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TMI Blog1966 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed the company agreed to pay the price in instalments. Though the company paid a few instalments, a sum of Rs. 25,00,000 still remained to be paid by it to the joint family. In July, 1961, one of the sons of Narayanlal Bansilal filed Suit No. 224 of 1964 on on the Original Side of the Bombay High Court against his father and others for partition of the joint family properties. Pending the suit, on October 20, 1961, the court, in exercise of its powers under Order XL, rule 7, of the Code of Civil Procedure, appointed a court receiver as receiver of all the joint family properties. Long prior to the filing of the said suit for partition, on July 24,1956, the Additional Income-tax Officer, Section V, Central Bombay, issued a notice to the company under section 46 of the Indian Income-tax Act, 1922, prohibiting it from paying the debt due by it to the joint family and calling upon it to pay the said amount to the income-tax authorities towards income-tax due from the said joint family. After the receiver was appointed, on June 29, 1962, the said receiver issued a notice under section 434 of the Indian Companies Act calling upon the company to pay the amount due from it to the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties belonging to the joint family in the suit. The material part of the order reads : " .... IT IS FURTHER ORDERED that the court receiver be and he is hereby appointed receiver of the properties belonging to the joint family in suit and all the books of accounts papers and vouchers with all necessary powers under Order XL, rule 1 of the Code of Civil Procedure, including power to vote and/or exercise all the property rights in respect of shares belonging to the joint family in the several joint stock companies mentioned in the plaint including power to file suit.... " Under this order, all the necessary powers under Order XL, rule 1, of the Code of Civil Procedure were conferred upon the receiver, including the right to file suits. Assuming that a petition for winding-up of a company is not a suit within the meaning of Order XL, rule 1(d) of the said Code, the other powers mentioned therein are comprehensive enough to enable the receiver to take necessary proceedings to realise the property of and debts due to the joint family. Can it be said that the petition filed by the receiver for winding-up of the company is not a mode of realisation of the debt due to the joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of authorisation obtained by the receiver to file the said petition. The question of the maintainability of the petition will be dealt with by us at a later stage of the judgment. In this view also, the receiver had the power to file the petition before the court for winding-up of the company. There are, therefore, no merits in the first contention. The second contention of the learned counsel is that the court receiver is not a " creditor " within the meaning of the relevant sections of the Indian Companies Act. The relevant provisions of the Indian Companies Act read : " 433. A company may be wound up by the court.--.... (e) if the company is unable to pay its debts ; 434. (1) A company shall be deemed to be unable to pay its debts-- (a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the same idea thus : " To constitute a good petitioning creditor's debt the alleged debt must be certainly due and payable to the person who presents the petition. There is no debt due to this receiver. He could not maintain an action of debt for this money in his own name. " This decision, therefore, goes to the extent of the holding that there is no debt due to a receiver either at law or in equity, that he cannot maintain an action of debt for the money in his own name and that, therefore, he is not a good petitioning creditor. The scope of this decision was explained by the Court of Appeal in In re Macoun. There, on the dissolution of a firm of stock-brokers by the death of one of the partners the partnership assets, including a debt to the late firm in respect of certain stock exchange transactions, were assigned by the surviving partners to L. for the purpose of winding-up the partnership, and notice of the assignment was served on the debtor. L. obtained a decree against the debtor. Thereafter, he commenced an action in the Chancery Division for the winding-up of the partnership, and in that action a receiver was appointed of the partnership assets. The receiver took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id clause (d) if a court confers upon the receiver power to bring a suit to realise the assets which are the subject-matter of the suit, it cannot be denied that the said receiver can file suits to recover the debts forming part of the said assets. This court in K. V. Mallayya v. T. Ramaswami & Co. held that a receiver authorized to file suits to recover debts could institute suits therefor in his own name. In that event, the position of such a receiver is analogous to that of a receiver who can file an action in law or in equity to recover a debt under the English law. If the latter is a creditor in English law in respect of the debt recoverable by him, there is no reason why a receiver empowered to file a suit under Order XL of the Code of Civil Procedure cannot be a creditor. In one case there is a voluntary assignment, and in the other there is a statutory assignment. The relevant provisions of the Indian Companies Act also lead to the same position. Section 434 speaks of a creditor by assignment or otherwise to whom the company is indebted in a particular sum. Such creditor can file a petition for winding-up under section 439 of the said Act. A creditor, therefore, under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company to make payment of Rs. 25,00,000 to the Additional Collector of Bombay, by whom the debt had been attached within the prescribed period of 21 days. He had to do so because the Additional Collector had served a notice, dated July 24, 1956, under section 46(5A) of the Indian Income-tax Act, 1922, calling upon the company to pay to him whatever amount was held by the company on account of the joint family. Section 434(1)(a) of the Indian Companies Act does not say that the demand made by the creditor on the company shall be to pay the amount due only to the creditor and not to any other person; nor does it by necessary implication impose any such condition. What is necessary is that the debtor by paying the amount demanded shall be in a position to get full discharge of his liability. In the present case the receiver directed the amount to be paid to the Additional Collector of Bombay, for the purpose of liquidating the income-tax payable by the joint family. Indeed, by paying the said amount, and in view of the notice served on the company under section 46(5A) of the Indian Income-tax Act, 1922, the company will get a full discharge of its liability to the joint family. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice was issued was attached by the Collector in exercise of his powers under the proviso to sub-section (2) of section 46 of the Indian Income-tax Act. These provisions do not prevent the debtor from compounding his claim with the creditor. If he compounds the claim, any agreement entered into by him with the creditor will not affect his liability to pay the income-tax of the creditor to the extent covered by the notice issued under section 46(5A) of the Income-tax Act ; but the agreement would certainly be binding between the creditor and the debtor. The Income-tax Officer has no concern with it. In either view, therefore, the notice cannot be said to have been issued in contravention of the provisions of section 434(1)(a) of the Indian Companies Act. No doubt courts have held, in our view rightly, that a statutory notice under section 434(1)(a) of the Indian Companies Act shall strictly comply with the provisions of the said section : see Japan Cotton Trading Co. Ltd. v. Jajodia Cotton Mills Ltd., Kureshi v. Argus Footwear Ltd., and W. T. Henley's Telegraph Works Co. Ltd. v. Gorakhpur Electric Supply Co. Ltd. But in this case the statutory notice issued by the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a bona fide dispute between the parties and that the notice issued was a vehicle of oppression and an abuse of the process of the court. But the same cannot be said in the present case. In In re Gold Hill Mines also a winding-up petition was dismissed on the finding that it was an abuse of the process of the court, it being a petition to compel payment of a small debt which was under bona fide dispute. In the present case, Narayanlal Bansilal was not only the karta of the joint family but was also the chairman of the board of directors of the company. In the partition suit he filed an affidavit wherein he stated : " Referring to paragraph 10(c) of the affidavit I deny there is any manipulation in the balance-sheet of Harinagar Sugar Mills Ltd., as falsely sought to be suggested by the 3rd defendant. No loan of Rs. 25,00,000 has been given by me to the said company. The said amount is the balance of the purchase price payable by the said company to the joint family in respect of Harinagar Cane Farm. " In view of the said affidavit it is manifest that the alleged dispute was not bona fide but was only a part of a scheme of collusion between the company and the karta of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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