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1968 Supreme(All) 112
Allahbad High Court
M.H.BEG
Indo Allied Industries Ltd. - Appellant
Versus
Punjab National Bank Ltd. - Respondent
Decided On : 08/20/1968
Radha Kishan and V.B. Singh, for Appellant; S.K. Tewari and S.N. Misra, for Respondent.
Headnote:
COMPANY - VOLUNTARY LIQUIDATION - APPOINTMENT OF LIQUIDATOR - AUTHORITY OF DIRECTOR TO OPERATE ON COMPANY'S ACCOUNT - LIABILITY OF BANK FOR PAYMENT TO DIRECTOR - JURISDICTION OF COURT UNDER SECTION 518 OF THE COMPANIES ACT, 1956.
Fact of the Case:
The Indo-Allied Industries Ltd. was in voluntary liquidation. The liquidator informed the Rangoon branch of the Punjab National Bank Ltd. about his appointment and sought information about deposits made on behalf of the company. The bank informed the liquidator that the account had become a "non-resident" account and that the Burmese Exchange Control Department had to be given a full account of the concern and of circumstances leading to its liquidation before any transfer could be made to the liquidator in India. The liquidator gave the required details, but the application for the transfer of the amount to India was rejected by the Burmese Exchange Control Department. The liquidator learnt that the account of Indo-Allied Industries in the Rangoon branch was closed. The liquidator claimed that the payments had been made collusively and wrongfully by the Rangoon branch of the Punjab National Bank Ltd. to Ram Samujh Singh, the Director of the Company, who had been authorised, according to it, to operate the account singly. The Punjab National Bank Ltd. denied any knowledge of the circumstances in which any sum was deposited with its Rangoon branch or how the account was closed. It pleaded that the authority of the liquidator appointed under the law of this country could not be recognised in Burma which is a foreign country.
Finding of the Court:
The Court held that the liquidator was duly appointed in accordance with the law. The authority of Ram Samujh Singh to operate on the account in dispute in the Rangoon branch of the Punjab National Bank came to an end on or after 6-1-1957. There was no collusion between the Opposite Parties to allow Ram Samujh Singh to withdraw the amount in dispute after the Bank had been informed that the Company was in voluntary liquidation and the Bank had agreed to transfer the amount to the liquidator. The Punjab National Bank Ltd. was not liable to pay the amount in dispute to the liquidator. Ram Samujh Singh was accountable to the liquidator for the amounts realised by Ram Samujh Singh in Rangoon on behalf of the company. The Court had jurisdiction under Section 518 of the Companies Act to determine the liabilities of Opposite Parties on proved facts and circumstances.
Issues: 1. Was the liquidator appointed in accordance with law? 2. Did the authority of Ram Samujh Singh, Opposite Party No. 2, to operate upon the account in dispute in the Rangoon branch of the Punjab National Bank come to an end on or after 6-1-1957? 3. Was there any collusion between the Opposite Parties to allow Ram Samujh Singh to withdraw the amount in dispute after the Bank had been informed that the Company was in voluntary liquidation and the Bank had agreed to transfer the amount to the liquidator? 4. On proved facts and circumstances of the case, were both or either of the two opposite parties, and if so, which party was liable to pay the amount in dispute to the liquidator? 5. Was the claim of the applicant time-barred? 6. Has this Court jurisdiction under S. 518 of the Companies Act to determine the liabilities of Opposite Parties on proved facts and circumstances? 7. To what relief, if any, is the applicant entitled?
Ratio Decidendi: The Court held that the liquidator was duly appointed in accordance with the law. The authority of Ram Samujh Singh to operate on the account in dispute in the Rangoon branch of the Punjab National Bank came to an end on or after 6-1-1957. There was no collusion between the Opposite Parties to allow Ram Samujh Singh to withdraw the amount in dispute after the Bank had been informed that the Company was in voluntary liquidation and the Bank had agreed to transfer the amount to the liquidator. The Punjab National Bank Ltd. was not liable to pay the amount in dispute to the liquidator. Ram Samujh Singh was accountable to the liquidator for the amounts realised by Ram Samujh Singh in Rangoon on behalf of the company. The Court had jurisdiction under Section 518 of the Companies Act to determine the liabilities of Opposite Parties on proved facts and circumstances.
Final Decision: The application partly succeeded and partly failed. The parties were directed to bear their own costs.
2. Neither Ram Samujh Singh, opposite party No. 2, a permanent resident of Gorakhpur, who died during the pendency of these proceedings, nor his heirs, who reside at Gorakhpur, have filed any reply or put in appearance. The Punjab National Bank Ltd. New Delhi, Opposite Party No. 1, has contested the applicant's claim and asserted that the bank's Rangoon branch was taken over by the Burmese Government on 23-2-1963. It denied any knowledge of the circumstances in which any sum was deposited with its Rangoon branch or how the account was closed. It, however, relied on the correspondence of the applicant with the Rangoon branch of the Bank, and, after that, with the Peoples Bank No. 7, which the applicant had filed in this Court, to put forward the plea that the Rangoon branch was not satisfied that the applicant had legal authority to act on behalf of the Company as no information from any Court or other legal authority was received by the Rangoon branch of the bank. It also pleaded that, according to the law in Burma, a "non-residen
