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VANGUARD INSURANCE CO. LTD v. RUHUNU TRANSIT CO. LTD
NLR65V60
1962 Present : Sansoni, J., and G. P. A. Silva, J.
VANGUARD INSURANCE CO. LTD.,
Appellant, and RUHUNU
TRANSIT CO. LTD., Respondent
S. C. 42/60-D. C. Matara, 1149/M
Company Law-Action filed
against a Company for recovery of money-Subsequent proceedings taken by the
Company for voluntary liquidation-Power of Court to stay proceedings pending
action-Companies Ordinance, ss. 166, 216-220, 243.
Shortly after action was filed by plaintiff against the defendant Company for
the recovery of a certain sum of money the defendant went into voluntary
liquidation, and the liquidator was added as a defendant. The defendants then
prayed that the action be stayed and the plaintiff be directed to prove his
claim in the winding-up. They also denied liability and submitted an affidavit
to show that they had sufficient assets to meet the claims of all creditors.
Held, that even if the case was such that the liquidator could
appropriately refer to Court the question of staying the action by virtue of the
provisions of section 243, read with section 166, of the Companies Ordinance,
the exercise by Court of the power to stay proceedings would not be just and
beneficial to the parties concerned.
APPEAL
from a judgment of the District Court,
Matara.
C. Ranganathan, with S. C. Crossette-Thambiah, for
Plaintiff-Appellant.
K. Shinya, with U. C. B. Ratnayake, for Defendant-Respondent and
Added Defendant-Respondent.
Cur. adv. vult.
July 9, 1962. G. P. A. SILVA,
J.-
The Plaintiff in this case, the Vanguard Insurance Co. Ltd., filed action on
18th December, 1957 in the District Court of Matara against The Ruhunu Transit
Co. Ltd., for the recovery of Rs. 41,294-11 being the amount due to the
Plaintiff on account of insurance premia in respect of certain buses belonging
to the Defendant company which buses had been insured with the Plaintiff. Very
shortly after this action was filed, the Defendant went into voluntary
liquidation and the liquidator, Noel de Costa of Carter de Costa & Co., was
added as a Defendant to the action. Thereafter, the Defendant and the
Added-Defendant filed answer on 27th June, 1958 praying inter alia that the
action be stayed. They also pleaded that, according to the Defendant's books of
accounts, credit was due from the Plaintiff to the Defendant on account of
premia returnable to and claims settled by the Defendant and that after these
amounts had been set off against moneys due to the Plaintiff the net sum owing
from the Defendant to the Plaintiff was Rs. 23,646-05 as at 31st December, 1957.
The Defendant further stated that the assets of the Defendant
company were compulsorily acquired by the Ceylon Transport Board on 1.1.1958 but
that, though compensation was payable in terms of the Motor Transport Act No. 48
of 1957 such compensation had not been paid and that such assets as were in the
hands of the Added-Defendant were insufficient to pay the Plaintiff's claim even
if such payment were permitted in law. The Defendants, therefore, prayed that
the Plaintiff's action be dismissed in respect of any sum in excess of Rs.
24,646-05 and also that the action be stayed and the Plaintiff directed to prove
his claim in the winding up.
The Added-Defendant also filed together with the answer a petition supported by
an affidavit praying that the action be stayed and that the Plaintiff be
directed to prove his claim in the winding up, pleading, among other things,
that the action was an attempt on the part of Plaintiff to obtain an undue
preference or an advantage over the other creditors of the Defendant, that the
Plaintiff's proper remedy was to prove its claim in the voluntary winding up and
that, even if the Plaintiff obtained judgment and decree against the Defendant
it cannot in fact or in law levy execution of such decree against the Defendant.
The application made by the Added-Defendant was taken up for inquiry by th
