HIGH COURT OF
Official Liquidator, R.P.S. Benefit Fund Ltd.
v.
Mrs. K. Tamilselvi
F.M. Ibrahim Kalifulla, J.
Company Application No. 166 of 2003
August 30, 2005
Section 456 read with section 457,
of the Companies Act 1956 - Winding up - Custody of company’s property -
Respondents were debtors of company-in-liquidation in respect of two loans for
which, they had executed mortgage and promissory note - Official Liquidator
issued notice to respondents to repay loan amount with stipulated interest - As
respondents did not repay amount, Official Liquidator filed application seeking
direction to respondents to pay specified amount or permit him to sell
mortgaged property - Whether since mortgage deed, promissory notes, receipts
issued by respondent for payment of loan, letter of respondent confirming
deposit of title deeds, etc., along with oral evidence cumulatively established
liability of first respondent as debtor and second respondent as surety to
company-in-liquidation, they were to be directed to pay amount due or to
deliver possession of mortgaged property to Official Liquidator - Held, yes
FACTS
The respondents were debtors of the company in liquidation in respect of two loans for which a mortgage deed had been registered in favour of the company in liquidation for a sum of Rs. 50,000 and a promissory note had been executed by depositing title deeds of certain property in respect of the sum of Rs. 2,50,000. In a company application, the High Court passed an order providing for a concessional scheme to all the debtors reducing the rate of interest at 9 per cent simple interest per annum on the principal outstanding from 8-9-1999, till 31-12-2001. Based on the said order, the Official Liquidator issued a notice to the respondents, directing them to repay the amounts payable to the company in liquidation. The respondent, however, did not pay the amount. The Official Liquidator, therefore, filed application seeking a direction to the respondents to pay the specified amount or permit the Official Liquidator to sell the mortgaged property.
HELD
The documents furnished by the
Official Liquidator, i.e., mortgage deed, promissory notes, receipts
issued by respondent for payment of loan, letter of respondent confirming
deposit of title deeds, etc., along with oral evidence cumulatively established
the liability of the first respondent as debtor and the second respondent as
surety to the company in liquidation. In
such circumstances, in the light of the overwhelming oral and documentary
evidence placed before the court, the debt due to the company in liquidation by
the respondents as claimed in the application was established and accordingly,
the respondents were liable to discharge the said liability. [
In spite of the various opportunities
extended to the respondents, they failed to avail the opportunities to
discharge the liability. In fact, in the
order dated 29-9-2003 and 30-10-2003, a sum which was far less than what was
due and payable by the first and second respondents were offered and yet there
was no inclination shown on behalf of the respondents in availing the
concessions extended to the respondents. [
A conjoint reading of sections
447 to 461 makes it amply clear that the object of a winding up proceedings is
to ensure the derivation and accumulation of all the wealth of the company in
liquidation by ensuring the collection of all the amounts outstanding from the
parties, in order to have proportionate distribution of such collection amongst
the creditors according to their rankings. If such object of a winding up
proceeding is to be achieved, it is imperative that any attempt for any quarter
from putting spokes into the smooth running of the wheel is stoutly
removed. [
The respondents were liable to
pay the ascertained sum of Rs. 20,72,989 with interest on the balance principal
amounts of Rs. 50,000 and Rs. 2,49,312 from 8-11-2002, till the date of
realization. Since the liability was,
thus, due from 8-11-2002 onwards, the respondents were to be directed to pay
the same within four weeks from the date of receipt of copy of the order. In the event of the respondents failing to
discharge their liability for making the payment within the said four weeks
time, they would deliver possession of the schedule mentioned property to the Official
Liquidator within one week thereafter. In the event of the respondents failing
to comply with the above directions within the stipulated time limit, the
Official Liquidator and administrator would be at liberty to invoke section
477(7) and execute the decree granted in the order for taking possession of the
schedule mentioned property through the appropriate execution court. [