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2001 Supreme(Mad) 718
High Court of Judicature at Madras
A. KULASEKARAN
Sundaram Finance Ltd.
Versus
Balurghat Transport Co. Ltd.
Application Nos. 2140 & 2406 of 2001
Decided On :Decided On : 03-07-2001
For the Applicant:M.S. Krishnan, M/s. Sarvabhaumans Associates, Advocates.
For the Respondent:Arvind Subramanian, Advocate.
The main legal point established in the judgment is that territorial jurisdiction and the interpretation of legal provisions and case law are crucial in determining the entitlement to a prohibitory order and the validity of alleged charges.
Headnote:
Prohibitory Order - Territorial Jurisdiction - Sec. 124(4)(f) of the Companies Act, 1956, Sec. 123 of the Companies Act, Sec. 48 of the Transfer of Property Act - The court held that it has territorial jurisdiction and rejected the plea of the first respondent. The court also found that the alleged first charge in favor of M/s. Vijaya Bank does not absolve the first respondent from their liabilities, citing legal provisions and case law.
Fact of the Case:
M/s. Sundaram Finance Limited filed an application for a prohibitory order to restrain M/s. Balurghat Transport Corporation Ltd. from disbursing amounts due to them and to deposit the same into the Court. The first respondent contested, questioning the territorial jurisdiction of the Court and denying their liability.
Finding of the Court:
The Court found that it has territorial jurisdiction and that the alleged first charge in favor of M/s. Vijaya Bank does not absolve the first respondent from their liabilities.
Issues: The main issue was whether the applicant is entitled to the prohibitory order as prayed for and whether the Court has territorial jurisdiction.
Ratio Decidendi: The Court's decision was based on its finding of territorial jurisdiction and the interpretation of legal provisions such as Sec. 124(4)(f) of the Companies Act, 1956, Sec. 123 of the Companies Act, and Sec. 48 of the Transfer of Property Act.
Final Decision: Application No. 2140/2001 was allowed, directing the garnishee not to disburse the amount to the first respondent and to deposit the same into the Court. Application No. 2406/2001 was dismissed.
1. Application No. 2140/2001 was filed by M/s. Sundaram Finance Limited against M/s. Balurghat Transport Corporation Ltd., and M/s. Wimco Limited for prohibitory order prohibiting the 2nd respondent-garnishee from disbursing the amounts due to the first respondent every month from out of the supply of vehicles to them and to deposit the same into this Court to the credit of the abovesaid application. Application No. 2406/2001 has been filed to suspend the interim order passed in O.A. No. 2140/2001 on 27.04.2001 in O.A. No. 2140/2001 prohibiting the second respondent from disbursing the amount payable to the first respondent.
2. For convenience, M/s. Sundaram Finance Ltd., is hereinafter referred to as the applicant, M/s. Balurghat Transport Corporation as the first respondent and Wimco Limited as the second respondent. The second respondent in this case has not appeared and the only contesting party is the first respondent herein.
3. The short facts of the case are as follows:
The applicant and the first respondent entered into 13 Hire purchase agreements in respect of 13 lorries. In the said transaction, five persons stood as guarantors. The statement of accounts are mentioned below:
Sl. No. Cont. No. Contract Date Amount outstanding as on 16.03.99 Principal AFC Incidental Less Rebate Total
1. 768 22.02.95 5,79460.00 2,25,394.00 -- -- 8,04,854.00
2. 777 21.02.95 5,97,520.00 2,30,770.00 -- -- 8,28,290.00
3. 802 04.03.95 5,97,520.00 2,26,212.00 -- -- 8,23,732.00
4. 310 14.07.95 39,200.00 78,884.00 -- 13,005.64 1,05,078.36
5. 312 14.07.95 7,39,200.00 2,46,063.00 -- 3,010.64 9,85,252.36
6. 314 14.07.95 3,16,800.00 1,05,533.00 -- 3,010.64 4,19,342.36
7. 435 31.08.95 97,320.00 35,010.00 -- 762.33 1,31,567.77
8. 330 20.11.97 4,10,215.00 43,716.00 150 10,084.36 4,43,996.94
9. 441 12.01.98 4,49,400.00 45,133.00 130 16,206.52 4,78,456.48
10. 458 15.01.95 3,85,200.00 38,104.00 400 13,891.30 4,09,812.70
11. 460 25.03.98 3,85,200.00 26,112.00 200 20,373.91 3,91,218.09
12. 459 15.01.98 3,85,200.00 38,104.00 400 13,891.30 4,09,218.09
13. 461 25.03.98 3,85,200.00 26,112.00 280 20,373.91 3,91,218.09 66,22,631.85
The above statement indicates the amount repayable by the first respondent, which was due and payable by them in respect of hire purchase agreement. In spite of several demands, the first respondent has not come forward to clear their outstanding. The applicants attempt to re-possess the said vehicles became vain since the first respondent has kept the vehicles out of their reach. The tenure of all the agreements expired. The said agreements also contain arbitration clause and the disputes also were referred to the arbitrator. The said proceedings are pending nearly for three years. The arbitrator could not dispose of the same due to the delaying tactics adopted by the first respondent herein. According to the applicants, the first respondent is liable to pay a number of creditors like the applicant herein and that the amounts payable to the applicant by the first respondent as on 16.03.1999 is Rs. 66,22,631.85 together with future interest. They felt that even when an award is passed, they cannot realize anything, hence they filed application No. 2140/2001 for prohibitory order restraining the second respondent herein from disbursing the amount payable to the first respondent and deposit into this Court. This Court after considering the merit of the case passed an interim order dated 27.04.2001 not to disburse the amount. Aggrieved by the interim order, A. No. 2406/2001 was filed by the first respondent for suspending the said interim order. The first respondent has raised a number of defences questioning the territorial jurisdiction of this Court, denied the execution of the hire purchase agreements and their liability. It is also their case that they are prepared to co-operate with the applicant for the disposal of the matter pending before the arbitrator. It is also stated by them that there is a first charge created on all
