1962 Supreme(All) 128

IN THE HIGH COURT OF ALLAHABAD
B. Mukerji and J. Sahai, JJ.
J.A.DIXIT - Appellant
Versus
OFFICIAL LIQUIDATOR - Respondents
Special Appeal 573 Of 1960
Decided On : 08/24/1962

Headnote:

LIMITATION - Winding up of Company - Claim by creditor - Limitation Act (36 of 1963), Sec. 19 - Acknowledgment of liability - Balance-sheet signed by Manager - Whether valid acknowledgment - Indian Companies Act (7 of 1913), Sec. 133 - Essential Supplies (Temporary Powers) Act (24 of 1946), Sec. 3 - Control order - Authorised Controller - Powers - Whether can authorise Manager to sign balance-sheet.

Fact of the Case:

The Jagdish Sugar Mills Ltd. went into liquidation upon a winding-up order having been made on 21st February, 1958. J. A. Dixit, who claimed to have been appointed General Manager of the Company on 22nd June, 1954, on a salary of Rs. 1,200/- per mensem, claimed his salary from the date of his appointment to November, 1955, when the Mills were sold in liquidation proceedings. He further claimed a sum of Rs. 500/- per mensem for the same period in lieu of, what he called, other amenities admissible to a General Manager in accordance with the past practice of the Company. He further claimed three months salary in lieu of notice and a sum of Rs. 2,551/- for expenses which, he said, he had incurred in travelling and other incidental charges connected with such travelling. The total sum claimed by this appellant was Rs. 35,051/-. The appellant first made his claim before the Official Liquidator who turned it down and thereafter the appellant preferred an appeal to the Company Judge who also has turned down the claim, and hence this appeal before us. Messrs. Madan Lal Agarwal and Brothers claimed a sum of Rs. 70,561. 24 np. from the Jagdish Sugar Mills Ltd. , (In liquidation) as creditors of the Mills. Messrs. Madan Lal Agarwal and Brothers had been the sole selling agents of sugar produced by the Company in the years 1952 to 1953 and 1953 to 1954. Their main claim was made up of a claim for commission due on sales made during the aforementioned years. They also claimed refund of certain cash advances or deposit and also the price of certain commodities which they alleged they had supplied to the Company. A claim for interest on the aforementioned items was also made. The Official Liquidator admitted the correctness of certain items of the claim on the ground that they had been entered in the books of account of the Company. He, however, specifically repudiated the liability for four items of Rs. 427/2/-, Rs. 989712/-, Rs. gi/ii}-, and Rs. 79/15/9. The Official Liquidator contended that no part of Messrs. Madan Lal Agarwal and Brothers claim could be entertained inasmuch as all the items of the claim were outstanding for more than three years of the date of the winding up order and therefore barred by limitation. The appellant, a partner of Managing Agency firm which was running the Jagdish Sugar Mills, claimed Rs. 14,490. 99 np. as due to him. This claim was treated as within time with reference to the winding-up application which had been made on 17th April, 1949. The Official Liquidator subsequent to the order of the learned Company Judge accepting the claim contended, when he applied for the expunction of the debt, that limitation in regard to the claim would have to be judged not in relation to the date of the winding-up application but in relation to the date of the winding-up order was the relevant date for determining the question of bar of limitation.

Finding of the Court:

The Court held that the appointment of Dixit as General Manager was not bona fide and that he did not act in the capacity in which it was purported by Raja Anrudh Pratap Narain Singh to appoint him. The Court further held that the claim of Messrs. Madan Lal Agarwal and Brothers was barred by limitation as the winding-up order was the relevant date for determining the question of bar of limitation and not the date of the winding-up application. The Court also held that the balance-sheet signed by the Manager was not a valid acknowledgment of liability as the Manager did not have the authority to sign it under the Indian Companies Act, 1913 and the Essential Supplies (Temporary Powers) Act, 1946.

Issues: 1. Whether the appointment of Dixit as General Manager was bona fide and whether he acted in the capacity in which he was appointed? 2. Whether the claim of Messrs. Madan Lal Agarwal and Brothers was barred by limitation? 3. Whether the balance-sheet signed by the Manager was a valid acknowledgment of liability?

Ratio Decidendi: 1. The appointment of Dixit as General Manager was not bona fide and he did not act in the capacity in which it was purported by Raja Anrudh Pratap Narain Singh to appoint him. 2. The claim of Messrs. Madan Lal Agarwal and Brothers was barred by limitation as the winding-up order was the relevant date for determining the question of bar of limitation and not the date of the winding-up application. 3. The balance-sheet signed by the Manager was not a valid acknowledgment of liability as the Manager did not have the authority to sign it under the Indian Companies Act, 1913 and the Essential Supplies (Temporary Powers) Act, 1946.

Final Decision: Appeal No. 573 of 1960: Dismissed. No order as to costs. Appeal No. 38 of 1961: Allowed in part. Appellant entitled to receive Rs. 5,665/- with proportionate costs. Appeal No. 48 of 1961: Dismissed. Parties to bear their own costs.