GENERAL AGENCIES AND TRADES LTD BY ITS MANAGING DIRECTOR, V DHARMA RAO Vs. KNVISWANATHAN AS OFFICIAL LIQUIDATOR REPRESENTING THE ABOVENAMED COMPANY IN LIQUIDATION

JUDGEMENT

(1.) The appellant was the managing agent of the Garland Petroleum Company (Madras) Limited which is being wound up by this Court under a compulsory winding up order passed on the 2nd April, 1938. The Court directed that all claims against the company should be presented by the 15 July, 1938. The appellant presented a claim for Rs. 25, 313-8-2, which was said to be due by way of commission and advances made to the company. The appellant's claim together with others were mentioned to the Court (Gentle, J.) on the 16 September, 1938. The Official Liquidator then informed the Court that he required the appellant to prove the claim in detail. The learned Judge decided that he would not enter upon an adjudication of the matter at that stage, and adjourned the matter for one month in order to allow the appellant to take such steps as he might deem necessary to enforce the claim. Apparently nothing was done, and when the matter came before Mockett, J., on the 14 March, 1940, he gave the appellant two weeks in which to prove his claim. The learned Judge directed that if no action was taken within the period the appellant would be excluded from the benefit of any distribution which might be made. On the 11 April, 1940, the appellant asked that the Judge's summons which he had taken out should be treated as an application for leave to file a suit against the Official Liquidator under Section 171 of the Indian Companies Act in order to prove his claim. The learned Judge pointed out that the appellant had been very slow in prosecuting his claim, which was in amount equal to almost the entire assets of the company. The learned Judge, however, decided to grant on terms the application for leave to file a suit. He directed that the suit should be filed before the 24 April, 1940, and that the appellant should give security for costs to the satisfaction of the Registrar in the sum of Rs. 1,500. The learned Judge also ordered that if the suit was not filed within the period allowed the application should be reposted for orders on the 25th of that month.

(2.) The suit had not been filed by the 25 April, but on that date the appellant asked that further time be allowed to him in which to file the suit. This application was dealt with by Gentle, J., who granted further time until noon on the 1 May, 1940. The learned Judge stated that his order was to be regarded as being "final and peremptory". The appellant presented his plaint on the 1 May, 1940, but did not tender the security until three-quarters of an hour after the time allowed, and Gentle, J., refused to grant a further extension. The consequence was that that the appellant had failed to prove his claim within the time granted by the Court. He had undoubtedly been guilty of great procrastination, and in the circumstances it is perhaps not surprising that no appeal was filed against the order of Gentle, J., of the 1 May, 1940, refusing to condone the delay of three-quarters of an hour. The result was that the order of Gentle, J., became final.

(3.) On the 19 October, 1940, the judgment of this Court, Bhide V/s. The Travancore National and Quilon Bank Ltd., in Liquidation , was published in the "Law Weekly." It was there held that the general law of insolvency applies to the winding up of an insolvent company and that when an application is made under Section 230-A (5) of the Indian Companies Act for an order rescinding a contract with the company and for an award of damages to the applicant, the applicant is entitled to have his application heard without being relegated to a regular suit. On the 5 November, 1940, obviously as the result of the publication of this judgment, the appellant took out a Judge's summons calling upon the Official Liquidator to show cause why the claim should not be inquired into and adjudicated on in the liquidation proceedings. This summons came before Gentle, J., on the 28 November, 1940, and the learned Judge dismissed it on the ground that it did not lie, because the appellant had failed to prove the claim within the time allowed.