TMI Blog1972 (7) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany incorporated under the Companies Act, 1913, having its registered office at Biscuit Factory, Rajpura, in the State of Punjab and also carrying on business at No. 10, Daryaganj, Delhi. At all material times and up to October 1, 1955, Govan Brothers Private Limited, having its registered office at No. 10, Daryaganj, Delhi and whose Directors were V.H. Dalmia and Ramkrishna Dalmia, was the Managing Agent of Indian National Airways Limited. After the aforesaid date i.e., October 1, 1955, Govan Brothers Private Limited resigned from its office as the Managing Agent of Indian National Airways. It is in controversy between the parties whether Govan Brothers Private Limited was also the Managing Agent of South Asia Industries Private Limited and continued to be so even after October 1, 1955. 2. The undertaking of the Indian National Airways Limited, by and under the provisions of the Air Corporations Act, No. XXVII of 1953, vested in the Indian Airlines Corporation with effect from August 1, 1953. Under section 27 of the Air Corporations Act, the Indian National Airways Limited was to receive compensation partly in cash and partly in Bonds in installments spread over 5 years, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res, and the said Bank used to collect from time to time, as his agent, such dividends as were declared by the Indian National Airways Limited during the time it carried on business and credit the same in the current account maintained with it by General Krishna Shamsher Jung Bhadur Rana. 4. Govan Brothers Private Limited resigned from its office as Managing Agent of Indian National Airways Limited with effect from October 1, 1955. 5. Then, on February 25, 1956, a majority of the Directors of Indian National Airways Limited made a declaration to the Registrar of Companies with regard to the solvency of the said company under section 207 of the Companies Act, 1913. On March 3, 1956, a notice (Annexure C-1) was issued that an Extraordinary General Meeting of the Shareholders of the Indian National Airways Limited will be held at the registered office of the Company at Daryaganj at 12.00 noon on March 28, 1956, to consider the' following:- (1) To consider and if thought fit to pass the following Resolution as Special Resolution: RESOLVED that the Company be wound up voluntarily, a Members' Voluntary Winding-up . (2) To consider and if thought fit to pass an Ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets. The said liquidators were informed of their appointment by a letter (Annexure F-1), dated March 28, 1956. Copies of the Resolution were filed with the Registrar of Companies in the prescribed form under section 82(1) of the Companies Act, 1913, (vide Annexure F-2), and copies of the resolutions were published in the Times of India (Annexure F-3), dated March 30, 1956, and the Gazette of India, Part IV, dated April 7, 1956 (Annexure F-4). The liquidators filed the prescribed notice (Annexure F-5) under section 214 of the Companies Act, 1913, with the Registrar of Companies notifying their appointment as liquidators. 6. On August 15, 1956, the two liquidators, in exercise of the general authority given to them by the special resolution to enter into an arrangement of such terms as they consider proper under section 208-C of the Indian Companies Act, 1913, entered into an agreement (Annexure G ) with the South Asia Industries Private Limited accepting a scheme offered by the latter. The said scheme was set out in a schedule attached to the agreement. 7. The relevant portion of the agreement and the scheme is as follows:- NOW THESE PRESENTS WITNESS AND IT IS HEREBY AGR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortion to the total amount of the said 20% profits as half the face value of his share or shares surrendered by him to the Transferee Company in respect of (a) the net profits for the aforesaid purposes shall be determined on the basis of the audited balance sheets of the Transferee Company for the period ending 31-3-1957, 31-3- 1958 and 31-3-1959, after deducting or making provision for depreciation allowed under the Income-tax Act: (b) the amount of profit mentioned above shall be paid to such members in the first year on the expiry of twelve months from the date of the issue of the Deposit Receipts on the basis of the said Balance Sheet for the year ending 31-3- 1957 in the second year on the expiry of a further period of twelve months on the basis of the balance sheet for the year ending 31-3-1958, and finally in the third year on the expiry of a further period of twelve months on the basis of the balance sheet for the year ending 31-3-1959; and the balance sheets of the Company, duly audited by a chartered Accountant, shall be final and conclusive and binding on the members of the Transferor Company, participating in the profits, as aforesaid: PROVIDED further (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by the Secretary of the South Asia Industries (P) Limited. The joint Liquidators published a notice, addressed to all the members of the Indian National Airways Limited (in Voluntary Liquidation) setting out the Scheme and a list of the share-holders of the Indian National Airways Limited in the newspaper, The Times of India , (Annexure G-3), On August 17, 1956; in the newspaper. The Tribune , (Annexure G-4), on August 20, 1956; in the newspaper. The Hindu , (Annexure G-5), on August 21, 1956; and in the newspaper, The Indian Express , (Annexure G-6). on August 21, 1956. 