A creditor of a receiver in respect of liabilities properly incurred, by him could directly enforce his claim against the company.

1. THIS appeal ii directed against an order of Datta J. made on June 24, 1966 for winding up of the appellant company on the grounds that the company is unable to pay its debts and that it is just and equitable that it should be wound up.

2. The company was incorporated in 1920 to carry on the business of cotton spinners, linen manufacturers cotton, flax hemp and jute merchants.

On January 24, 1963 the Company entered into an agreement with standard Dyes Private Ltd. whereby standard Dyes agreed to purchase cotton and pay for the purchases on behalf of and in the name of the company under the agreement, Standard Dyes; were also to guarantee payment to the suppliers in consideration of commission at one percent on the value of the yarn.

3. ON September 4, 1964 in a shareholder's action, Mr. S. M. Dutt was appointed Receiver of yarn and cloth manufactured by the; company. The order was made by consent of parties as the order is of some importance for deciding this appeal, it may be set out in extenso.

"as and by way of interim arrangement for the protection of the defendant company's interest and without prejudice to the respective rights and contentions of the parties, the following order is made by consent of the parties appearing, to remain effective till the disposal of this application : - (i) Mr. S. M. Datt is hereby appointed Receiver of yarn and cloth manufactured by the company which power to sell the same or part and raise money thereon. The Receiver will be at liberty to sell the same to ether parties. (ii) Mr. S. M. Dutt shall have power to purchase stores and raw cotton far the company and pay for the same, (iii) Mr. S. M. Dutt shall have power to pay all costs, charges and expenses for running the mills including electrical expenses arid decretal dues if any and to issue such orders for the administration as he may think necessary. (iv) Mr. S. M. Dutt shall have power open new account of the defendant company and to operate thereon. (v) Mr. Dutt shall have power to receive all monies receivable by the company including those from Mohanlal hariram and Standard Dyes Pvt. Ltd. and to give discharge therefor. (vi) Mr. S. M. Dutt will be entitled to take such assistance, financial or otherwise, from such persons as he thinks fit in discharging his duties and exercising his powers under this Order. (vii) No meeting of the Board of directors to be held. (viii) The Receiver is appointed without any remuneration and without any security. (ix) All parties including Receiver are directed to act on a signed copy of the minutes.

4. IT appears that under certain contracts the Receiver purchased large quantities of cotton from the petitioning creditor through Standard Dyes in terms of the agreement dated January 24 1963. Standard Dyes paid by cheques a total sum of Rs. 4,87,588. 53 far these purchases to the petitioning creditor. These payments were presumably made by Standard Dyes under the agreement of January 24, 1963. The cheques were all dishonored. Thereafter by a letter of March 20, 1965, the respondent asked the Receiver and the company to pay the said sum of rs. 4,87,588. 53 but in vain.

On March 20, 1985, the respondent served a notice on the company under section 434 of the Companies act.

5. The Company did not make any payment nor did it reply to the notice.

6. THEREAFTER on June 4, 1985, the petition for winding up was presented by the respondent. In the petition, it is said that the company is indebted to the petitioner in the sum of rs. 4,87,588. 53 with interest at the rate of 6 percent, per annum from due dates till payment is made and the said sum is due and payable in respect of supplies or sales of cotton made by the petitioner to the said company; that the petitioner called upon the company for the payment of the aforesaid dues through its solicitor by a notice which was served on the company on March 23, 1965 by registered post. The company failed and neglected to reply to the said letter, which was a