Subba Rao, J. - (1.) The facts that gave rise to this appeal may be briefly stated:On January 3, 1933, M/s. Harinagar Sugar Mills Ltd. hereinafter called the company, was incorporated under the Indian companies Act, 1913 (Act VII of 1913), Narayanlal Bansilal was the Chairman of the Board of Directors of the company. He was also the karta and manager of the joint Hindu family consisting of himself, his sons and daughters. As such karta he purchased a large block of shares of the Company from and out of the funds of the joint family. The said family also owned a sugarcane farm at Harinagar in the State of Bihar. On March 8, 1956, Narayanlal Bansilal and his three sons sold the said farm to the Company for a sum of Rs. 40,00,000. Under the sale-deed the Company agreed to pay the price in installment. Though the Company paid a few installment, a sum of Rs. 25,00,000 still remained to be paid by it to the joint family. In July 1961, one of the sons of Narayanlal Bansilal filed Suit No. 224 of 1964 on the Original Side of the Bombay High Court against his father and others for partition of the joint family and others for partition of the joint family properties. Pending the suit, on October 20, 1961, the Court, in exercise of its powers under O. XL, R. 7 of the C. P. C., appointed a Court Receiver as Receiver of all the joint family properties. Long prior to the filing of the said suit for partition, on July 24, 1956, the Additional Income-tax Officer, S. V, Central Bombay, issued a notice to the Company under S. 46 of the Indian Income-tax Act, 1922, prohibiting it from paying the debt due by it to the joint family and calling upon it to pay the said amount to the Income-tax authorities towards income-tax due from the said joint family. After the Receiver was appointed, on June 29, 1962, the said Receiver issued a notice under S. 434 of the Indian Companies Act calling upon the Company to pay the amount due from it to the joint family with interest to the Additional Collector of Bombay towards the income-tax dues of the family and also informing it that, in case the said payment was not made within 21 days of the receipt of the notice, proceedings for winding up of the Company under the Indian Companies Act would be taken. As the Company did not comply with the terms of the said notice, the Receiver moved the High Court for directions and obtained an order on November 22, 1963, authorizing him to file a petition for winding up of the Company. After obtaining the permission of the Court, on January 10, 1964, the Receiver filed a petition in the High Court for winding up of the Company. After hearing the objections filed by the Company, Kantawala, J., admitted the petition and directed advertisements to be given in the newspapers and in the Government Gazette mentioning his order. The Company preferred an appeal against that order and that was heard by a Division Bench consisting of Patel and Tulzapurkar, JJ. The learned Judges dismissed the appeal. Hence the present appeal, by special leave.
(2.) Mr. N. C. Chatterjee, learned counsel for the appellant company, raises before us the same contentions which were advanced unsuccessfully on behalf of the Company in the High Court. We shall deal with the said contentions seriatim.
(3.) The first contention of the learned counsel is that the Court Receiver had no power to file a petition in the Court for winding up of the Company. Elaborating this contention the learned counsel contends that under O. XL, R. 1 (d) of the C. P. C. a Court can only confer on a Receiver the power to bring a suit and that the expression "suit" does not take in a petition for winding up of a company. Order XL, R. 1 of the C. P. C. reads: "Where it appears to the Court to be just and convenient, the Court may by order- ********** (d) confer upon the receiver all such powers, as to bringing and defending suits and for the realisation, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the court thinks fit." In exercise of the said power, the Court appointed the respondent as the Court Receiver on October 20, 1961, of the properties belonging to the joint family in the suit. The material part of the order reads: ".......It is further ordered that the Court Receiver be and he is hereby appointed Receiver of the properties belonging to the joint family in suit and all the books of accounts papers and vouchers with all necessary powers under O. XL, R. 1 of the C. P. C. including power of vote and/or exercise all the property rights in respect of shares belonging to the joint family in the several joint stock companies mentioned in the plaint including power to file suit ........". Under this order, all the necessary powers under O. XL, R. 1 of the C. P. C. were conferred upon the Receiver, including the right to file suits. Assuming that a petition for winding-up of a company is not a suit within the meaning of O. X.L, R. 1 (d) of the said code, the other powers mentioned therein are comprehensive enough to enable the Receiver to take necessary proceedings to realise the property of and debts due to the joint family. Can it be said that the petition filed by the Receiver for winding up of the Company is not a mode of realisation of the debt due to the joint family from the Company In Palmer's company Precedents, Part II, 1960 Edn., at page No. 25, the following passage appears: "A winding up petition is a perfectly proper remedy for enforcing payment of a just debt. It is the mode of execution which the Court gives to a creditor against a company unable to pay its debts." This view is supported by the decisions in Bowes vs. Hope Life Insurance and Guarantee Co., (1865) 11 HLC 389; Re, General Company for Promotion of Land Credit, (1870) 5 Ch A 363 (380) and Re, National Permanent Building Society, (1869) 5 Ch A 309. It is true that a winding up order is not a normal alternative in the case of a company to the ordinary procedure for the realisation of the debts due to it"; but nonetheless it is a form of equitable execution. Propriety does not affect the power but only its exercise. If so, it follows that in terms of Cl. (d) of R. 1 of O. XL of the Code of Civil Procedure, a Receiver can file a petition for winding up of a company for the realisation of the properties, movable and immovable, including debts, of which he was appointed the Receiver. In this view, the respondent had power to file the petition in the Court for winding up of the Company.;