9. Thus, in pursuance of the aforesaid agreement all the assets and liabilities etc. of the Indian National Airways Limited (in Voluntary Liquidation) (hereinafter referred to as the Transferor Company ) were transferred to the South Asia Industries (P) Limited (hereinafter referred to as the 'Transferee Company ), and the Transferee Company was to make payments to the shareholders of the Transferor Company in terms of the Scheme. It appears that most of the share-holders of the Transferor Company, who had filed their claims in compliance with the terms and conditions of the Scheme of Arrangement, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d submit their wealth tax returns (vide Annexure 'B' (collectively) to the Company Petition). In reply, the South Asia Industries (P) Limited sent a letter on October 11/13, 1962, informing Shri Advani that they had been making payments to the shareholders of the Indian National Airways Limited. A copy of the Scheme was enclosed and Shri Advani was requested to ask his constituents to send the shares in terms of the Scheme. On October 19, 1962, Shri Advani wrote a letter to the State Bank of India. Calcutta, stating that the latter was holding 7875 ordinary and 4125 deferred shares of the Indian National Airways Limited (in Voluntary Liquidation) on account of General Krishna Shamsher Jung Bahadur Rana that under a Scheme of Arrangement the South Asia Industries (P) Limited had taken over the assets and liabilities of the Indian National Airways Limited and the share-holders of the said Company were to receive in full and final settlement of their claims at the rate of ₹ 10/- for every deferred ordinary share and the claims in the form of fixed deposit receipts to be issued by the South Asia Industries (P) Limited for a period of 3 years, and that in addition thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd stating that by virtue of the said paragraph no claim could be entertained by them regarding the shares of General Krishna Shamsher Jung Bahadur Rana as the latter did not intimate them the mode in which he desired to receive payment nor sent the relevant share scripts to them within a period of one year from August 17, 1956, the date on which notice of acceptance of the Scheme was sent to General Krishna Shamsher Jung Bahadur Rana by the Joint Liquidators of the Indian National Airways Limited. They also enclosed a copy of the Scheme of Arrangement. In answer to that letter, General Shamsher Jung Bahadur Rana wrote a letter, dated January 9, 1968, stating that no notice of acceptance of the Scheme of Arrangement alleged to have been sent to him on August 17, 1956, by the Joint Liquidators, was ever received by him that as such he was amazed at the stand taken by the South Asia Industries (P) Limited, that had he received the said notice there was no reason why he would not have intimated the South Asia Industries (P) Limited his choice of the mode of payment and also sent the share scripts which were in safe custody with his Bankers the State Bank of India. Calcutta and that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le must be distributed among the members of the transferee company in proportion to their rights and interests. Otherwise, the sale will be without any consideration. (iii) The Joint Liquidators should also be made parties in such action on the ground that such a scheme, does not relieve the Liquidators of the transferor company from the obligation of seeing that the debts are duly paid before the transferor company is dissolved. To leave everything to the transferee company is a gross dereliction of duty of liquidators. 13. On June 15, 1968, General Shamsher Jung Bahadur Rana sent a notice to South Asia Industries (P) Limited through his Solicitors demanding payment of the amount due to him, and staling that in default of payment appropriate legal proceedings for recovery of the amount with interest thereon would be taken. A reply was sent by South Asia Industries (P) Limited through their Lawyer on July 2, 1968, reiterating that a copy of the notice of acceptance of the Scheme of Arrangement was definitely sent to General Krishna Shamsher Jung Bahadur Rana on August 17, 1956 by the Joint Liquidators of the Indian National Airways Limited and that the claim of General Kris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded and paid by Respondent No. 2 to Respondent No. 1. D. Alternatively (i) the Respondent No. 2 be directed to pay to your Petitioner the total sum of ₹ 1,74,199/- together with interest thereon at 12% per annum until payment and also such sums as may be found due. (ii) Enquiries and accounts be directed against Respondent No. 2 and the latter be directed to pay such other amounts as are payable to Your Petitioner under the said arrangement upon such enquiries and accounts. E. In the further alternative a direction upon Respondents 3 and 4 to forthwith have the entire moneys payable under the said arrangement to the shareholders of the Respondent No. 1 but which have not yet been paid deposited in the Company's Liquidation Account in the Reserve Bank of India in accordance