Back
PUNJAB & HARYANA HIGH COURT
G.R.Majithia and Harmohinder Kaur Sandhu JJ.
Ambala Bus Syndicate Pvt.Ltd.
Versus
Roop Nagar Credit And Investment Company Pvt.Ltd.(In Liquidation)
Company Appeal No. 5 of 1992,
Decided On : OCTOBER 15, 1993
COMPANY LAW - HIRE PURCHASE AGREEMENT - VALIDITY - AUTHORIZATION - OWNERSHIP OF VEHICLES - CONSIDERATION - LEDGER ACCOUNT.
Fact of the Case:
The appellant company, The Ambala Bus Syndicate Pvt. Ltd., entered into hire-purchase agreements with three finance companies, Roopnagar Credit and Investment Pvt. Ltd., Bachan Motor Financers Pvt. Ltd., and Bala Financers Pvt. Ltd. The finance companies claimed that they were the full owners of the vehicles and that the appellant company had defaulted on its payments. They filed claim petitions under Sections 446, 447, and 453 read with Section 458 of the Companies Act, 1956, seeking to recover the outstanding amounts.
Finding of the Court:
The court found that the hire-purchase agreements were invalid and unenforceable because the appellant company had not authorized its directors to enter into such agreements. The court also found that the finance companies were not the owners of the vehicles and that no consideration had passed under the agreements. The court dismissed the claim petitions filed by the finance companies.
Issues: 1. Whether the hire-purchase agreements were valid and enforceable. 2. Whether the finance companies were the owners of the vehicles. 3. Whether consideration had passed under the hire-purchase agreements.
Ratio Decidendi: 1. The court held that the hire-purchase agreements were invalid and unenforceable because the appellant company had not authorized its directors to enter into such agreements. The court relied on the principle that the powers of a company are to be exercised by its Board of Directors and that a director as an individual has no power to act on behalf of the company except where the Board has delegated its powers to him. 2. The court held that the finance companies were not the owners of the vehicles because there was no evidence to support this assertion. The court relied on the statement of the appellant company's director, who stated that the finance companies were neither the owners nor in possession of the vehicles. 3. The court held that no consideration had passed under the hire-purchase agreements because the finance companies were not the owners of the vehicles and had not delivered them to the appellant company.
Final Decision: The court set aside the judgments and decrees of the lower court and dismissed the claim petitions filed by the finance companies.
G.R.Majithia, J.
1. This judgment disposes of Company Appeals Nos. 5 to 13 of 1993.
2. Claim petitions under Sections 446, 447 and 453 read with Section 458 of the Companies Act, 1956 (for short, the Act), i.e. C.P. Nos. 36 to 39 of 1984 and 51 to 55 of 1985, were disposed of the learned Company Judge by a common judgment dated February 7, 1992. The learned Company Judge decreed the claim petitions and the judgments have been challenged in these company appeals filed under Section 483 of the Act.
3. Facts first :-
Roopnangar Credit and Investment Pvt. Ltd. Roopnagar was ordered to be judgment of this Court rendered in Company Petition No. 235 of 1980, decided on October, 1982 and M/S. Bachan Motor Financers Pvt. Ltd. and M/s. Bala Financers Pvt. Ltd. were ordered to be wound up vide judgment of this Court rendered in Company Petition No. 243 of 1980, decided on October 19, 1982. These were sister concerns. Gursharan Singh Bala and Bhupinder Singh Bala had been the Managing Directors of these Companies. Gursharan Singh Balas son of Harminder Singh Bala had been the Managing Director of The Ambala Bus Syndicate Pvt. Ltd. Ropar (hereinafter the appellant) from the year 1972 till April 11, 1980 and thereafter Birender Singh Bala son of Bachan Singh Bala took over the charge as Managing Director. Roopnagar Credit and Investment Pvt. Ltd. Ropar, M/s. Bachan Motor Financers Pvt. Ltd., Ropar and M/s. Bala Financers Pvt. Ltd., Ropar entered into hire-purchase agreements with the appellants, These hire purchase agreements stated that the finance companies were the full owners of the motor vehicles along with their fittings, tools, accessories, which were given on hire to the appellant through its Directors, namely, Gurdial Singh Longia and Amar Singh. Swaran Singh S/o Joginder Singh, Village and Post Officer Chaklan, Tehsil and District Ropar stood surety in the case of hire-purchase agreements entered into by M/s. Roopnagar Credit and Investment Pvt. Ltd. and M/s. Bachan Motor Financers Pvt. Ltd. and Amar Singh son of Ishar Singh, Village and Post Office Singh Bhagwantpur, Tehsil and District Ropar stood as guarantor in the case of hire-purchase agreement entered into by M/s. Baia Financers Pvt. Ltd. with the appellant. The agreement contained Schedule A indicating payments by instalments. Schedule B to the hire-purchase agreement contained details of the vehicles hired, engine number, chassis number, registration number, type of the body of the vehicle, its make and model and whether new or old. Some of the instalments were allegedly paid by the appellant. When these finance companies were ordered to be wound up by judgment of this Court dated October 19, 1982 rendered in C.P. Nos. 235 and 243 of 1980, the Official Liquidator, on the basis of the records, found that certain amounts were due from the appellant, which necessitated the filing of the claim petitions by the Finance Companies which were described as owners of the vehicles. The averments made in these company petitions are almost in identical terms. However, for the purpose of appreciating the contentions raised in these appeals, a reference has been made to the pleadings of Company Petition No. 36 of 1984. In paragraphs 4, 5, 6 and 7 a mention has been made of the clauses in the hire-purchase agreement. In para 9 it is stated that as per ledger account, a sum of Rs. 71,796. 15P shown due towards the petitioner-Company in C.P. No. 36 of 1984 from the appellant on July 14, 1980. To this amount, incidental charges and interest from July 14, 1980 to July 14, 1983 @ 12% per annum was added and thus a demand notice for Rs. 97,795. 76P was made in the petition.
4. Written statement was filed on behalf of the appellant through its Managing Director Sh. Ujagar Singh. Preliminary objections were taken that the hire-purchase agreement was void being without consideration; the claim petition was barred by time and the hire purchase agreement was allegedly entered into on Novemb
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
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
