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V. Natarajan and anr. Versus N. Salai Muthu and anr.

1981 (12) TMI 174 - MADRAS HIGH COURT

C.R.P. No. 2336 of 1980 - Dated:- 21-12-1981 - S. Swamikkannu, J. ORDER S. Swamikkannu, J. 1. This is an interesting Civil Revision Petition in which a principle of "Doctrine of Notice" has been the subject matter of argument advanced by both the sides. The Uma Investment Company incorporated under the provisions of the Indian Companies Act was in existence and the same became defunct and therefore an Official Liquidator had been appointed in this case. The main question that arises fo .....

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preliminary decree had been assigned by Uma Investments Private Limited, namely the company which is undergoing liquidation, in favour of the respondents in this revision petition. Now, a question has arisen as to whether these respondents who are ready and willing to pay the amount that is due and payable to the decree-holder have to pay after giving notice to the Official Liquidator as per Section 531(A) of the Companies Act (1 of 1956) which is equivalent to Sections 320 and 321 of the Indian .....

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ecree. The order of winding up had emanated from the competent Court on 23rd July, 1976 in C.P. No. 441 of 1976. On 9th August, 1976 the final decree was passed. On 19th August, 1976, the present execution petition was filed in which the order under revision was pronounced with respect to the notice that has to be given with respect to the assignment of the decree. 2. E.P. No. 277 of 1976 was filed in Q.S. No. 687 of 1973. On 18th August, 1,978, a petition had been filed in this Execution Petiti .....

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sanction of the Chit Registrar, the transfer cannot be void. Therefore, I dismiss the contention of the learned Counsel for the respondents that the assignment is hit by Section 26(1) of the Madras Act XXIV of 1961. The assignment was recognised. As against the above order, the respondents (V. Natarajan and V. Thangavel) in E.P. No. 277 of 1976 have come forward with this civil revision petition inter alia contending that notice ought to have been served on the Official Liquidator because it is .....

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August, 1974 which is about 2 years prior to the appointment of the Official Liquidator in C.P. No. 441 of 1976. The petition, namely I.A. 645 of 1976 was filed by Uma Investments Private Limited on 23rd June, 1976 for final decree. It was within a month from thereof or exactly on the very same date in the subsequent month C.P. No. 441 of 1976 was ordered for winding up the said company. On 9th August, 1976, the final decree was passed. 3. It would have been better if the fact of winding up of t .....

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ore this Court under Section 115 of the C.P.C, to revise the order made in E.P. No. 277 of 1976 in O.S. No. 687 of 1973 by the learned II Additional Subordinate Judge, Coimbatore, and while disposing of the same, this Court has observed as follows: The reason given by the Executing Court, that, because the assignment came to be effected in favour of the Revision Petitioner on 22nd August, 1974, and after that assignment, steps were taken by the decree-holder, Uma Investments Private Limited to h .....

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mits that notice need not be given to the Official Liquidator who was appointed in C.P. No. 441 of 1976 though the said C.P. No. 441 of 1976 had been filed with reference to the very same Uma Investments Private Limited which had assigned the decree in O.S. No. 687 of 1973 in favour of the petitioners in E.P. No. 277 of 1976, the order on which is now before this Court as the subject-matter of this revision. This Court is unable to uphold the contention so raised on behalf of the respondents her .....

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ol over the financial aspects as well as the procedural aspects relating to the various transactions which the company had indulged in during the relevant period affecting its activities which became questionable in the interest of the share-holders of the company. Therefore, it is needless to say that when once the assignment had been made by the Company under winding up proceedings, the said transaction also comes within the purview of the supervisory and the scrutinisation power of the Offici .....

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winding up as well as the subsequent matters relating to the financial aspects of the company. Of course, it may be said, unless there is provision under the procedural law of the land which provides that such a notice should be given to the Official Liquidator, the Court cannot compel a notice being given to the Official Liquidator. It is not a case of any provision actually existing as it is that a notice has to be given to the Official Liquidator so as to enable the Court to order notice to t .....

