Back
PATNA HIGH COURT
Rai and Choudhary JJ.
Hemendra Lal Roy
Versus
Indo Swiss Trading Co.Ltd.
Appeal from Original Decree No. 60 of 1947 ;
Decided On : MAY 10, 1955
ELECTRICITY ACT - License granted to partnership firm - Firm floating limited liability company - License worked by company - Company's managing agents executing promissory notes for unpaid price of equipments - Company and managing agents guaranteeing due payment - Properties procured and set up - Supply of electric energy commenced - Company adjudged insolvent - Official assignee releasing properties to official liquidator - Official liquidator taking possession of undertaking - Company's right, title and interest purchased by plaintiff at auction sale - Plaintiff getting possession - Plaintiff's suit for declaration of title and confirmation of possession and for permanent injunction restraining defendants from taking possession of undertaking and its assets - Held, plaintiff entitled to declaration of title and confirmation of possession and to permanent injunction - Properties acquired by company and not by partnership firm - Arrangement between company and licensee not void under Section 9(2) and (3), Electricity Act - Claim by company before official assignee not proved - Properties not vested in official assignee under Section 52(2)(c), Presidency Towns Insolvency Act - Title of company not extinguished under Section 28, Limitation Act - Plaintiff entitled to permanent injunction - Subsequent acquisition of land by State of Bihar and purchase of plaintiff's right, title and interest by State of Bihar - Court entitled to take into consideration subsequent events to do justice in case and shorten litigation.
Fact of the Case:
A partnership firm was granted a license to supply electric energy. The firm floated a limited liability company which worked the license. The company's managing agents executed promissory notes for the unpaid price of equipments. The company and the managing agents guaranteed the due payment. The properties were procured and set up and the supply of electric energy commenced. The company was adjudged insolvent and the official assignee released the properties to the official liquidator. The official liquidator took possession of the undertaking. The company's right, title and interest was purchased by the plaintiff at an auction sale. The plaintiff got possession. The plaintiff filed a suit for declaration of title and confirmation of possession and for permanent injunction restraining the defendants from taking possession of the undertaking and its assets.
Finding of the Court:
The court held that the plaintiff was entitled to a declaration of title and confirmation of possession and to a permanent injunction. The court held that the properties were acquired by the company and not by the partnership firm. The court held that the arrangement between the company and the licensee was not void under Section 9(2) and (3) of the Electricity Act. The court held that the claim by the company before the official assignee was not proved. The court held that the properties were not vested in the official assignee under Section 52(2)(c) of the Presidency Towns Insolvency Act. The court held that the title of the company was not extinguished under Section 28 of the Limitation Act. The court held that the plaintiff was entitled to a permanent injunction. The court held that it was entitled to take into consideration subsequent events to do justice in the case and shorten litigation.
Issues: Whether the plaintiff was entitled to a declaration of title and confirmation of possession and to a permanent injunction.
Ratio Decidendi: The court held that the plaintiff was entitled to a declaration of title and confirmation of possession and to a permanent injunction. The court held that the properties were acquired by the company and not by the partnership firm. The court held that the arrangement between the company and the licensee was not void under Section 9(2) and (3) of the Electricity Act. The court held that the claim by the company before the official assignee was not proved. The court held that the properties were not vested in the official assignee under Section 52(2)(c) of the Presidency Towns Insolvency Act. The court held that the title of the company was not extinguished under Section 28 of the Limitation Act. The court held that the plaintiff was entitled to a permanent injunction. The court held that it was entitled to take into consideration subsequent events to do justice in the case and shorten litigation.
Final Decision: The appeal was dismissed.
1. In order to appreciate the points raised in this appeal, it is better to narrate some of the salient events preceding the institution o£ the present suit. One Haro Lal Saha Roy of Calcutta died leaving behind His widow Sarla Sundari Roy and three sons, Hemendra Lal Roy, Jitendra Lal Roy and Nripendra Lal Roy (present defendants 1 to 3 hereinafter referred to as Roy brothers). Haro Lal Saha Roy left, amongst other properties, a house at Giridih known as Bishram Kutir. The Roys had ancestral family business known and styled as Firm Lalji Mohan Haro Lal Saha Roy. After the death of their father Roy brothers started at 34 Sobhabazar Street, Calcutta, a firm styled as Messrs. Lalji, and Co. (defendant 4). On 14-1-1928, Messrs. Lalji and Co. applied to the Government of Bihar for grant of licence to supply electric energy at Giridih and Pachamba. Thereafter followed some correspondence between the Secretary to the Government of Bihar on the one hand and Messrs. Lalji and Co. on the other in which at the enquiry of the Government of Bihar as to how the latter proposed to run the undertaking Roy brothers replied that they intended to float a limited liabiliity company the shares of which would be subscribed by them and some of their friends and relations, and, if necessary, they would finance the limited liability company to enable it to run the undertaking. Eventually, on 9-7-1929, the Governor of Bihar and Orissa in Council was pleased to grant to Roy brothers carrying on business in partnership in the name and style of Messrs. Lalji and Co., at 34 Sobhabazar Street, Calcutta, the licence for the supply of electric energy within the limits of the town of Giridih as described in Clause 4 of the license. Soon after the grant of the license Messrs. Lalji and Co. floated a limited liability company which was named and styled as "The Giridih Electric Supply Corporation Limited" (hereinafter called the Corporation for the sake of brevity) with its registered office at Giridih for the supply of electric energy at Giridih under the license originally granted to Roy brothers. It was clearly and specifically mentioned in the prospectus of the Corporation that the license granted to Roy brothers would be worked by the Corporation and that Messrs. Lalji and Co. would be appointed the managing agents of the Corporation. Thereafter, on 14-9-1929, two agreements (Exs. 8 and 23) were entered into between the Corporation and Messrs. Lalji and Co. Exhibit 8 dealt with the appointment of Messrs. Lalji and Co. as managing agents of the Corporation and Ex. 23 dealt with the provisions for carrying out and executing all the compulsory works for the supply of electric energy at Giridih. Messrs. Lalji and Co. as the managing agents of the Corporation placed orders for the supply of electric equipments with the International General Electric Company and British Insulated Cables Limited. They, in their capacity of being managing agents, executed several promissory notes on behalf of the Corporation for the unpaid price of those equipments. Roy brothers and Messrs. Lalji and Co., also guaranteed the due payment of the dues under the aforesaid promissory notes. The plants, machineries and transmission lines etc. were thus procured and Set. up and the power house and other necessary structures were built and the supply of electric energy was commenced under the license granted to Roy brothers.
2. On 24-6-1932, the British Insulated Gables Ltd. instituted Suit No. 1428 of 1932 before the Calcutta High Court for realisation of the unpaid price of the electric equipments supplied to the Corporation. In that suit the Corporation was made defendant 1 and Roy brothers were made defendants 2 to 4. This suit was decreed on compromise on 22-8-1932, against all the defendants. On 18-1-1933, the International General Electric Co. also instituted Suit No. 218 of 1933 before the Calcutta High Court against the Corporation, Messrs. Lalji and Co. and Roy brothers f
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
