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1974 Supreme(Cal) 162

High Court Of Calcutta
Sudhamay Basu, J.

Auto Distributors Tld : Appellant
Versus
Guha Rice Company : Respondent
Decided On : Jun 19,1974

Advocates Appeared:
B. Das, Mnotosh Mukherjee

The delay in filing the certified copy of an amalgamation order under Section 394(3) of the Companies Act, 1956, does not affect the validity of the amalgamation or the transfer of property from the transferor company to the transferee company.

Headnote:

COMPANY LAW - AMALGAMATION - MAINTAINABILITY OF SUIT - EFFECT OF DELAY IN FILING CERTIFIED COPY OF AMALGAMATION ORDER - COMPANIES ACT, 1956, SECTION 394(3).

Fact of the Case:

Poddar Automobiles Limited filed a suit against the defendant for arrears of rent, interests, and costs. During the pendency of the suit, Poddar Automobiles Limited was amalgamated with Auto Distributors Limited, and the latter was substituted as the plaintiff. The defendant challenged the maintainability of the suit on the ground that the amalgamation order was not filed within 30 days as required by Section 394(3) of the Companies Act, 1956.

Finding of the Court:

The court held that the delay in filing the certified copy of the amalgamation order did not affect the validity of the amalgamation or the transfer of property from the transferor company to the transferee company. The court also held that the defendant's acceptance of cheques in the name of Poddar Automobiles Limited after the amalgamation did not amount to a waiver of the defendant's right to challenge the maintainability of the suit.

Issues: 1. Whether the suit was maintainable against the defendant. 2. Whether the substituted plaintiff had any cause of action against the defendant.

Ratio Decidendi: 1. The court held that the provision of Section 394(3) of the Companies Act, 1956, requiring the filing of the certified copy of the amalgamation order within 30 days, was directory and not mandatory. The court reasoned that the provision did not contain any default clause or provide for any consequences of non-compliance. 2. The court also held that the defendant's acceptance of cheques in the name of Poddar Automobiles Limited after the amalgamation did not amount to a waiver of the defendant's right to challenge the maintainability of the suit, as the amounts of the two cheques related to a period which was not included in the suit.

Final Decision: The court held that the suit was maintainable and decreed in favor of the plaintiff for Rs. 69114.43/- with interim interest @ 8 1/3 % and further interest at the rate of 6% per annum and costs.

JUDGMENT :

1. THIS is a suit for a decree for Rs. 69114.43 for arrears of rent, interests and costs. The plaintiff's case is that the defendant was a tenant of the plaintiff in respect of a go-down and durwan's quarter at a monthly rent of Rs. 6350/- at. No. p. 15, transport Depot Road, Jingir Pool, pore. The defendant has failed and neglected to pay monthly rent horn October, 1970 to July, 1971 in spite of demands. The plaintiff, it is stated is also entitled to interest's at the rate of eight and one third percent per annum. The defendant Agreed to pay electricity charges. A sum of rs. 69141.43 is said to be due and pay able on account of the monthly rent interests and electricity charges. It may be noted that the suit was originally filed by Poddar Automobiles limited. It is alleged in paragraph 6a of the amended plaint that by an order of this Court of the 28th of February, 1972 the said Poddar Automobiles limited was amalgated with the plaintiff. The formalities mentioned in the said order having all been complied with in terms of Clauses 1 and 3 of the said order all properties, rights and powers of the said company stand transferred to the plaintiff including the right in this suit and the right to proceed with the suit.

2. BESIDES the original written statement the company filed an additional written statement. Mr. B. Das, the learned Counsel appearing on behalf of the defendant said that the defendant would contest only on the maintainability of the plaint on the ground that the present plaintiff is not entitled to proceed with the suit. It is not necessary therefore, to set out all the allegations in the written statement. It is, inter alia, contended in the additional written statement that the said order dated 28th february, 1972 was not made upon notice to the defendant or with their knowledge. The plaintiff is not entitled or competent to continue the present suit. No intimation was given of the amalgamation nor the defendant was asked to attorn to the tenancy in favour of the present plaintiff. It is further alleged that the suit filed by the original plaintiff was not maintainable nor the present plaintiff has any right title or interest to proceed with the suit.

On the basis of the aforesaid pleadings the following issues were raised 1 (a) Is the suit maintainable against the defendant 1 (b) Has the substituted plaintiff any cause of action against the defendant ? 2. What relief or reliefs, if any, is title plaintiff entitled to ? two witnesses were examined in this case; (His Lordship then discussed the evidence and proceeded as follows :)

3. MR. B. Das, the learned Counsel appearing on behalf of the defendant company argued that although the order for the amalgamation was made an the 28th of February, 1972 the same was filed only on the 9th of May, 1972. It was long after thirty days. According to Mr. Das it transgressed the provision of section 394 sub-section 3 of the companies Act which was mandatory. From the deposition of Uma Kanta chakraborty and some of the letters; iod. 19, DD. 22 and DD. 23 he contended that even after the amalgamation the defendant paid two cheques in the name of Poddar Automobile company and the same were accepted by the latter. There was no cross-examination of Uma Kanta Chakraborty in this respect and there was no suggestion either that the cheques were not enchashed. This encashment of the cheque was in consistent with the amalgamation having taken place. Mr. Das then referred to the scheme in terms of which the amalgamation was effected. Paragraph 4 of the scheme mentions some other suits but not the present one. He laid considerable emphasis on these two aspects of the matter. Referring to the previsions of section 394 (3) of the Companies Act Mr. Bas pointed out that it not only provides that the order of amalgamation has to be filed within thirty days but there if also a penal provision attached to it he submitted that the penal provision made the provision a mandatory one. I









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