with the first Act and/or the Second Act. F. Enquiry and accounts against the Respondents 3 and 4 for misfeasance and nonfeasance and a direction that they do pay to your Petitioner such sums as may be found due to him upon such enquiries and accounts as damages or otherwise. G. Enquiries and accounts against the Respondents except Respondent No. 5 and a direction that they do pay to you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e moneys payable under the Scheme of Arrangement to the share-holders of the Indian National Airways Limited but which have not yet been paid in the Company's Liquidation Account in the Reserve Bank of India in accordance with the provisions of the Companies Act, 1913, (b) that the Joint Liquidators be directed to pay such damages as may be found due to General Krishna Shamsher Jung Bahadur Rana for misfeasance and nonfeasance, (c) that the respondents other than the Registrar of Joint Stock Companies be directed to pay to General Krishna Shamsher Jung Bahadur Rana such sums as may be found due to him on hiking accounts, (d) that an injunction be issued restraining the South Asia Industries (P) Limited from dealing with, disposing of transferring, utilising, using or in any manner parting with the sum of ₹ 7,87,150/42 lying with it as moneys due to the share-holders of the Indian National Airways Limited under the Scheme of Arrangement, and (e) that a Receiver be appointed in respect of the said sum of ₹ 7,87.150/42. 18. In support of the prayers mentioned above it was contended before the learned Single Judge (1) that the voluntary winding up of the Indian Natio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share-holders of the Indian National Airways Limited as well as the South Asia Industries (P) Limited were bound by the Scheme of Arrangement entered into by the Joint Liquidators. On the third contention, the learned Single Judge held that the resolutions, dated March 28, 1956, were perfectly valid and legal and that an argument advanced on behalf of General Krishna Shamsher Jung Bahadur Rana that the said resolutions were vitiated because no notice of the meeting was Served on General Krishna Shamsher Jung Bahadur Rana did not have any force. As regards the fourth contention, the learned Single Judge held that the right of General Krishna Shamsher Jung Bahadur Rana to recover money from the South Asia Industries (P) Limited really flowed from the service of the notice of acceptance of the Scheme, that there was no proof of service of the said notice on General Krishna Shamsher Jung Bahadur Rana and the presumption raised by Illustration (f) of section 114 of the Evidence Act on the basis of the alleged despatch of the notice under a certificate of posting could not be pleaded against General Krishna Shamsher Jung Bahadur Rana by the South Asia Industries (P) Limited or the Joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Limited was in the position of a trustee. The learned single Judge further held that since the South Asia Industries (P) Limited had undertaken to pay to the share-holders of the Indian National Airways Limited moneys from its own assets and not from those of the company that was being wound up, the relationship between the share-holders of the Indian National Airways Limited and the South Asia Industries (P) Limited was that of a creditor and a debtor, that irrespective of whether the South Asia Industries (P) Limited held any assets of the Indian National Airways Limited or not, it was bound to pay the share-holders the moneys which it had undertaken to pay by virtue of paragraphs 3 and 4 of the Scheme of Arrangement if its liability to pay was sought to be enforced within the period of limitation. Dealing then with the question as to whether the claim of General Krishna Shamsher Jung Bahadur Rana was barred by time, the learned Judge held that the South Asia Industries (P) Limited, explaining its then current liabilities, had shown in its balance sheet (Annexure 'J') as on May 31, 1969, that there was a sum of ₹ 7,87,150/42 as a liability and held in Shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Liquidators had done all that was necessary to be done in accordance with the authority vested in them both by the resolutions of the Indian National Airways Limited and the statute, that once the liability to pay was taken over by the South Asia Industries (P) Limited there was nothing more to be done by them and they were justified in filing the final return claiming dissolution of the Company and that in the circumstances no claim could be enforced against them. In the result, the learned Single Judge came to the conclusion that the dissolution of the Indian National Airways Limited could not be rescinded or set aside, and that the South Asia Industries Limited was liable to pay to General Krishna Shamsher Jung Bahadur Rana the amounts due to him in terms of paragraphs (clauses) 3 and 4 of the Scheme of Arrangement. However, observing that at that point of time a share in the profit of the South Asia Industries (P) Limited would create complications, the learned Judge directed that the payment be made by the South Asia Industries (P) Limited to General Krishna Shamsher Jung Bahadur Rana in terms of paragraph (clause) 4 alone. The learned Judge observed further that Gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with, voluntary