L SUBBARAMA NAIDU Vs. VEMULAPATI SUBBARAYUDU

JUDGEMENT

(1.) These two appeals under clause (15) of the Letters Patent, are filed against the Judgment of our learned brother, Anantanarayana Ayyar, J., in S.A. Nos. 605 and 678 of 1957 with his leave, confirming the Judgment of the District Judge, Nellore, in A.S. Nos. 38 and 37 of 1956.

(2.) These appeals arise out of two actions laid by the two appellants separately in O. S. Nos. 433 and 434 of 1954 to set aside the orders passed by the Subordinate Judge's Court, Nellore, in certain claim proceedings. For an appreciation of the contentions raised in these appeals, it is necessary to state a few material facts. In the year 1946, appellant in L.P.A. No. 7 of 1962 and the appellant in L.P.A. No. 8 of 1962 who owned the transport vehicles M.D.L. No. 564 and M.D.L. No. 428 and several others formed a limited company called the Nellore Bus Transport Ltd., in which the transport vehicles belonging to the shareholders were pooled together and operated as a fleet. One Subbarayudu, respondent in both the appeals, travelled in one of these vehicles, M. D. L. No. 428, and met with an accident which resulted in the loss of one of his eyes. The injured person brought a suit in the Sub- ordinate Judge's Court, Nellore, against the company of which the two appellants were the shareholders, for recovery of damages and recovered judgment against the company for Rs. 4,000 by way of damages with full costs amounting to Rs. 1,800 on 29th March, 1952. Pending this litigation, the company decided to go into voluntary liquidation and for this purpose passed a preliminary resolution on 15th April, 1949 at a General Body Meeting and a final resolution on 11th July, 1949. After observing the provisions of section 208 of the Indian Companies Act and fulfilling the requisite formalities, the company finally went into liquidation on 24th August, 1949 and this was published in the Nellore District Gazette. At a subsequent meeting of the shareholders, all the transport vehicles were distributed amongst all the shareholders and the two buses, M. D. L. No. 428 and M. D. L. No. 564 were allotted to Umamaheswara Motor Service, Nellore, a partnership, consisting of Subbareddy and Subbarama Naidu. After judgment was obtained by the respondent, he attached the buses M. D. L. No. 428 and M.D.L. No. 564, by issuing execution of his decree.

(3.) To raise these attachments, Subbareddy filed the claim petition E.A. No. 311 of 1953 and Subbarama Naidu E.A. No. 312 of 1953. As these claims were negatived, they brought two suits, O.S. Nos. 433 and 434 to 1954 to vacate the orders on the claim petitions on the allegation that the decree obtained against a defunct company was a nullity and that, at any rate, it could not be executed against the shareholders, who were entities distinct from the limited company.