BISHADENDU GUPTA Vs. HLANGHAM REED

JUDGEMENT

(1.) This is an application under Section 235, Companies Act, and relates to payments made by the directors who are persons named in this application on 24 June 1930, that date is rather more than a month after a petition for winding up had been presented. That petition was dated 5 May of the same year. There were difficulties arising in the case but ultimately this Court made an order compulsorily winding up the company on 11 May 1931. It will be seen therefore that the payment was made after winding up, the date of the winding up dating back to the presentation of the petition under the provisions of the Companies Act. Now under Section 235 this application is made and it is said that there has been a misapplication of the assets of the company in these circumstances. The Peninsular Company which had not been carrying on business for some time entered into negotiations with a firm who were the debenture-holders of the Calmoni Engineering Co., Ltd.

(2.) It is unnecessary to load the case with a great many facts. It is sufficient to state that as a result of those negotiations the Peninsular Company were to pay some thing approaching ?10,000 sterling for the purchase to the Calmoni Company and under the agreement they were to pay ?4,000 either as earnest money or to give them the right of option to purchase the assets of the Calmoni Engineering; Co, It matters not whether under the contract, which is not before me, it was payment of ?4,000 entitling the purchasing company to exercise the option of whether it was the earnest money or part payment; the fact remains that the directors paid over this sum of money and it is in these circumstances that an application is made under Section 235. It is a most unfortunate matter that every one of these directors is out, of the jurisdiction of this Court, namely Mr. Langham Reed, Sir George Cunningham Buchanan, Mr. Charles Thomson Gordon and Mr. Manu Subedar. All of them are actually outside the jurisdiction of this Court. The first three are living in England and with regard to them I have not the slightest hesitation as to what my order should be. It is impossible for me to hold that I can either issue an order of service of the summons or any other proceeding on persons beyond the jurisdiction of this Court or beyond the jurisdiction of the Courts in British India.

(3.) It is a principle of international law that a Court shall not serve its processes on persons outside its own jurisdiction and upon persons against whom, if an order was made, the order cannot be enforced. It is expressed in these words: "extra territorium jus decenti non paretur legis extra terrorum non obligant." To say that under certain circumstances I am to enforce orders against persons out of the jurisdiction of this Court has nothing to do with the matter. But if the matter is entirely within the jurisdiction, then under certain conventions that judgment or order may be enforced in a country other than the country in which it is made but that is an entirely different subject. As to the question of jurisdiction, the Code of Civil Procedure is quite clear. Section 16 provides "subject to the pecuniary or other limitations prescribed by any law" (and then it describes suits of various kinds for the recovery of immoveable property, for partition etc.) "shall be instituted in the Court within the local limits of whose jurisdiction the property is situate." The section applies exclusively to immoveable property. We have nothing to do with that. Section 19 provides: Where a suit is for compensation for wrong done to the person or to moveable property, if the wrong was done within the local limits of the jurisdiction of one Court and the defendant resides or carries on business or personally works for gain within the local limits of the jurisdiction of another Court, the suit may be instituted at the option of the plaintiff in either of the said Courts. Section 20 provides: Subject to the limitations aforesaid, every suit shall he instituted in a Court within the local limits of whose jurisdiction the defendant resides, etc.