winding up. Sections 203 to 207 contain provisions regarding all cases of voluntary winding up. Section 203 enumerates the circumstances in which a company may be wound up voluntarily by passing any of the resolutions mentioned in clauses (1) to (3) thereof. Section 204 provides that a voluntary winding up shall be deemed to commence at the time of the passing of a resolution for voluntary winding up under any of the clauses of section 203. Section 205 lays down that when a company is wound up voluntarily, it shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof, but that the corporate state and corporate powers of the company shall, notwithstanding anything to the contrary in its articles, continue until it is dissolved. Section 206 prescribes that notice of any special or extraordinary resolution for winding up a company voluntarily shall be given within ten days of the passing of the same by advertisement in the official Gazette and in some newspaper. Section 207 provides that the directors of the company may, before the date on which notices of the meeting at which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) may, with the sanction of a special resolution of that company conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, receive, in compensation or part compensation for the transfer or sale, shares, policies or other like interests in the transferee company, for distribution among the members of the transferor company, or may enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies or other like interests or in addition thereto participate or receive any other benefit from the transferee company. As stated earlier in the course of narration of the facts, appropriate resolutions were passed on March 28, 1956 (Annexure E ) or the voluntary winding up of the Indian National Airways Limited, and two joint liquidators were appointed. The liquidators were informed about their appointment, copies of the resolutions were filed with the Registrar of Companies and were also published in the official Gazette and in a newspaper, and the liquidators delivered the notice prescribed under section 214 of the Act to the Registrar of Companies notifying their appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered by the Registrar on July 1. 1957, pursuant to section 208-E(4), Consequently, in view of the provision in section 208-E(1), the transferor company, i.e., the Indian National Airways Limited has to be deemed to have been dissolved with effect from October 1, 1957. 26. There are two more sections which require to be noticed. They are sections 216 and 243. Section 216(1) provides that the liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls, staying of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court. Section 216(2) provides that the aforesaid persons may also apply to the Court for an order setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up. Section 243 provides that where a company has been dissolved, the Court may at any time within two years of the date of the dissolution, on an application being made for the purpose by the liquidator of the company or by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aside the same. He, however held further that the Company Court had jurisdiction to direct the implementation of the terms of the Scheme of Arrangement entered into by the joint liquidators with the South Asia Industries (P) Limited under section 208-C on the ground that the said Scheme of Arrangement fell within the ambit of the Companies Act, and also by virtue of the provision in section 216. As stated earlier, the reliance upon section 216 was not appropriate inasmuch as the said section refers to a stage when the winding up is still in progress and there has yet been no dissolution of the company. The question, however, remains as to whether after the company had become dissolved the Court had no jurisdiction to implement the terms of the agreement and Scheme of Arrangement which were entered into by the joint liquidators with the transferee company under section 208-C of the Act and which were thus within the ambit of the Act as pointed out by the learned Judge. 28. For answering the above question, the scope and effect of an agreement and/or Scheme of Arrangement contemplated by section 208-C vis- -vis the dissolution of the company provided for by section 208-E, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be approached by the liquidator or a contributory or any other person interested for directions regarding the implementation of the Scheme of Arrangement. That is so by virtue of the facts that the terms Court is defined in section 2(3) as the Court having jurisdiction under the Act , which again is stated in section 3(1) to be the High Court having jurisdiction in the place at which the registered office of the company is situate, and that the jurisdiction thus conferred on the High Court in company matters is the jurisdiction to deal with matters for which provision is made in the Act, and the aforesaid agreement or Scheme of Arrangement is a matter provided for in section 208-C of the Act. If then the High Court has jurisdiction to give directions regarding the implementation of the agreement or Scheme of Arrangement entered into by the liquidator or liquidators with the transferee company