N P N M CHIDAMBARAM CHETTIAR Vs. TINNEVELLY SARANGAPANI SUGAR MILLS COMPANY LD, REPRESENTED BY ITS OFFICIAL LIQUIDATOR MRFSCLARK

JUDGEMENT

(1.) WE do not think that there is anything in the agreement between the petitioner and the Company to exclude the operation of Section 221 of the Indian Contract Act. In so far as the expenditure incurred before the winding up order comes within that section the appellant is entitled to alien. The District Judge was therefore wrong in refusing to recognise this lien which operated on the properties and goods in his possession at the date of the winding-up order. Sec. 149 of the Indian Companies Act does not authorise a Court to deprive a secured creditor of possession of his security; but we understand that in this case possession was given up under the order of the Court dated the 5 December, 1905, without prejudice to the petitioner's right. If the petitioner was entitled to remain in possession by virtue of a lien under Section 221 of the Indian Contract Act, the making of the winding-up order would not affect his right to remain in possession and continue to make the necessary disbursements. The subsequent disbursements are stated to have been made between the date of the winding-up order and the handing over of possession. These disbursements, in our opinion, stand on the same footing as the disbursements made prior to the winding-up order.

(2.) WE must, therefore, set aside the order of the District Judge and remand the case to him for the purpose of deciding what sum should be allowed in respect of disbursements subsequent to the winding-up order, and also for the purpose of deciding what property the appellant was in possession of, as agent, when dispossessed by the Court, and what amount he is entitled to as lien on such property under Section 221 of the Indian Contract Act. Fresh evidence may be taken. The appeal is allowed with costs here and in the lower Court. Costs will be paid out of the estate.