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HIGH COURT OF CALCUTTA
Ramendra Mohan Datta
CALCUTTA SAFE DEPOSIT CO. LTD. - Appellant
Versus
RANJIT MATHURADAS SAMPAT - Respondent
Company Petn. 91 Of 1970
Decided On : AUGUST 28, 1970
COMPANY - WINDING UP - STAY OF PROCEEDINGS - BEARER DEBENTURES - HOLDER IN DUE COURSE - DISPUTE AS TO VALIDITY OF DEBENTURES - SUBSTANTIAL QUESTION OF LAW - SECURED CREDITOR - RIGHT TO PRESENT WINDING UP PETITION - INTERPRETATION OF SECTION 434 OF THE COMPANIES ACT, 1956.
Fact of the Case:
The petitioner, a holder of three bearer debentures issued by the respondent company, filed a winding up petition against the company on the ground that the company had neglected to pay the principal amount and interest due on the debentures. The company opposed the petition, contending that the petitioner was not a holder in due course, that the debentures were not validly issued, and that the petitioner was a secured creditor who had no right to present a winding up petition.
Finding of the Court:
The court found that the petitioner was a holder in due course of the debentures, that the debentures were validly issued, and that the petitioner was entitled to present a winding up petition as a secured creditor. The court held that the company's disputes were not bona fide or substantial, and that the company had neglected to pay the petitioner's debt within the meaning of Section 434 of the Companies Act, 1956.
Issues: 1. Whether the petitioner was a holder in due course of the debentures? 2. Whether the debentures were validly issued? 3. Whether the petitioner was a secured creditor who had no right to present a winding up petition? 4. Whether the company's disputes were bona fide or substantial? 5. Whether the company had neglected to pay the petitioner's debt within the meaning of Section 434 of the Companies Act, 1956?
Ratio Decidendi: 1. The court held that the petitioner was a holder in due course of the debentures because he had acquired them in good faith, for value, and without notice of any defect in the title of the previous holder. 2. The court held that the debentures were validly issued because they were issued in accordance with the terms of the company's memorandum and articles of association. 3. The court held that the petitioner was a secured creditor because the debentures were secured by a charge on the company's assets. 4. The court held that the company's disputes were not bona fide or substantial because they were based on flimsy grounds and were not supported by any evidence. 5. The court held that the company had neglected to pay the petitioner's debt within the meaning of Section 434 of the Companies Act, 1956 because the company had failed to pay the petitioner's debt within three weeks of receiving a demand letter from the petitioner.
Final Decision: The court dismissed the company's application for a stay of the winding up proceedings.
( 1 ) THIS is an application for the stay of the winding up proceedings of Calcutta Safe Deposit Co. , Ltd. (hereinafter called the said company ). The petitioning creditor in the winding up proceedings is one Ranjit Mathuradas Sam-pat the respondent herein. Sampat is one of the debenture holders of the debentures issued by the applicant company.
( 2 ) ACCORDING to the petitioner he is the holder in due course of three debentures of the value of Rs. 1000/- each put of 250 First Mortgage Debentures issued by the company on or about June 19. 1939. Each of the said debentures carried interest at the rate of 4 1/2% per annum payable half yearly in June and in December in each year.
( 3 ) THE said debentures were issued subject to and with the benefit of the conditions endorsed thereon and in an Indenture dated November 22, 1939. made between the company of the one part and Sailendra Nath Banerjee and others of the other whereby certain properties of the company were vested in trustees for securing the payment of the principal amount and interest payable in respect of the said debentures.
( 4 ) THE relevant clauses of the said debentures as endorsed thereon are as follows :" (I) The Calcutta Safe Deposit Co. , Ltd. (hereinafter called the 'company') will on the 22nd day of November 1969 or on such earlier date as the principal monies hereby secured become payable in accordance with the conditions endorsed herein, pay to the bearer of this debenture or if registered to the registered holder hereof on the presentation of this debenture of Rs. 1000/ -. (2) The Company will during the continuance of this security pay interest on the said principal sum of Rs. 1000/- at the rate of 4 1/2 per annum by equal half-yearly payments on every 30th June and 31st December in accordance with the coupons annexed hereto. (4) This Debenture is issued subject to and with the benefit of the conditions endorsed hereon, which are to be deemed part of it. "
( 5 ) THE conditions referred to herein above and as provided, on the reverse of the said Debenture are as follows :--" (3) If the principal moneys hereby secured shall become payable before the 22nd day of November 1969 the person presenting this debenture for payment must surrender therewith the coupons representing subsequent interest, the company nevertheless paying the interest for the fraction, if any. of current half-year. (4) The registered holder for the time being of this debenture when registered and the bearer thereof for the time being when not registered and the bearer of each of the interest coupons aforesaid, shall be entitled to the principal money and interest secured by such instruments, respectively free from any equities between the company and the original or any intermediate holder hereof and all persons may act accordingly, and the receipt of such registered holder or bearer, as the case may be, for such principal money and interest shall be a good discharge to the company which shall not be bound to enquire into the title of such registered holder or bearer or save as herein provided and except as ordered by some court of competent iurisdiction or as by statute required to take notice of any of equities affecting the ownership of such instruments or moneys. (12) The principal moneys hereby secured shall immediately become payable : (a) If the company makes default for a period of six months in the payment of any interest hereby secured and the bearer or registered holder hereof before such interest is paid by notice in writing to the company calls in such principal moneys, or (b) If an order is made or a resolution is passed for the winding up of the company otherwise than for the purpose of reconstruction. (13) The holders of the debentures of the above issue are and will be entitled pari passu to the benefit of and subject to the provisions contained in an indenture dated 22nd day of November 1939 and made between the company of the one part, and
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