Judgement

BHAGWATI J. This appeal with a certificate under Art.133 (1)(c) of the Constitution is directed against the judgment of the High Court of Judicature at Madras dismissing the appeal of the appellants and refusing to set aside a sale effected by respondent 2 of certain properties belonging to the Madras Electric Tramways (1904) Ltd. hereinafter called the Company, above the around at Vepery, Madras and Mylapore, including the machinery cars, etc., and buildings as scrap to respondent 3 in his capacity as the Receiver of the trustees of the debenture holders of the Company.

2. The appellants are the Secretary and President respectively of the Madras Tramways Workers Association (Regd. No. 1253) a Trade Union registered under the Trade Unions Act. The workmen employed by the Company are entitled under the award of the Special Industrial Tribunal, Madras in I. D. No. 9 of 1953 published in the Fort St. George Gazette, dated 8-7-1953 being G. O. Ms. No. 3024/53 to a payment of nearly Rs. 7,00,000/-out of which the workers belonging to the Madras Tramways Workers Association alone would be entitled nearly to a sum of Rs. 4,35,000/. and be thus the major creditors of the Company.

The Company was incorporated in England with its principal office situated at No. 1, Rundall s Road, Vepery, Madras-7 and was running the Tramway Service in Madras with licence issued to it by the Government under the Tramways Act. It had issued 1300 First Debentures of £100/- each and the debenture-holders had appointed the Beawer Trust Ltd., England as trustees. By an Indenture made in England on 13-10-1924 the Company charged by way of first charge in favour of the trustees all its undertaking properties and assets for the time being both present and future including its uncalled capital with the payment of all moneys for the time being owing on the security of the debentures and such charge was to rank as a floating charge.

By two subsequent deeds made at Madras dated 26-3-1925 and 6-7-1950 certain immovable properties belonging to the company were mortgaged in favour of the said trustees. The said Trustees appointed respondent 2, the Managing Director of the Company and day today management of the tramway Service and of the business of the Company, as their Receiver. He took possession as such Receiver, from the midnight of 11-4-1953 of all the assets of the Company including moneys in the bank to the credit of the Company and after that date the Tramways service was suspended and still remains suspended.

3. One J. B. Beardsell, one of the Directors of the Company filed O. P. No. 419 of 1953 as the duly constituted Attorney of the Company for winding up the Company on the ground that it was unable to pay its debts and that it had ceased to carry on its business. An order for winding up of the Company was made by the Court on 20-1-1954 and the Official Receiver, High Court, Madras, was appointed the Official Liquidator. Since all the assets including the moneys of the Company were in possession of respondent 2, the Official Receiver was unable to take charge of anything except the records of the Company.

4. Soon after the order for winding up the respondent 2 advertised in the newspapers on 23-1-1954 for the sale of the properties and assets of the Company. At the end of the conditions of sale he stated in Para. 7 that "the sales are for the time being subject to the approval of the High Court at Madras and it will be for the undersigned to obtain such approval for accepted offers free of all costs to the purchaser".

5. At the time of the order of winding up, two suits were pending in the High Court, C. S. No. 191 of 1952 flied by the Company against the State of Madras for Rs. 1,33,204-9-0 and interest thereon being electric charges alleged to have been collected by the State of Madras in excess of those payable by the Company and paid by the Company under protest and C. S. No. 368 of 1953 filed by the State of Madras against the Company for the recov