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on 19th August, 1976. The Official Liquidator had been appointed even as early as 22nd April, 1976 in C.P. No. 441 of 1976. Under these circumstances, this Court considers that notice must necessarily be given to the Official Liquidator with respect to the transaction of assignment which had led to the institution of E.P. No. 277 of 1976. It is not as if the assignment of decree must stand a scrutiny of the judicial forum and this is possible by giving a notice to the Official Liquidator who wi .....

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en cited on behalf of the revision petitioners as well as the decisions cited by the learned Counsel for the respondents though they are not germane to the point at issue, but they do contain certain observations which are really enlightening the Court to a proper conclusion in the present civil revision petition. 7. The meaning of "Notice" as given in Stroud's Judicial Dictionary of Words and Phrases (Third Edition) Volume 3 is as follows: (1) "Notice", is a direct and d .....

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cquiring such knowledge. * * * (18) Notice of Assignment of a Chose in action to be given to the prayer, in order to complete the assignee's title, and the priorities of incumbrancers are determined according to the dates of service of the notices. * * * (20) Notice of claim includes notice to a defendant by including him in a counter claim. 8. In Dhanai Ram v. Sri Ram A.I.R. 1938 Cal. 734, it has been held as follows: Property in a decree passed to the transferee under a deed of assignment .....

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e judgment-debtor and that the decree shall not be executed until the Court has heard their objections, if any, to its execution. It is one thing to say that the decree may not be executed by the transferee until the objections of the transferor and the judgment-debtor are heard. It is an altogether different thing to say that the assignment is of no consequence until the objections are heard decree-holder and transferee is effected by the deed of assignment. If the judgment-debtor has notice of .....

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he ground that notice of transfer of the decree has not been properly served on the transferor, cannot raise the objection in a subsequent proceeding. 10. In Sarifa Khatun v. Asimannessa Bibi A.I.R. 1938 Cal. 734 it has been observed as follows: The service of notice under Order 21 Rule 16 is an essential pre-requisite to the assumption of jurisdiction by the Court in a proceeding to execute the decree, if the application for execution purports to have been made by one who is not the original de .....

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to execute the decree as it stands. It is only the decree-holder or the person whose name appears on the face of the decree that can execute it and the executing Court cannot record any other person as being entitled to execute the decree. The principle of o. 21, r. 16 is that no one can execute the decree except the decree-holder or the person to whom the decree has been assigned in writing or by operation of law. In the instant case it is the name of the Bank that is shown as the decree-holde .....

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original decree-holder is entitled to execute the decree. 12. In Bansidear v. Md. Ibrahim , it has been held as follows: There is nothing in the Companies Act, 1913, which makes the leave under Section 171 a condition precedent to the institution of proceeding in execution of decree against a company ordered to be wound up. Failure to obtain leave before institution of the proceeding does not entail dismissal of the proceeding. The suit or proceeding without leave of the Court may be regarded a .....

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the presentation of the plaint. The same view was taken by a Bench of the Lahore High Court in Peoples Bank of Northern India, Ltd., Lahore v. Fateh Chand & Co., and another A.I.R. 1936 Lah. 401. The word 'Commenced' occurring in Section 446 of the Companies Act has to be understood in the light of the expression "Shall be proceeded with" occurring in the same section. The expression "shall be proceeded with" is intended to cover the case of those suits or other l .....

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uch presentation and taking on file is not barred under Section 446 would virtually render the provision nugatory. 14. Under Section 457 of the Companies Act (1 of 1956) it is provided that the Official Liquidator has the following powers with the sanction of the Court: (1) to bring and defend actions, prosecutions or other legal proceedings, civil or criminal, in the name and on behalf of the Company; (2) to carry-out the business of the company so far as may be necessary for the beneficial win .....

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in the insolvency of any contributory for any balance against his estate and to receive dividends in respect thereof; (c) to draw, accept, make and endorse any bills of exchange, hundies or promissory notes with the same effect as if drawn, etc., by the company in the course of its business, (d) to take out in his own name letters of administration to any deceased contributory, (e) to appoint an agent to do any business which he is unable to do himself; and (f) to inspect the records and return .....

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