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SUPREME COURT OF INDIA
6th November, 1961
K. SUBBA RAO, J.C. SHAH, RAGHUBAR DAYAL AND J.R. MUDHOLKAR, JJ.
Rajah of Vizianagaram, Appellant
Versus
Official Receiver and Official Liquidator of Vizianagaram Mining Co. Ltd., and others, Respondents.
Civil Appeal No. 225 of 1959.
Advocates appeared
M/s. R. Thiagarajan and P. Ram Reddy, Advocates, for Appellant; Mr. K. Bhimasankaram, Senior Advocate, (Mr. T. V. R. Tatachari, Advocate, with him), for Respondent No. 1; M/s. D. N. Mukherjee and B. N. Ghosh, Advocates, for Respondent 2.
-the Courts of a country dealing with the winding up of a Company can ordinarily deal with the assets within their jurisdiction and not with the assets of the Company outside their jurisdiction. It is therefore necessary that if a Company carries on business in countries other than the country in which it is incorporated, the courts of those countries too should be able to conduct winding up proceedings of its business, in their respective countries. Such winding up of the business in a country other than the country in which the Company was incorporated is really an ancillary winding up of the main Company whose winding up may have already been taken up in that country or may be taken up at the proper time. In view of the specific provisions of Sections 426, 429, 433, 447, 511, 528, 582, 583, 584 and 585 and of the general principles, foreign creditors of a Company which is incorporated outside India and carried on business in India can prove their claim in the winding up proceedings of the Company as an unregistered Company in India
In view of the specific provisions of Sections 426, 429, 433, 447, 511, 528, 582, 583, 584 and 585 and of the general principles, foreign creditors of a Company which is incorporated outside India and carried on business in India can prove their claim in the winding up proceedings of the Company as an unregistered Company in India, as held in the case of Rajah of Vizianagaram v. Official Receiver and Official Liquidator of Vizianagaram Mining Co. Ltd., AIR 1962 SC 500 : (1962) 2 SCJ 237 : (1962) 32 Com. Cas. 1 : (1962) 2 M.L.J. (SC) 85.
Such winding up of the business in a country other than the country in which the company was incorporated is really an ancillary winding up of the main company whose winding up may have already been taken up in that country or may be taken up at the proper time. In view of the specific provisions of Sections 426, 429, 433, 447, 511, 528, 582, 583, 584 and 585 and of the general principles, foreign creditors of a company which is incorporated outside India and carried on business in India can prove their claim in the winding up proceedings of the company as an unregistered company in India,
If a company carries on business in countries other than the country in which it is incorporated, the courts of those countries too should be able to conduct winding up proceedings of its business, in their respective countries. Such winding up of the business in a country other than the country in which the company was incorporated is really an ancillary winding up of the main company whose winding up may have already been taken up in that country or may be taken up at the proper time. In view of the specific provisions of Sections 426,429, 433, 447, 511, 528, 582, 583, 584 and 585 and of the general principles, foreign creditors of a company which is incorporated outside India and carried on business in India can prove their claim in the winding up proceedings of the company as an unregistered company in India, as held in the case of Rajah of Vizianagaram v. Official Receiver and Official Liquidator of Viziangaram Mining Co. Ltd., AIR 1962 SC 500 : (1962) 2 SCJ 237 : (1962) 32 Corn. Cas. 1 : (1962) 2 MLJ (SC) 85.
Judgment
RAGHUBAR DAYAL, J. : This is an appeal on certificate wanted by the High Court of Madras. The question for determination in this appeal is whether foreign creditors of a firm which was incorporated in England and carried on business in India can prove their claims in the winding up proceedings of the firm as an unregistered company in India.
2. The facts leading to the appeal are that the Vizianagaram Mining Co. Ltd., hereinafter called the company, was incorporated in England, under the English Companies Act then in force, on December 8, 1894, the object of the company being to mine manganese ore and some other minerals in India. Its principal place of business in India was at Kodur, Vizagapatam District.
3. The company took certain land on lease from the Rajah of Vizianagaram, the appellant. Its business did not prove profitable and it was not in a position to pay the rent to the lessor or to pay its creditors. On the application on behalf of the Rajah of Vizianagaram, orders for the winding up of the company were, passed by the High Court on March 6, 1946. The Official Receiver of Vizagapatam was appointed Official Liquidator of the company. Thereafter, the liquidation proceedings were transferred to the District Court of Vizagapatam. The Official Liquidator realised about two lakhs of rupees from the assets of the company in India. Certain foreign creditors of the company filed proofs of their claims before the Official Liquidatcr. The appellant objected to their claims being entertained on the ground that these liquidation proceedings were only for the benefit of the Indian creditors and that foreign creditors were not entitled to prove their debts in these proceedings. The Official Liquidator rejected these objections and allowed the foreign creditors to prove their claims.
4. The appellant then filed an application under S. 183 of the Indian Companies Act, 1913 (Act VII of 19l3), hereinafter called the Act, for the expunging of the proofs of all foreign creditors and for deleting their names from the certificate of the Official Liquidator filed under R. 90 of the rules framed under the Act, in the Court of the District Judge, Vizagapatam. The application was dismissed by the District Judge. Against this order the appellant filed an appeal, C. M. A. 249 of 1949, in the High Court. The High Court dismissed the appeal holding that the foreign creditors could prove their claims in the proceedings. Thereafter, the appellant applied for a certificate under Art. 133 of the Constitution. The High Court granted the certificate and hence this appeal.
5. Learned counsel for the appellant has supported the contention that foreign creditors cannot prove their debts in a winding up of the company in India, on three grounds. They are:
(i) the winding up of a company incorporated outside India, as an unregistered company, in pursuance of the provisions of sub-section (3) of S. 271 of the Act is really the winding up of the unregistered company as an independent and separate entity from that of the main company incorporated outside India and is therefore limited to the realisation of Indian assets and their distribution to Indian creditors;
(ii) as the Liquidator appointed by the Court in India cannot get at the foreign assets and contributories it is just that foreign creditors be not allowed to prove their debts here;
(iii) even if foreign creditors can prove their debts in such winding up proceedings they should be allowed to prove only such debts which have some relation to the business of the company in India.
6. On the other hand, it is contended for the respondents that the Indian creditors are free to prove their claims in foreign countries and therefore no prejudice is caused to them by allowing foreign creditors to prove their claims in the binding up proceedings in India, that the Act made no distinction between foreign and Indian creditors for the purpose of the proceedings under the Act and that in reality it is the main co
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