SAROJ KUMAR BANERJEE Vs. GAYA SUGAR MILLS LTD

JUDGEMENT

(1.) THIS appeal is brought under Clause 10 of the Letters Patent from an order of Sahai, J., dated the 3rd May, 1960, in Company Act Case No. 3 of 1951, rejecting the claim of Saroj Kumar Banerjee and eighty-five others who are workers of Guraru Sugar Mills Limited. It was held by the learned Judge that the claim should be rejected as it has been put in after the expiry of the time during which they should have done so and there was hardly any ground made out for condoning the delay. On behalf of the appellants learned Counsel put forward the argument that the learned Judge was not right in totally rejecting the claim of the appellants. It was pointed out that the only penalty for failure to come within the time stated in the notice for proving the claim is that the claimant can be excluded from the benefit of any distribution made before such debts are proved, that is, he can only claim a proportionate share in such assets as may remain undistributed at the time when the proof is claimed and without disturbing any distribution made before such proof. In our opinion the argument put forward on behalf of the appellants is well founded and must be accepted as correct. Section 191 of the Indian Companies Act (Act VII of 1913) states that "the Court may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before those debts are proved". The language of this section is identical with Section 156 of the Indian Companies Act of 1882. It was held by a Full Bench of the Madras High Court in (sack Jesudasen Pillai v. Ramaswamy Chetty, I L R 27 Mad 496 (F B) with regard to this old section, that the creditor was not included from coming in at a later stage than that fixed by the Official Liquidator for claims to be made. It was also held that the only penalty for failure to come within the time stated in the notice was that prescribed by the latter part of the section, namely, that the claimant would be excluded from the benefit of any distribution made before his debt was proved. THIS view has been followed in a later decision of the Madras High Court in T. R. Rajakumari v. Motion Picture Producer Combine Ltd., AIR 1942 Mad 349 and it was held in that case that an application for excusing delay in filing proof of a claim should be allowed, and so long as justice can be done to a creditor without disturbing the dividend already declared or paid, there is no reason why he should be prevented from getting his dividend. In re, General Rolling Stock Discount Co's Claim. (1872) 7 Ch A 646 at p. 649 Mellish, L. J. explains thus the principle that should be observed in a case of this description:--

(2.) WE accordingly allow this Letters Patent Appeal. There will be no order as to costs.