STATE OF BIHAR Vs. SYED ANISUR RAHMAN

JUDGEMENT

(1.) These are three applications in revision by the State of Bihar, which owed certain money to the United Provinces Commercial Corporation, a private limited company incorporated under the Indian Companies Act. The plaintiff opposite parties in all the three civil revision applications filed three money suits against the said Corporation for realisation of certain amounts of money. The suits were filed in the year 1964. Compromise decrees were made on September 6, 1968. Under the terms of the compromise decrees the Corporation agreed to pay certain sums of money to the plaintiffs. From time to time, under orders of the court, monies due to the Corporation from the State of Bihar were paid to, and realised by, the plaintiffs in pursuance of the compromise decrees." After a lapse of considerable time--on June 8, 1970--the State of Bihar filed applications in the court below asking it to withhold further payments of the money due from it to the Corporation on the ground that the company had gone into liquidation by an order of the Calcutta High Court made on June 4, 1968, about 3 months prior to the passing of the compromise decrees; an official liquidator had been appointed. The court below was asked to stay its hands because of the provision of law contained in Section 446 of the Companies Act, 1956. The learned Additional Subordinate Judge has refused to do so. The State has come up in revision.

(2.) It is no doubt true that after the defendant-company went into liquidation the suits could proceed with the leave of the winding-up court. Compromise decrees could be passed only after the suits had proceeded with the leave of the winding-up court. But then, for want of leave, the decrees cannot be said to be without jurisdiction. A. N. Ray J., as he then was, has held in Roopnarain Ramchandra Private Ltd. v. Brahmapootra Tea Co. (India) Ltd. AIR 1962 Cal 192, 194 :

(3.) It is also to be pointed out that a company does not lose its corporate character and legal entity merely because it has gone into liquidation under orders of a court or a voluntary one. The corporate status and legal entity of the company remains. Decrees could be passed against the company and so also compromise decrees. It was for the official liquidator of the company to get rid of the compromise decrees and bring the debts due from the State of Bihar to the company in the common pool. No step seems to have been taken by the official liquidator to avoid the compromise decrees. The State as a debtor cannot object to the payment of the money on the ground of the proceedings being bad under Section 446 of the Companies Act. It has made the payments and is required to do so under orders of the court. That is sufficient to discharge it from its liability. It is not its look out whether the money goes to one creditor of the company or the other. I am, therefore, of the view that the order of the court below is correct and cannot be interfered with in any of these revisions.