KAIKHUSHRU NUSSERWANJI CHANDABHOY Vs. TATA INDUSTRIAL BANK LTD

JUDGEMENT

(1.) These are two appeals from the orders passed by Kemp J. on two petitions under the Indian Companies Act VII of 1913. The first petition was filed by the appellants, the second by the respondents in the circumstances mentioned by the learned Judge at pp. 336 to 340 of the Paper Book. There being no dispute as to the facts there is no necessity for me to set them out again in this judgment. The learned Judge on the second petition ordered that Messrs. Chandabhoy and Guzdar should be removed from their office as liquidators in the voluntary winding up of the Tata Industrial Bank. As a consequence of that order the first petition was dismissed with costs, the Judge remarking that in the circumstances of the case he thought the presentation of that petition was improper.

(2.) Under Section 207, Clause (ix), of the Indian Companies Act the Court has power in the voluntary winding up of a company on cause shown to remove a liquidator. What should be the measure of "due cause" was considered in In re Adam Eyton; Ex parte Charlesworth (19887) 36 Ch. D. 299. where Bowen L.J. said (p. 306): A contention was raised by Mr. Cozens-Hardy . . . to the effect that untitness in the liquidator ought to bo shewn before he is removed...In many cases, no doubt, and very likely, for anything I know in most cases, unfitness of the liquidator will be the general form which the cause will take upon which the Court in this class of case acts, but that is not the definition of due cause shewn. In order to define due cause shewn you must look wider afield, and see what is the purpose for which the liquidator is appointed. To my mind the Lord Justice has correctly intimated that the due cause is to be measured by reference to the real, substantial, honest interests of the liquidation, and to the purpose for which the liquidator is appointed. Of course, fair play to the liquidator himself is not to be loft out of sight, but the measure of due cause is the substantial and real interest of the liquidation. That should be thoroughly understood, I think, as of great importance.

(3.) It is unfortunate for the appellants that, as it would seem, they were not aware of that judgment before they embarked upon the course of action which led to the order in the Court below for their removal. It is necessary then to consider the facts leading up to the resolution for the voluntary winding up of the Tata Bank, and the purpose for which the liquidators were appointed. The conditional agreement of July 5, 1923, referred to by the learned Judge, a copy of which by some strange omission does not appear to have been annexed to either petition, provided for the transfer of the whole business of the Tata Bank to the Central Bank, provided the Tata Bank shareholders passed effective resolutions for the voluntary winding up of the Bank and the appointment of liquidators to carry out the transfer mentioned in the agreement. Thereafter the necessary resolution was passed by the share-holders of the Tata Bank for the voluntary winding up and, at the meeting confirming this resolution, the appellants with two other gentlemen were appointed liquidators by a separate resolution for the following purpose, to adopt the conditional agreement and curry it into effect with such modifications as they thought fit under the supervision of the Directors of the Central Bank and the Tata Bank, the power of the last named Directors to continue for the purpose of carrying the agreement into effect. Put shortly, under that agreement the whole of the assets of the Tata Bank were to be transferred to the Central Hank which undertook to satisfy all the liabilities of the Tata Bank and to keep the Tata Bank, its liquidators, and contrilmtories, indemnified against all such liabilities. The share-holders of the Tata Bank who agreed to take one share of the Central Bank for two shares of the Tata Bank would get the shares in the Central Bank through their liquidators. Those who did not consent to the exchange were offered Rs. 15 for each share, which they would receive from the Central Bank through their liquidators, and if any such shareholder did not agree to the offer of Rs. 15, then he was to be paid such sum as by arbitration between the vendor company and himself should be determined, the payment being made by the Central Bank to the liquidators.