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TMI Blog1959 (11) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... iled Suit No. 810 of 1949 in the Court of the Munsiff at Agra for a decree for rent for three months and obtained an order of attachment before judgment on the movable property of the bank. The Munsiff by his decree dated December 2, 1949, decreed the suit and confirmed the order of attachment before judgment. In the meanwhile, on a petition dated September 13, 1949, the bank was ordered to be wound up by the High Court of Judicature at Allahabad and the appellants were appointed liquidators of the bank. The employees of the bank had vacated the premises on September 10, 1949, but the property of the bank which was attached was with the consent of the respondent stored by the Commissioner appointed by the Munsiff's court in the banking hall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Judge of Allahabad for execution. The Joint Registrar issued a certificate of non-satisfaction of the order and directed that the same be transmitted to the District Judge, Allahabad, for execution. The respondent filed an application for execution in the Court of the Civil Judge, Allahabad, and obtained an order for attachment of an amount of Rs. 12,000 lying to the credit of the official liquidators in the Allahabad Bank. The official liquidators thereupon applied to the High Court praying that the execution proceeding pending in the Court of the Civil Judge, Allahabad, be declared void and the order of attachment of the fund in the account of the official liquidators passed by the Civil Judge be quashed. Mr. Justice Brij Mohan Lall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being virtually one under section 45B of the Banking Companies Act, the respondent was entitled to payment according to the tenor of the order. The order in terms declares the liability and does not decide any question of priority between the respondent and other creditors of the bank. By section 647 of the Companies Act, (1 of 1956) the winding up of the bank having commenced before that Act was enacted, the provisions with respect to the winding up contained in the Indian Companies Act (VII of 1913), continue to apply to the bank in the same manner and in the same circumstances as if Act No. 1 of 1956 had not been passed. By section 230 of the Indian Companies Act, 1913, provision is made for payment of specified categories of debts in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not deal with any question of priority in payment of debts. By section 246 of the Indian Companies Act, 1913, power is conferred upon the High Court to make rules consistent with the Act and the Code of Civil Procedure concerning the mode of proceedings to be had for winding up of the company and certain other matters. The Legislature has by section 230 prescribed that certain specified categories of debts shall rank for priority over other debts due by the company and it is not within the competence of the High Court to prescribe by rule a category for priority in payment which is not included in that section. By section 193 of the Act, the court has, in the event of the assets being insufficient to satisfy the liabilities, indisputably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct on such terms as to payment of damages for non-performance of contracts. It is evident that on the winding up outstanding contracts of the company do not become ipso facto inoperative. The contracts remain binding until disclaimed or rescinded in the manner provided by section 230A; but the liability incurred under these contracty is merely an ordinary debt which ranks for claim to payment pro rata along with other creditors. If the debt be regarded reasonably as falling within the description of costs and expenses of winding up of the company, it is open to the court to direct that preferential payment in respect thereof be made ; otherwise the debt will be claimable out of the assets of the company pro rata with other ordinary creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors were not carrying on any business after the winding up and the properties were not used by the liquidators for the purpose of liquidation. The conclusion of the High Court on the evidence has not been challenged. The property not having remained with the liquidators for the purpose of liquidation, unless the court passes an order holding that the debt incurred was part of the costs and expenses of liquidation, the rent accruing due since the date of the winding up cannot be claimed in priority over other ordinary debts. We are, therefore, unable to agree with the High Court that under rule 97 of the Company Rules, if the premises remained in the occupation of the liquidators, not for the purpose of winding up, the landlord is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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