EASTERN STEAMSHIP PRIVATE LTD Vs. PUCTO PRIVATE LTD

JUDGEMENT

(1.) This is judge's summons dated 12th August, 1969, taken out by the applicants who are the plaintiffs in Suit No. 252 of 1969 pending in this court for leave to continue the said suit instituted by them on 24th February, 1969, and to continue all proceedings pending in the said suit. The application is under the provisions of section 446 of the Companies Act 1 of 1956. The respondents in the judge's summons are the defendants No. 1 and 2 in the suit.

(2.) When the judge's summons came up for hearing before Mr. Justice Kantawala, some judgments of this court under the provisions of the Presidency Towns Insolvency Act (III of 1909) and the Provincial Insolvency Act (V of 1920) were cited which also provide for leave to commence a suit. As there was a conflict between various decisions of this court, to which we shall refer later, by an order dated 12th January, 1970, the learned judge referred the matter to a Division Bench. This is how the matter comes up before us to-day.

(3.) A petition for winding up Gill Amin Steamship Company Private Limited the defendant No. 2 was filed in this court on 4th July, 1963. A provisional liquidator was appointed on 26th August, 1963, and an order of winding up was made on 23rd September, 1963. The plaintiffs claim to be creditors of the said company. The defendant No. 1 claim to be mortgagees of a ship named "S. S. Sheilla Margarette" belonging to the defendant No. 2 company under two deeds of mortgage dated 18th May, 1963, and 28th May, 1963, in the sums of Rs. 2,60,000 and Rs. 1,30,000 respectively. The plaintiffs wish to challenge the validity of the said mortgages and contend that the said mortgages are not binding on the official liquidator, inter alia on the ground that they were made within a period of one year before the date of the order of winding up and further that the defendant No. 1 and defendant No. 2 have common directors and that the mortgages were fraudulent as well as without consideration. The plaintiffs have filed Suit No. 252 of 1969 in this court challenging the validity of the said mortgages.