under section 208-C while the winding up is still going on, there is no valid reason for holding that the said jurisdiction ceases on the dissolution of the company which event, as explained above, is entirely distinct from and independent of the obligations of the transferee company under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said Scheme of Arrangement, the South Asia Industries (P) Limited undertook to do that which had to be done by the liquidators, and as such cannot claim to be a third party. The ratio of the decision of the Punjab High Court cannot, therefore, be of any assistance to the learned counsel, and his contention that the remedy of General Krishna Shamsher Jung Bahadur Rana was only to file a civil suit and not to approach the High Court under the Companies Act has to be held to be untenable. 32. The second contention of Shri Rameshwar Dial was that even if the Company Court had jurisdiction and power to give directions regarding the implementation of the terms of the Scheme of Arrangement, such directions could be given only in accordance with the terms of the Scheme of Arrangement. There cannot be any dispute about the said general proposition, and in fact Shri Mukherjee, learned counsel for General Krishna Shamsher Jung Bahadur Rana, did not dispute the same. 33. The third contention of Shri Rameshwar Dial was that under paragraphs 3, 4 and 5 of the Scheme of Arrangement, an option was to be exercised by the share-holders within a particular time, that General Krishna Sham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 35. Shri Rameshwar Dial next argued that the learned single Judge held that there was no proof of service of the notice of acceptance of the Scheme of Arrangement on General Krishna Shamsher Jung Bahadur Rana, and that the said finding was erroneous. In paragraph 55 of his company petition. General Krishna Shamsher Jung Bahadur Rana stated that no notice as required under paragraph 5 of the Scheme of Arrangement was ever issued or served upon him at any time. In paragraph 24 of its reply, the transferee company stated that a notice along with the Scheme was sent to all the share-holders under Certificate of Posting and filed a photostat copy of the relevant Certificate of Posting as Annexure G-2. The said Certificate showed that a letter was sent to General Krishna Shamsher Jung Bahadur Rana to his address at Kathmandu. Nepal, on behalf of the Indian National Airways Ltd. (in voluntary liquidation) on August 17, 1956, from the General Post Office, Delhi. In paragraph 17 of his replication, General Krishna Shamsher Jung Bahadur Rana, while reiterating the statement made by him in paragraph 55 of his petition, asserted that no notice along with the Scheme of Arrangement was sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by virtue of the provision in paragraph 5 of the Scheme of Arrangement General Krishna Shamsher Jung Bahadur Rana should have intimated his option and claimed payment within one year at least from the date of the receipt of the aforesaid letter to Shri B.U. Advani, and that since he did not so intimate within one year from 11/13-10-1962 he was not entitled to put forward his claim by filing the company petition in November, 1970. It is true that the learned Judge, after holding that there was no proof of service of the notice on General Krishna Shamsher Jung Bahadur Rana, observed that the latter could at best be regarded as served with a notice of the acceptance of the Scheme for the first time when the transferee company sent its letter, dated 11/13-10-1962. The learned Judge also observed that nothing has been placed on the record by General Krishna Shamsher Jung Bahadur Rana to show that he ever exercised his option either under paragraph 3 paragraph 4 of the Scheme of Arrangement or that he ever delivered to the transferee company the share scrips of his shares in spite of having been asked to do so by the letter, dated 11/13-10-1962, addressed to Shri Advani by the transferee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d single Judge, and his first argument was that the statement in the balance-sheet was not an admission of the liability of the transferee company, and that in any case it could not be regarded as an acknowledgment within the meaning of section 19 of the Limitation Act, 1908, or section 18 of the Limitation Act, 1963. 38. In paragraph 71 of the company petition, it was stated that the transferee company had by its balance-sheets of 1957 to 1968 and, lastly, of 31st May. 1969, acknowledged, inter alia, its liability to the share-holders including General Krishna Shamsher Jung Bahadur Rana under the Scheme of Arrangement, that the said balance-sheets constituted an acknowledgment of liability in respect of the claim and/or right of General Krishna Shamsher Jung Rana, that the said balance-sheets were in writing signed by the transferee company and/or by an agent duly authorised by it in that behalf, and that the company petition filed on November 2, 1970, was within time. It was also stated that the cause of action of General Krishna Shamsher Jung Bahadur Rana could not be said to have arisen until November 10, 1967, when the transferee company rejected his claim for the first tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted by him cannot, therefore, be regarded as a suit. There being no specific Article in the Limitation Act, 1963, which is applicable to the petition, the only Article applicable to it is the residuary Article 137 which provides the period of limitation as three years and states that the said period begins to run when the right to apply accrues. 