SEBASTIAN JOSEPH Vs. NEW GOTHURUTHI EDUCATIONAL AND INDUSTRIAL CO
LAWS(KER)-1968-3-4
HIGH COURT OF KERALA
Decided on March 05,1968

SEBASTIAN JOSEPH Appellant
VERSUS
NEW GOTHURUTHI EDUCATIONAL AND INDUSTRIAL CO. Respondents

JUDGEMENT

- (1.) This is an appeal by a member of the Gothuruth Educational and Industrial Company Ltd. in liquidation against an order passed by the District Judge, Ernakulam on a petition purporting to be under S.396 of the Indian Companies Act, 1956 moved by the New Gothuruth Educational and Industrial Company Ltd. and also by its Chairman, Managing Director and Trustees. This application has been allowed and it is contended before us by the appellant that the District Judge had no jurisdiction to deal with the matter as under the Companies Act, 1956 jurisdiction is vested in the High Court in regard to this matter. It is also urged that the petition is defective in that it does not conform to the relevant rules and forms applicable. Thirdly it was urged that in any view of the matter the transfer of the assets of the Gothuruth Educational and Industrial Company Ltd. (in liquidation) sought by the application cannot be allowed without settling the claims of the appellant.
(2.) The Gothuruth Educational and Industrial Company Ltd., has been in the process of being liquidated and certain proposals were made before the court and orders have been passed as early as 15-2-1963 sanctioning what is called reconstruction of the company. The relevant parts of this order are extracted in the order under appeal which we may also extract. "On I. A. No. 949 of 1962 an order was passed on 15-2-1963 to the following effect, (1) That the members' representative be authorised to take all necessary steps to form the new Company with the members of this Company willing to become members of the new Company for the purpose of acquiring the undertaking, property and liabilities of this Company and with the same objects as are set forth in clause (3) of the Memorandum of Association of this Company. (2) That the new Company be a Company limited by guarantee and that the liability of each member be limited to a sum of Rs. 500/- (Five hundred rupees only). (3) That this Company should transfer to the new Company the whole of its undertaking, property and liabilities. (4) That the Liquidator and the members' representative above mentioned be authorised to take all necessary steps to fully and effectively carry out the scheme. (5) That the Liquidator be authorised to meet, out of the assets of this Company all the expenses for convening and conducting the meeting of the members and all the costs and expenses required for fully and effectively carrying out the scheme and that the members' representative above mentioned be paid out of the assets of the Company, the expenses required for the purpose of forming a new Company, as stated above and all other expenses and costs he has to meet for fully and effectively carrying out this scheme." It is clear from the terms of the resolution passed at the meeting which has been accepted by the court by order dated 15-2-1963 that the Gothuruth Educational and Industrial Company Ltd. (in liquidation) is to cease to exist. This being so, it is equally clear that the present application that has been moved is a step in respect of a winding up of the Gothuruth Educational and Industrial Company Ltd. in liquidation. In regard to such winding up, the provision of the Companies Act, 1956 will have no application. This is clear from the provision in S.647 thereof. S.647 states: "647. Where the winding up of a company has commenced before the commencement of this Act - (i) .......................................... (ii) the other provisions with respect to winding up contained in this Act shall not apply, but the company shall be wound up in the same manner and with the same incidents as if this Act had not been passed".
(3.) That the winding up of the Gothuruth Educational and Industrial Company Ltd. commenced before the commencement of the Companies Act, 1956 is not disputed. Such winding up will therefore have to be concluded without reference to the provisions of the Companies Act, 1956. This being so, there is no substance in the contention raised by counsel for the appellant that the District Court had no jurisdiction to deal with the matter. We are supported in this view by a decision of the Travancore - Cochin High Court in A. Ananthasubramonia Ayyar v. The Official Receiver reported in AIR 1957 Travancore - Cochin 51. Similar views have been taken by the Bombay, Punjab and Rajasthan High Courts. The provision in S.391 of the Companies Act, 1956, or for that matter S.153 of the Companies Act, 1913 can be utilised either for compromise or for an arrangement or for the purpose of winding up of the company. When the scheme visualised by the resolution adopted in the meeting spells out winding up of the company, any transfer involved to implement that resolution will be with respect to the winding up of the company and therefore an application under S.153A of the Companies Act, 1913 for implementing such resolution as well as one under S.394 of the Companies Act, 1956 for the same purpose will be steps in aid of the liquidation of the company. It is therefore appealable as an order passed in liquidation. This is what has been held by the Bombay High Court and therefore it is impossible to accept the contention of counsel for the appellant that whenever an application is moved either under S.153 A of the Companies Act, 1913 or under S.394 of the Companies Act, 1956, it must be understood and treated as an original petition.;


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