T R THYAGARAJAN Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) THIS is an appeal against the order of Subrahmanyam J. passed by him on an application made by the appellant, T. R. Thyagarajan (Appln. No. 584 of 1858) to modify alt order of the Official Liquidator dated 27-1-1958 passed in the course of the proceedings in the liquidation of a public limited company named Messrs. Kutty and Rao (Engineers) Ltd. The Indian National Industries Ltd. were the managing agents of Kutty and Rao Ltd. There was another private limited company called Sayanas Ltd. , of which the appellant claims to be a secured creditor for a sum of Rs. 21,180, He alleged that Messrs. Sayanas Ltd. , gave security for the sums advanced by him--certain moveable properties of the approximate Value of Rs. 20,000. They comprised: chandler and Price Folio size tradle 1 hongkong half Crown tradle 1 chandler and Price 24" cutting machine 1 perforating machine 1 lead types 4000 Lbs racks for types 50 stands 12 subsequently instead of the Indian National Industries Ltd. , Messrs. Sayanas Ltd. , were appointed as managing agents of Messrs. Kutty and Rao Ltd. There was an agreement entered into dated 11-5-1955 in and by which it was inter alia agreed that there should he a transfer of the assets and liabilities of Sayanas Ltd. to Kutty and Rao Ltd. On 3-6-1955 the Board of Directors of Sayanas Ltd. , passed a resolution approving the agreement entered into by its managing director with the then managing director of Messrs. Kutty and Rao Ltd. They further resolved to hand over the fixed assets and liabilities of the company at the time of handing over. On 25-6-1955 the general body of Kutty and Rao ltd. , passed an extraordinary resolution agreeing to accept the agreement mentioned, above and to accept the taking over of the assets and liabilities of messrs. Sayanas Ltd. , at the valuation approved by the board of directors. On 1-7-1955 the Board of directors of Kutty and Rao Ltd. , passed the following resolution: "that the business of Messrs. Sayanas Ltd. , be merged with this company from 25-6-1955 tentatively the actual de facto merger to take place from the dale of approval of the managing agency and issue of consideration shares to the managing agents. On 11-3-1957 Balakrishna iyer J. , construed the effect of the above transactions to mean that there has been a transfer of the entirety of the assets and liabilities of sayanas Ltd. , to Messrs. Kutty and Rao Ltd. It is evidently on this footing that the appellant came to make his claim before the Official liquidator in the winding up of Messrs. Kutty and Rao Ltd. The claim of the appellant was made under three promissory notes dated 10-111952, 17-12-1952 and 7-11-1955 for Rs. 2000, Rs. 8000 and Rs. 6000 respectively Carrying interest at the rate of 12 per cent, 13 per cent, and 10 per cent per annum. The Official liquidator admitted the claim of the appellant for principal and interest due on the first two promissory notes but refused to admit his claim in respect of the third promissory note because it had been executed on 7-11-1955 after the date of the agreement between the two companies on 25-6-1955, The appellant also claimed to be a secured creditor so far as the properties mentioned earlier in this judgment were concerned. He relied upon a letter given by I. S. Rao, managing director of Sayanas Ltd. , on 17-12-1952. The Official Liquidator refused to recognise this charge because it had not been registered with the Registrar of Companies and was, therefore, void against the official liquidator under Section 125 of the Indian Companies Act, 1958. The appellant thereupon made an application, out of which this appeal arises, to the judge dealing with company matters praying that the order of the Official liquidator may be modified by treating the appellant as a secured creditor for the amount claimed on the ground that even alter the merger between Sayanas Ltd. , and Messrs. Kutty and Rao Ltd. , so far as the creditors of Sayanas Ltd. were concerned, they were not to be affected by the merger and the provisions of section 125 of the Indian Companies Act do not affect the right of the creditors of sayanas Ltd. , who must be deemed to have the same rights against the company in liquidation so long as they were enforceable against Sayanas Ltd. , which had not gone into liquidation.

(2.) THE only party to the application taken out by the appellant before subrahamanyam J. , was the Official liquidator but it appeared that there were other parties who were vitally interested in the claim made by the appellant as. a secured creditor. There was one Kalyanji N. Suchede who had a mortgage executed on 16-8-1956 over all the assets of Messrs. Kutty and Rao Ltd. , and there was also one P. B. Raju who held a mortgage of the properties of the company created in 1950 and there 'were also holders of debentures issued with a floating charge over all the assets of the company in liquidation. They were certainly proper parties to the appellant's application before Subrahmanyam J. , but notice was not taken to them. It was only on the last day of the hearing of the appellant's application that their advocates were heard. But they were not made parties. Before us they have been added as parties and their counsel were heard.

(3.) SUBRAHAMANYAM J. , dismissed the application of the appellant. Hence this appeal.