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SUPREME COURT OF INDIA
E.S. VENKATARAMIAH AND SABYASACHI MUKHARJI, JJ.
Balkrishan Gupta and others, Appellants
Versus
Swadeshi Polytex Ltd. and another. Respondents.
Civil Appeal No. 4803 of 1984, D/- 12-2-1985.
-Section 64 states that where an attachment of a property is made any private transfer or delivery of property attached or any interest therein and any payment to the judgment debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment. What is forbidden under Section 64 is a private transfer by the judgment-debtor of the property attached, contrary to the attachment, that is, contrary to the claims of the decree-holder under the decree for realisation of which the attachment is effected. A private transfer under Section 64 is not absolutely void as against all the world but void only as against the claims enforceable under the attachment. Until the property is actually sold, the judgement-debtor retains title in the property attached. Under Order XXI Rule 21, the shares in a Corporation which are attached may be sold through a broker. In the alternative such share may be sold by public auction under Rule 77 thereof. On such sale either under Rule 76 or Rule 77, the purchaser acquires title. Until such sale is effected all other rights of the judgment-debtor remain unaffected even if the shares have been seized by the officer of the Court under Order XXI Rule 43, for the purpose of effecting the attachment or through a receiver or through an order in terms of Order XXI Rule 21 may have been served on the judgment-debtor or on the company concerned - Balkrishan Gupta v. Swadeshi Polytex Ltd., AIR 1985 SC 520.
-mere appointment of a Receiver in respect of certain shares of a company cannot deprive the holder of the shares whose name is entered in the Register of Members of the Company, the right to vote at the meeting of the company or to issue a notice under section 169 of the Act,
-Section 64 states that where an attachment of a property is made, any private transfer a delivery of property attached or of any interest therein and any payment to the judgment debtor of any debt, dividend or other minor contrary to such attachment, shall be void as against all claims enforceable under the attachment. What is forbidden under Section 64 is a private transfer by the judgment debtor of the property attached, contrary to the attachment, that is, contrary to the claims of the decree holder under the decree for realisation of which the attachment is effected. A private transfer under Section 64 is not absolutely void as against all the world but void only as against the claims enforceable under the attachment. Until the property is actually sold, the judgment debtor retains title in the property attached. Under Order 21, Rule 21, the shares in a Corporation which are attached may be sold through a broker. In the alternative such share may be sold by public auction under Rule 77 thereof. On such sale either under Rule 76 or Rule 77 the purchaser acquires title. Until such sale is effected, all other rights of the judgment debtor remain unaffected even if the shares have been seized by the officer of the court under Order 21, Rule 43, for the purpose of effecting the attachment or through an Order in terms of Order 21, Rule 21, may have been served on the judgment-debtor or on the company concerned.
Judgment
VENKATARAMIAH, J.:- This appeal by special leave is filed against the order dated August 7, 1984 passed by the High Court of Allahabad in Civil Misc. Application No. 10968 of 1984 (reported in (1984) 9 Com. N.R. 399) in Special Appeal No. 2 of 1982 on its file. The dispute involved in this case relates to the validity of an extraordinary general meeting of the Swadeshi Polytex Ltd. (hereinafter referred to as the Ploytex Company), a company governed by the Companies Act, 1156 (hereinafter referred to as the Act) held pursuant to a notice dated February 11.1984 issued under section 169 of the Act by some of its members.
2. The controlling interest in the Swadeshi Cotton Mills Company Ltd. (hereinafter referred to as the Cotton Mills Company) which is also governed by the Act was acquired by Mangturam Jaipuria and his family in 1946. Sitaram Jaipuria is the adopted son of Mangturam, Jaipuria. Alter his adoption Mangturam Jaipuria got a natural son. Rajaram. In or about the year 1964, Sitaram Jaipuria became the Chairman and Managing Director of the Cotton Mills Company. In 1970. the Jaipuria family decided to promote another company and accordingly the Polytex Company was established. In 1970. Rajaram became the Managing Director of the Cotton Mills Company and Sitaram continued as its Chairman. Sitaram became the Chairman and Managing Director of the newly established Polytex Company in which the Cotton Mills Company had acquired 10 lakhs shares of Rs. 10/- each. From about 1975-76 on account of a very serious set back in its financial position the Cotton Mills Company could not meet the wage bill, the dues of the U. P. Electricity Board and several other monetary claims against it. There were serious labour troubles in its factory and its work virtually became paralysed. The total liability of the Cotton Mills Company was in the order of Rs. 2.34 crores in the year 1977. On October 27, 1977, the Collector of Kanpur passed an order under section 182-A of the U. P. Land Revenue Act. 1901 (hereinafter referred to as the Land Revenue Act) read with section 5 of the Uttar Pradesh Government Electricity Undertakings (Dues Recovery) Act. 1958 appointing a Receiver in respect of the Cotton Mills Company for a period of six months with various powers specified therein and in particular to seize 1 lakh of shares of the Polytex Company of the face value of Rs. 10 lakhs held by the Cotton Mills Company and to pledge them in favour of the State Government of Uttar Pradesh against a loan for the purpose of meeting the dues payable to the employees of the Cotton Mills Company and he made a further order under section 149 of the Land Revenue Act read With section 5 of the U. P. Government Electrical Undertakings (Dues Recovery) Act, 1958 attaching the remaining 9 lakhs shares of the Polytex Company held by the Cotton Mills Company and empowering the Receiver to seize them. Both the order appointing the Receiver and the order attaching 9 lakhs shares were incorporated in the same document. the relevant part of which read thus :-
"ORDER
Whereas electricity dues are payable by M/s. Swadeshi Cotton Mills Co. Ltd., Kanpur, to the U.P. State Electricity Board and recovery certificates for the amount enumerated below have been received for realisation of the dues above mentioned from the said consumer :
8 Recovery certificates dated 29-9-76, 31-12-76, 16-12-76, 29-12-76, 16-7-76, 17-9-76 and 3-10-77 1,06,22,423.17
Less amount paid 19,00,000.00
Balance 87,22,423.17
Add : Collection charges 10,62,242.31
TOTAL RECOVERABLE 97,84,665.48
And whereas, for the expeditious recovery of the dues outstanding, as above, without affecting adversely the running of the mills, it is just and proper that a Receiver be appointed over the mills at Kanpur. belonging to M/s Swadeshi Cotton Mills Co. Ltd. Now. therefore, 1. K. K. Baksi. Collector. Kanpur, in exercise of the power under sub-section (1) of section 182-A of U. P. Land Revenue Act of 1901 read with sectio
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