RAM LAL ANAND Vs. BANK OF BARODA

JUDGEMENT

(1.) This is an appeal under section 483 of the Companies Act No. 1, of 1956, herein called 'the Act', directed against the judgment of the learned company Judge, who, while disposing of an application of Bank of Baroda, respondent No. 1 herein, under section 392 of the Act, directed the official Liquidator to sell the property in dispute by public auction and further directed Mr. R. L. Anand, the appellant, to execute all the necessary documents including the conveyance deed, as may be required to complete the sale.

(2.) The property in dispute is No. 88, Sunder Nagar, New Delhi, which Mr. R. L. Anand, the appellant claims as his, white Messrs Anand Finance Private Limited, herein referred to as 'the company' claims as belonging to it. "The company had been enjoying certain cash credit facilities from the respondent Bank since 1959. In January, 1966 an equitable mortgage by deposit of title deeds of the property was created in favour of the Bank by way of additional security. It is not disputed that at the relevant time, the appellant was the Managing Director of the company. A total of more than Rs. 10,00,034.20, stood to the company's debit in the said cash credit account with the Bank. A winding up petition (Company Petition No. 34 of 1966) was pending against it, as was also pending a petition for sanction of a scheme of compromise between the company and its unsecured creditors, when the respondent Bank entered into a compromise with it. In April, 1968 a joint application was moved under section 443 (2) read with sections 391 and 392 of the Act for sanctioning the said compromise. The company admitted under the compromise, that the respondent Bank was a secured creditor and a sum of Rs. 9,97,048.50 stood to its debit in favour of the Bank as on May II, 1966. It was also admitted that the Bank held an equitable mortgage of the property in dispute, by way of security. The compromise also provided that the parties will cooperate in taking appropriate steps to get the attachment of the property in dispute vacated, which attachment was made in suit No. 406 of 1966 filed by some creditors against Mr. R. L. Anand. The company agreed that within three months from the date of the sanction of the agreement or the raising of the said attachment, it will pay to the respondent Bank a sum of Rs. 4,98,524.00 being 50% of the admitted claim of the Bank as on May II, 1966. The Bank was also authorised to sell the said property and to receive the said sum of Rs. 4,98,524.00 being 50% of its total claim in full and final settlement subject to the other conditions mentioned in the compromise. If the property fetched more price than Rs. 4,98,524.00 the excess was agreed to be paid to the company. One of the terms of the compromise provided. that if after the creditors were paid to the extent of 50 per cent a surplus still remained, the Bank was to be paid a further amount to the extent of Rs. 1,49,556.00, being 15 per cent of the amount due to the Bank as on May II, 1966. The Bank, however, agreed to accept the said sum of Rs. 4,94,524.00 in full and final settlement of its admitted claim, if 15 per cent out of the distributable surplus did not become ^payable. The application for the sanction of this compromise came up before S. N. Shanker, J., who by his order, dated May 10, 1968 sanctioned it as being in the larger interest of the company and of the creditors and the Board of Directors were directed to enter into the compromise if they considered it fit and proper. The petition filed by the creditors against Mr. Ram Lal Anand and others were dismissed as withdrawn by October 16, 1970 and attachment on the property in dispute was raised. The Bank filed an application under section 392 of the Act and rule 9 of the Company (Court) Rules for directions to enforce the sanctioned compromise. A notice ot the application was directed to be given to the appellant, Mr. R.L. Anand, one of the directors of the company also, as the property stood in his name and he had been claiming it as his. The company, however, was disputing the appellant's claim and claimed, on the other hand, that this property belonged to it. The company did not dispute the creation of the equitable mortgage or the amount due- It only pleaded its unsatisfactory financial position. To begain with, it contended that there was no compromise and that the order dated May 10, 1968 was made on a proposed compromise. But this position was given up and the counsel appearing on behelf of the company stated before us that the company supported the claim of the Bank and the order of the learned Company Judge.

(3.) It had been contended by the appellant, as has been contended on his behalf even before us, that he was not a party to the said agreement and compromise and was, therefore, not bound by it. It was also contended that he was the owner of the property and the company had nothing to do with it. His property, according to him, could not be sold to satisfy the indebtedness of the company.