S T SHANMUGESAN Vs. K CHENGALVARAYA MUDALIAR

JUDGEMENT

(1.) Application No. 4499 of 1954 as amended by order in application No. 770 of 1955, is for sanction to prosecute by directing that a complaint be filed against (a) K. Chengalvaraya Mudaliar, the first respondent, under Section 209, Penal Code, and (b) K. Bahi Mudaliar, M. Natesa Mudaliar and S. Velu Mudaliar, respondents 2 to 4 under Section 195, Penal Code and also under Section 209, Penal Code coupled with Section 109, Penal Code.

(2.) The first respondent filed application No. 2583 of 1951 on the Original Side of the High Court for a declaration that the dissolution of the Thirumagal Corporation Ltd., was void and for consequential proceedings to be taken as if the company had not been dissolved, for the realisation of the moneys due to the first respondent. The case of the first respondent was that the Thirumagal Corporation was a private limited company incorporated under the Indian Companies Act on 6-91946 with a share capital of Rs. 2,00,000, divided into one hundred shares of Rs. 2000 each, that he was a share-holder owning five fully paid up shares of the value of Rs. 10,000, that Messrs. Ganesh and Company were the managing agents of the Company, that at the extraordinary general meeting held on 17-4-1949, a special resolution was passed resolving to wind up the company voluntarily as Members Voluntary Winding up and appointing the. applicant, S.T. Shanmugesan, as a Liquidator at a certain remuneration, that the requirements of the Companies Act were complied with as regards the further steps to be taken, that at a meeting of the shareholders held on 4-9-1949 a statement of receipts and disbursements was placed and the Liquidator assured the shareholders at that meeting that the moneys due to the shareholders would be paid to them and that the first respondent was not paid his subscribed capital of Rs. 10,000. Application No. 2583 of 1951 was presented on 28-4-1951, more than 11/2 years after the general body meeting of the share-holders dated 4-9-1949. The applicant denied that any assurance was given at the meeting on 4-9-1949 that the shareholders would be paid their subscribed share capital. His case was that the voluntary winding up of the company was with a view to constitute a partnership firm known as Canesh and Company with a capital of Rs. 1,32,500 and that it was agreed that the share capital of the shareholders of the dissolved company was to be transferred and shown as capital of the Firm of Ganesh and Company, that there were no assets of the company still available for distribution, that the first respondent instituted O. S. No. 20 of 1951 for the dissolution of the new partnership Ganesh and Company in which the applicant was appointed as the managing partner and that the case set up by the first respondent was false and not bona fide.

(3.) Application No. 2583 of 1951 came up before me and when evidence was taken, the respondents 2 to 4 herein were cited as witnesses on behalf of the first respondent, the first respondent himself not figuring as witness. In so far as capital of the partnership was concerned, the first respondent's share capital was Rs. 20,000 and it is the applicant's case that Rs. 10,000 being his share value of the company was adjusted and given credit to and the first respondent paid in cash only two sums of Rs. 5000. The second respondent, who is the brother of the first respondent, stated that Rs. 20,000 was paid by the first respondent in cash, and not by adjustment, in two instalments of Rs. 15,000 and Rs. 5000 and that the moneys were paid to the applicant. The third respondent admitted that he was one of the managing directors and also managing partner and he wrote the accounts. He stated that the share capital was returned to him and that he paid cash towards his share capital of the new partnership. Similar is the evidence of the fourth respondent in so far as his share of capital was concerned, but in answer to a question whether he knew that the first respondent paid Rs. 15,000 to Ganesh and Company, lie said he knew it from what the parties told him. On this and other evidence and circumstances, I found that the first respondent's case that of Rs. 10,000 of his share capital was not by adjustment towards the share capital of the partnership and that he paid his share capital of the partnership in cash was false. He did not choose to get into the witness box and speak to the fact of having paid Rs. 15,000 in cash for which a receipt dated 10-12-1948 was issued. He sought to support his case by the evidence of his brother without the assistance of any other document. All these and his failure to explain as to his means to make the payment were taken into consideration and I observed that the arrangement pleaded by the applicant was true and that the first respondent had come to court with a false case of actual payment with a view to see if possible, whether he could make a profit out of it from the applicant between whom and the first respondent there was no love lost .and I dismissed the application with costs on 5-11-1951. The first respondent took the matter on appeal in O.S.A. No. 69 of 1952 and the appeal was dismissed on 1-3-1954. The appellate Court observed: