and certain other incidental reliefs. As mentioned hereinbefore, this is an application for appointment of receiver and sale of these goods. There are several defendants to whom reference need not be made except the added defendant viz. defendant No. 17 being National Iron and Steel Co. who claims to be the owner of the leasehold property in which the plants and machinery, which are alleged to be charged in favour of the plaintiff bank, are situate. The application was resisted on various grounds. The first ground of opposition to this application was that there has been non-compliance of Section 453 of the Companies Act, 1956. The said section states that the receiver shall not be appointed on any assetsin the hands of liquidator except by or with the leave of the Court. I am unable to sustain this objection. As this is an application to the Court which appointed the liquidator, this application, in my opinion, for appointment of receiver by this Court is a competent one.

2. The next objection raised by counsel on behalf of respondent No. 17 was that this suit was incompetent inasmuch as no notice under Section 80 of the Code of Civil Procedure had been given prior to the institution of this suit. Section 80 of the Code of Civil Procedure is explicit and mandatory in its terms and provides that no suit shall be instituted against Government or against a public officer in respect of any act purporting to be done by such public officer in hit official capacity, until the expiration of two months notice, as mentioned in the section. Counsel for the respondent No. 17 contended that the suit was against the Official Liquidator and was also in respect of act done by him in his official capacity. Therefore, notice under Section 80 was mandatory and imperative in this case. Reliance was placed on provisions of Sections 488, 451, 452, 457 and 445(3) and 446 of the Companies Act, 1956 for the proposition that the Official Liquidator was a public officer and the property of the company being in his custody as custodian and the suit being in respect of that property this is in respect of the acts done by him in his official capacity. It was further submitted that even in respect of future acts notice under Section 80 of the Code of Civil Procedure was necessary and reliance was placed on the decision in the case of Union of India v. Baijnath, reported in : AIR1971Cal56 . In support of that proposition, counsel for respondent No. 17 drew my attention to several decisions to which I shall briefly refer. It, how-ever, appears to me that Official Liquidator can legitimately be described as a public officer as contemplated under Section 80 of the Code of Civil Procedure in terms of Section 2(17)(d) as well as Sub-section (17) (h) of the said section. But the Official Liquidator is in custody of the property of the company and the suit of this nature in its true perspective, in my opinion, is a suit against the company and is not against the Official Liquidator as such. That would be clear by a reference to Section 446 of the Companies Act, 1956 and the relevant rules of the Company Court Rules being Rules 115 & 118. Therefore, though it is true that the Official Liquidator is a public officer the suit of this nature is not in respect of any act done by the Official Liquidator, the suit is in respect of the act done or right of the company in liquidation. In the case of Anna Laticia De Silva v. Gobind Balvant Parashare ILR 44 Bom 895 = (AIR 1920 Bom 50) the Division Bench of the Bombay High Court had to deal with a suit the plaintiff brought against the defendant who had been appointed receiver in an insolvency application to get it declared that the property in suit belonged to her. The suit was dismissed by the lower appellate court on the ground that under Section 80 of the Code of Civil Procedure notice had not been given. The High Court on an appeal upheld the order and held that the receiver was appointed under the Provincial Insolvency Act and he became a public officer within the meaning of Section 2(17) of the Code of Civil Procedure and was protected by Section 80 of the Code of Civil Procedure against any plaintiff who filed the suit against him with regard to act done by him as receiver without giving requisite notice. With respect, it appears to me the Division Bench of the Bombay High Court had no occasion to consider the nature of the suit filed against companies in liquidation. It is true that when a winding up order is made the property goes into the hands of the liquidator but the identity of the company remains unless the name of the company is struck off. Even after the liquidation proceedings the company exists in a separate and independent character. Therefore, in a suit in respect of property of such a company which in view of the provisions of the Companies Act must necessarily be through the Official Liquidator cannot be described to be a suit against the Official Liquidator in respect of an act done in his Official capacity. Reliance was also placed on the decision in the case of Kathiawar and Ahmeda-bad Banking Corporation Ltd. v. Ram Charan Lal, AIR 1934 Oudh 158 (2). There the Court held, the Official Liquidator like the Official Receiver appointed in insolvency cases is an official of the Court and got definite powers conferred upon him under Act 7 of 1963 and as such, he was a public servant within the meaning of the term and to such a public officer notice under Section 80 was necessary. The Oudh Court was not concerned with the nature of the act in respect of which the suit is filed. The Court followed the decision of the Bombay High Court referred to hereinbefore. Reliance was placed on the decision of the Nagpur High Court in the case of Liquidator of Society Sangakheda Kalan Co-operative Bank v. Ayodhyaprasad Shiamlal, AIR 1939 Nag 232. It was held there that the duties of the Liquidator appointed under Section 42 of the Co-operative Society Act were quasi-judicial duties and he had authority to summon and enforce the attendance of witnesses and to compel production of documents in the same way as the Civil Court. As the Liquidator was appointed by Government and performed public duties he was an officer in the service of the Government when acting as Liquidator and therefore, was a public officer as defined in Civil Procedure Code. Hence, in a case where in execution of an award issued by the Registrar of Co-operative Societies the Liquidator had attached a house and an objecton to the attachment brought by a person on the ground that the house belonged to him and the application was dismissed and a suit was brought, theLiquidator was entitled to a notice under Section 80 of the Code of Civil Procedure. The facts in that case were however materially different from the facts of the instant case. Section 446 of the Companies Act and Rule 118 of the Company Court Rules provide that the suit will be against the company in liquidation but represented through the Liquidator. So, in essence the cause of action is against the company, not against any act done by the Official Liquidator as such To the similar effect is the decision of the Lahore High Court in the case Abdul Ghani v. Anjuroan Dehi Imdad Bahmi, Ghunike Sharqi, AIR 1942 Lah 287. For the reasons mentioned hereinbefore I am of the opinion that in case of a suit of the instant nature notice under Section 80 of the Code of Civil Pro-cedure is not necessary and as such the first point is rejected.