42. As regards the applicability of Article 137, our attention has been drawn to two decisions of the Supreme Court. In Town Municipal Council Athani v. Presiding Officer, Labour Court, Hubli, A.I.R. 1969, Supreme Court 1335, (10) the Supreme Court held that Article 137 of the Limitation Act 1963 does not apply to applications under section 33-C(2) of the Industrial Disputes Act so that no limitation is prescribed for such applications. After referring to earlier decisions of the Supreme Court in which it was held that Article 181 of the Limitation Act 1908, was confined to applications under the Code of Civil Procedure, it was observed in paragraphs 10 and 11 that the said view must be held to be applicable even when considering the scope and applicability of Article 137 in the new Limitation Act of 1963, and that since an Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions under the Code of Civil Procedure cannot be applied to Article 137. However, since the first ground was expressly left open for consideration, and the said consideration has necessarily to be by the Supreme Court as the correctness of the view of the Supreme Court cannot be gone into by a High Court, we proceed on the footing that the petition of General Krishna Shamsher Jung Bahadur Rana was governed by Article 137 of the Limitation Act as it was a petition to the Court. 43. The next question for consideration is as to when the right to apply to the Court had accrued to General Krishna Shamsher Jung Bahadur Rana. In Mt. Balo v. Mt. Koklan, A.I.R. 1930 P.C. 270 and again in Annamlai Chelliar v. A.M.K.C.T. Muthukannappan Chettiar, A.I.R. 1931 P.C. 9, it was pointed out by the Privy Council, referring to the expression right to sue in Article 120 of the Limitation Act, 1908, that there can be no right to sue until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted . The aforesaid decisions of the Privy Council were followed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time when the acknowledgment was so signed. Sub-section (2) provides that- where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received. Explanation (b) to the section provides that- the word 'signed' means signed either personally or by an agent duly authorised in this behalf. 46. Shri Rameshwar Dial argued that statements in the balance-sheet of a company cannot amount to acknowledgment of liability because the balance-sheet is made under compulsion of the provisions in the Companies Act. There is no force in this argument. In the first place, section 18 of the Limitation Act, 1963, requires only that the acknowledgment of liability must have been made in writing, but it does not prescribe that the writing should be in any particular kind of document. So, the fact that the writing is contained in a balance-sheet is immaterial. In the second place, it is true that section 131 of the Companies Act, 1913 (Section 210 of the Companies Act, 1956) makes it compulsory that an annual balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d single Judge also took the same view as regards the words used in the balance-sheet. In Lahore Enamelling and Stamping Co. Ltd. v. A.K. Bhalla and others (Supra) A.I.R. 1958 Punjab 341. Tek Chand, J. held that debts due to creditors not mentioned by name but included in the item relating to Loans (unsecured) or as due to Sundry Creditors mentioned in the balance-sheet amount to an acknowledgment of liability for the purposes of section 19 of the Indian Limitation Act, 1908. There was thus no force in the argument of the learned counsel. 49. Shri Rameshwar Dial next urged that in 1967 General Krishna Shamsher Jung Bahadur Rana sent a notice to the transferee company and the latter denied its liability, and that in view of the said denial of liability prior to the date of the balance-sheet, viz. 1969, intention to acknowledge the liability cannot be inferred from the statement in the balance-sheet. This argument also cannot be accepted. Although, the transferee company denied its liability in 1967, there was nothing to prevent it from acknowledging the liability in 1969. 50. Shri Rameshwar Dial next urged that the words Shareholders' suspense used in the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the balance-sheet. After the balance-sheet has been so laid before the company at the annual general meeting, section 220 requires that three copies of the balance-sheet should be filed with the Registrar. In the present case, the balance-sheet (Schedule D to Annexure J) was signed by the Secretary and two Directors, and Annexure 'J' contains the Auditors' report and the Board's report. It was stated in the judgment of the learned single Judge that the balance-sheet was adopted by the company and the same was not disputed before us. It is thus quite clear that the balance-sheet was signed by duly authorised agents of the company. 