Judgement

BHAGWATI J. - These are two appeals filed with certificates under Art. 133 (1) of the Constitution against the Judgement and Order of the High Court of Judicature at Bombay setting aside the order passed by the District Judge, Ahmedabad.

2. The National Mills Company Limited, Ahmedabad, hereinafter referred to as the National Mills, was ordered to be compulsorily wound up by an order of the Joint Judge, Ahmedabad, dated 14-3-1950 and Trikamlal J., Patel, Manvantray T. Mehta (since deceased) and Krishnalal B. Dave were appointed liquidators of the Nationlal Mills. The liquidators invited sealed tenders for the purchase of the mills land, bungalow, warehouses, etc., and the Himabhail Manufacturing Company, Limited Ahmedabaad, hereinafter referred to as the Himabhai Company, submitted their tender on 15-9-1953 offering to purchase the same.

The said offer was sanctioned by the Court on 22-9-1953 and an agreement was entered into between the liquidators and the Himabhai Company for the sale of the properties therein Mentioned for a consideration of Rs 12,68,000. Rs. 3,00,000 were to be paid in cash and the balance in 1936 sharees of the Himabhai Company which were taken to be of the value of Rs.500 per share. There were 484 shares of the National Mills held by 232 shareholders.

It was then contemplated that,. After the payment of all debts by the liquidators, these 1936 shares would be distributed amongst the contributories, in the proportion of 4 shares of the Himabhai Company to 1 share of the National Mills. Clauses 5 and 6 of the agreement, however, provided :--

"Clause (5). That the Managing agents of the Second Party Sheth Chunilal Khushaldas by way of and in consideration of this agreement, agrees to purchase the shares to be issued by the Second Party from the contributories of the First Party as agreed at Rs. 500. This amount of Rs. 500 per each share of the Second party shall be payable by the Said Sheth Chunilal Khushaldas within five months from the date of the execution of the Sale Deed to such contributories who intend to case the said shares of the Second Party and who shall notify his intention and deliver his share certificates with transfer forms duly signed and executed by him, Sheth Chunilal Khushaldaas to cash the said share within the period aforesaid.

"Clause (6). That over and above Rs. Three Lacs to be paid in cash as and by way of consideration by the Second Party, if the Official Liquidators require further funds for payments to the creditors, the Official Liquidators may at any time submit up to Seven Hundred shares allotted to the First Party s name by Second Party to Sheth Chunilal Khushaldas and Sheth Chunilal Khushaldas hereby agrees and undertakes to pay to the extent of Rs. three and half lacs on such submission of shares with transfer from A duly executed at the rate of Rs. 500 (rupees five hundred) per each such share in addition to expenses of such transfer of shares pertaining to those shares only."

3. On 3-11-1953, another agreement was entered into between the Liquidators and Chunilal Khushaldas Patel, hereinafter referred to as Chunilal, incorporating therein the terms of Cls. (5) and (6) set out above and Chunilal agreed to abide by the Same. The sale deed was actually executed on 18-4-1954, and the five months period provided in Cl.(5) expired on 18-9-1954.

4. Even though the Liquidators had anticipated that the work of liquation would be over within the said period of five months and the 1936 shares of the Himabhai Company distributed amongst the contributories, the Liquidators found that the Income-tax Authorities assessed the National Mills heavily beyond their expectations and the creditors also could not be paid more than As. 8 in a Rupee. It was, therefore, not possible to distribute the shares to the contributories.

The market price of the shares of the Himabhai Company, which was Rs. 435 in September 1953 was about Rs. 450 in Septemebr 1954 and neither the Liquidators nor the con