SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

1959 Supreme(Cal) 34

HIGH COURT OF CALCUTTA
K. C. Das Gupta, R. S. Bachawat
NEW CENTRAL JUTE MILLS CO. LTD. - Appellant
Versus
RIVERS STEAM NAVIGATION CO. LTD. - Respondent
A. F. O. O.  222  Of  1957
Decided On : FEBRUARY 10, 1959

Advocates Appeared:
AMIYA BOSE, SUBIMAL ROY

A right to sue for damages for breach of contract appertaining to the business of the transferor company is transferred by a vesting order under Section 153a of the Indian Companies Act, 1913.

Headnote:

TRANSFER OF PROPERTY - VESTING ORDER - RIGHT TO SUE FOR DAMAGES - TRANSFERABILITY - SECTION 153A OF THE INDIAN COMPANIES ACT, 1913 - INTERPRETATION.

Fact of the Case:

Albion Jute Mills Co. Ltd. instituted a suit against the respondent claiming damages for breach of contract to carry certain bales of Jute safely. During the pendency of the suit, a scheme of amalgamation of Albion Jute Mills Co. Ltd. and Lothian Jute Mills Co. Ltd. with New Central Jute Mills Co. Ltd. was sanctioned by the court under Section 153a of the Indian Companies Act, 1913. The order directed the transfer of the whole undertaking and property of the transferor companies to the transferee company and the continuation of legal proceedings by or against the transferor companies by or against the transferee company. New Central Jute Mills Co. Ltd. applied to be brought on record as the plaintiff in the suit in place of Albion Jute Mills Co. Ltd., but the application was dismissed by the trial court.

Finding of the Court:

The court held that the right to sue for damages for breach of contract appertaining to the business of the transferor company is transferred by a vesting order under Section 153a of the Indian Companies Act, 1913. The court found that the transfer of the right to sue for damages together with the business is not a transfer of 'a mere right to sue'. The court also held that the decision in Nokes v. Doncaster Amalgamated Collieries, Ltd. (1940) AC 1014, does not support the contention that the vesting order could not and did not transfer the claim for damages.

Issues: 1. Whether a right to sue for damages for breach of contract appertaining to the business of the transferor company is transferred by a vesting order under Section 153a of the Indian Companies Act, 1913? 2. Whether the transfer of the right to sue for damages together with the business is a transfer of 'a mere right to sue'?

Ratio Decidendi: 1. Section 153a of the Indian Companies Act, 1913, empowers the court to order the transfer of property, rights, and powers of every description from a transferor company to a transferee company. The right to sue for damages for breach of contract is within the wide definition of 'property' in Section 153a(4). 2. The transfer of the right to sue for damages together with the business is not a transfer of 'a mere right to sue'. A right to sue for damages for breach of contract appertaining to the business is intimately connected with the enjoyment of the business and is an important item of its assets.

Final Decision: The court allowed the appeal, set aside the judgment and order of the trial court, and made an order in terms of the prayers of the petition. The court also certified that the case was a fit one for employment of Counsel before the trial court.

R. S. BACHAWAT, J.

( 1 ) THE point for determination in this appeal is whether a right to sue for damages for breach of contract appertaining to the business of the transferor company is transferred by a vesting order under Section 153a of the Indian Companies Act, 1913. On 6-9-51 Albion Jute Mills Co. Ltd. , instituted a suit against the respondent claiming damages for breach of contract to carry certain bales of Jute safely. The plaint alleges that the defendant carrier returned the goods to the plaintiff in a damaged and deteriorated condition and that the plaintiff thereby suffered damages.

( 2 ) ON 6-12-1955, S. R. Das Gupta, J. , sanctioned a scheme of amalgamation of Albion Jute Mills Co. Ltd. , and Lothian Jute Mills Co. Ltd. , with New Central Jute Mills Co. Ltd. The learned Judge also ordered that (a) the whole of the undertaking and property and all the assets and liabilities of Albion Jute Mills Co. Ltd. , and Lothian Jute Mills Co. Ltd. , as mentioned in the Scheme of Amalgamation be transferred to and do vest in New Central Mills Co. Ltd. ; (b) that suits or other legal proceedings, if pending in this Court or in any other Court by or against Albion Jute Mills Co. Ltd. , and Lothian Jute Mills Co. Ltd. , be continued by or against New Central Jute Mills Co. Ltd. ; (c) that Albion Jute Mills Co. Ltd. , and Lothian Jute Mills Co. Ltd. , do stand dissolved without being wound-up. This order was made under Section 153a read with Section 153 of the Indian Companies Act, 1913.

( 3 ) ON 17-5-1957 New Central Jute Mills Co. Ltd. , applied for an order that its name be brought on record as plaintiff in the suit in place and stead of the Albion Jute Mills Co. Ltd. , on the strength of the order dated 6-12-1955. Bose, J. , dismissed this application. He held that all that was purported to be transferred to the applicant was the right to sue for damages for breach of contract and nothing else and that the transfer could not take effect in view of Section 6 (e) of the Transfer of Property Act and having regard to the decision in Nokes v. Doncaster Amalgamated Collieries, Ltd. , (1940) AC 1014. The applicant has preferred this appeal from that order.

( 4 ) THE vital words of Section 153a of the Indian Companies Act, 1913, are as follows: "*** the Court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision or all or any of the following matters : (a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company; (c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company; (d) the dissolution, without winding up, of any transferor company. (2) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and in the case of any property, in the order so directs, freed from any charge which is by virtue of the compromise or arrangement to cease to have effect. In this section the expression 'property' includes property, rights and powers of every description, and the expression 'liabilities' includes duties.

( 5 ) THE right to sue for damages for breach oft contract is within the wide definition of 'property' in Section 153a (4 ). The claim for damages for breach of contract to carry the bales of jute appertains to the undertaking of Albion Jute Mills Co. Ltd. , and passes with the undertaking.

( 6 ) THE argument that the transfer infringes the provisions of Section 6 (e) of the Transfer of Property Act overlooks the plain words of Section 153a of the Indian Companies Act, 1913. The transfer takes place by virtue of the vesting order without any further act or deed. The antecedent scheme of amalgama





















Click Here to Read the rest of this document

1
2
3
4
5
6
7
8
9
10
11
Judicial Analysis

AI

SupremeToday Portrait Ad
supreme today icon
logo-black

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

qr

Scan Me!

India’s Legal research and Law Firm App, Download now!

For Daily Legal Updates, Join us on :

whatsapp-icon Back to top