52. Shri Rameshwar Dial then argued that it has now been well settled that the acknowledgment contemplated by section 18 of the Indian Limitation Act, 1963 (section 19 of the Indian Limitation Act, 1908) is one of an existing or a subsisting liability, that the liability of the transferee company bad become barred by limitation by the date of the balance-sheet made as on May 31, 1969, and that the statement in the said balance-sheet could not, therefore, operate as an acknowledgement within the meaning of section 18 of the Indian Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exist at the date of the signing of the acknowledgment and the Directors' signatures on the balance-sheets did not refer to a liability at the date of signatures but to a liability which existed when the balance-sheet was made up. The Privy Council further pointed out that it would be quite unreal to treat the liability shown as existing on the date of the signature, as it might have changed and had in fact in the case of one balance-sheet been reduced by the time of signature. It has however, to be noted that at page 288, the Privy Council added that there may be cases where it would be proper to assume that the liability persisted upto date of the signature which would then be an acknowledgment of an existing liability , and that some further consideration may have to be given to the general question whether and in what circumstances balance-sheets may operate as acknowledgments of debts comprehended therein . In the present case, the balance-sheet was made as on May 31, 1969, but was signed on October 25, 1969. That is to say, the statement in the balance-sheet mentioned the liability as existing on May 31, 1969, and as pointed out by the Privy Council it would normally b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion. The first ground was that the Scheme of Arrangement was a nullity, in that the transferor company had only assets in the form of cash, and such ready cash was not property within the meaning of section 208-C. with the result that the Scheme of Arrangement was not within the purview of section 208-C. The argument was that on the enactment of the Air Corporations Act, 1953, the Indian National Airways Limited virtually ceased to carry on any further business activity, that all its assets consisted only of the compensation paid under the provisions of the aforesaid Act partly in cash and partly in bonds which have since been encashed, that the assets of the transferor company thus consisted only of ready cash and the same was not property within the meaning of section 208-C of the Companies Act, and that the Scheme of Arrangement was not, therefore, within the purview of section 208-C of the Companies Act. The argument is without substance as the term property used in section 208-C is, in our opinion, comprehensive enough to include cash also. 56. The second ground was that the liquidators had, under the Scheme of Arrangement, divested themselves of their functions und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangement mentioned above was not liable to be impugned by any of the shareholders, including General Krishna Shamsher Jung Bahadur Rana. 59. The third ground urged by Shri Mukherjee was that the voluntary winding up of the Indian National Airways Limited under the provisions of the Companies Act was invalid and liable to be set aside in view of the provision in section 28 of the Air Corporations Act, 1953. The argument was that the voluntary winding up of the transferor company could only be effected under the aforesaid section 28 and not under the Companies Act. This argument was advanced before the learned single Judge also, and he took the view that while a company going into a voluntary liquidation has normally to do so in accordance with the provision in the Indian Companies Act, 1913, an alternative mode of proceeding to voluntary winding up was provided in the aforesaid section 28 in the case of companies whose undertakings were acquired under the Air Corporations Act. A reading of section 28 shows that it is not stated in the said section that in the case of a company acquired under the Air Corporations Act its voluntary winding up should necessarily be in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Shamsher Jung Bahadur Rana. 63. Shri Harbans Singh, learned counsel for the joint liquidators (respondents 3 and 4), raised an objection that the cross-objections were not maintainable inasmuch as, according to him. Order 41 Rule 22 applied only to an appeal against a decree within the meaning of the Code of Civil Procedure, and there was no provision in the Companies Act, 4913 making an order of the Company Court a decree within the meaning of the Code of Civil Procedure. There is no force in this contention. Order 43 Rule 2 clearly provides that the rules of Order 41 shall apply so far as may be to appeals from orders. Even otherwise, it is a settled principle that a respondent to an appeal can always support the judgment of the lower Court by contentions which were advanced but negatived by the lower Court. Objections 1 and 2 mentioned above were of such a nature, and they could be advanced by General Krishna Shamsher Jung Bahadur Rana for supporting the judgment of the learned single Judge without filing a cross-appeal or cross-objections. We have already considered the said contentions and negatived the same in dealing with the appeal. 64. The third and fourth objectio ..... 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