3. That however does not dispose of this application. It was contended on behalf of the respondent No. 17 that there was no danger to the property. The liquidator has taken possession of the properly. Furthermore, in view of the terms under which the lease had been granted the creation of equitable mortgage by alleged deposit of title deeds in favour of the Bank was not authorised. It was contended furthermore that the persons who had alleged to have deposited the title deeds being respondents Nos. 6 and 7 had no authority and prima facie no authority had been indicated. These are serious questions of title of the plaintiff in respect of the charged properties. Quite apart from it, it appears to me that the averments made in paragraph 14 of the petition are thoroughly misconceived because the properties are in custody of the Official Liquidator. Therefore, there is no danger to the property and unless the question of title and right of the plaintiff is prima facie established which cannot be done in this interlocutory application no question of appointment of Receiver arises. One more point has to be dealt with namely, that it is alleged that the Receiver had been appointed in an application by Bank of India on more or less identical allegations and identical facts and indeed petitioner's claim for appointment of Receiver is based on that allegation. It appears to me that the case of Bank of India suit was on entirely different basis and facts are entirely different. Therefore, the fact that there was appointment of Receiver in the case of Bank of India suit is no ground for the appointment of Receiver in the instant case.

4. Having regard to the nature of the averments made in this case, in my opinion, the petitioner is not entitled to any reliefs asked for. I would, however, direct the Official Liquidator to make an inventory of the plants and machinery, goods, movable assets mentioned in Part I of Annexure E and the properties mentioned in part II of Schedule C. Such inventory will be made upon notice to the United Bank of India and the respondentNo. 17. In respect disposal of these assets the Official Liquidator will do so upon notice to the present plaintiff. If the written statements have not been filed I direct to all parties to file the same within a fortnight from this date. Cross order for discovery within a fortnight thereafter and the inspection forthwith thereafter and the suit to appear in the warning list a week after the long vacation.

5. Costs of this application will be costs in the suit. Official Liquidator will retain the cost out of the assets.


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