Mukherji, J. - (1.) This is a special appeal from the decision of our brother Broome exercising Company jurisdiction. The U. P. Oil Industries Ltd., went into liquidation, on an application made by a creditor, by virtue of a winding-up order made on the 6th May, 1956. During the progress of liquidation, certain creditors claiming to be secured creditors attempted to get their money in liquidation by adducing proof of their debts. The creditors who attempted to get their money were Debenture-holders of two series, namely, the Debentures which were issued on the 24th April, 1948 and secondly, those which were issued on the 23rd June, 1950. We are in this appeal concerned with the Debenture-holders of the second series. There were 20 Debentures of the second series issued of Rs. 5,000/- each, totalling a sum of Rs. 1,00,000/-. Raja Sharda Narayaa Singh and Company took all the 20 Debentures of the second series. It may be mentioned that the Company, namely. Raja Sharda Narayan Singh and Company, was a partnership consisting of only two partners, the husband and the wife -- Raja Sharda Narayan Singh, the husband and Rani Shashi Pra-bha Kumari, the wife. The fact that the 20 Debentures of the second series were actually recorded in the name of Raja Sharda Narayan Singh and Company is not disputed and was never disputed. From the Official Liquidator's report dated the 29th April, 1959, and the third resolution recorded at the meeting of the Board of Directors dated the 28th February, 1950, as also from the account-books of the Company it was clear that Raja Sharda Narayan Singh had paid the consideration for these Debentures, i. e., a sum of Rs. 1,00,000/- and that the said sum had been duly credited in the books of the Company on the 23rd June, 1950.
(2.) By a notice dated the 7th December, 1956 Sri Bijay Shankar, an Advocate, wrote to the official Liquidator, under instructions from Raja Sharda Narayan Singh, laying claim against the U. P. Oil Industries Ltd., (in Liquidation) in respect of 8 items stated in the notice. The first item of this, notice was a claim of Its. 1,00,000/- in respect of the Debentures' of the second series. This was the first, time when the controversy in regard to this claim was" raised. The Official Liquidator made certain enquiries in regard to the Debentures, their custody, etc., and by a letter dated the 26th December, 1956, Sri Bijay Shankar, Advocate, informed the Official Liquidator that the original trust deed -and the scrips concerning the Debentures of the second series were missing, and after a long correspondence between his client and the Company a resolution was recorded by the Company to issue a duplicate. Sri Bijay Shankar informed the Official Liquidator of the fact that a certified copy of the trust deed was being applied for and, would be produced before him for his satisfaction. The claim of the appellants in respect of the Debentures of the second series and interest due on them remained pending for a long time. There was a stage when the Official Liquidator was prepared to admit proof of these Debentures of the second series and was prepared to liquidate them, but it appears that one Beni Prasad Agrawal, who purported to be the holder of Debentures of the third series, raised the question as to whether the alleged holders of the Debentures of the second series could get their money in liquidation, and further, whether they could get it without proof of the fact that they were not in a position to give a valid discharge in respect of the Debentures of the second series.
(3.) The question as to whether the Debenture-holders of the second series could give a valid discharge was decided against the appellants at one stage without going into the evidence which the parties, by virtue of an earlier order, could have given, and, therefore, the case went back to the learned Company Judge for giving the parties an opportunity to produce such evidence as they want ed. The learned Company Judge gave the parties the necessary opportunity. Three witnesses were called on behalf of the appellants, namely, Raja Sharda Narayan Singh, Rani Shashi Prabha Kumari and Sri Bindeshwari Prasad Singh, the present Manager of the Estate of the Raja. The fact that was attempted to be proved by these witnesses was the factum of loss of the Debentures because the primary ground, on which the want of power in the alleged holders of the Debentures of the second series to give a valid discharge was raised, was their incapacity to produce the Debentures for being cancelled as discharged. The Debentures were "Bearer" Debentures and it was contended on behalf of the Official Liquidator that bearer Debentures could be negotiated by mere handing over of the Debentures and, therefore, unless and until the Debentures were produced or their loss satisfactorily established the Official Liquidator would have no protection against any claims that may subsequently be made by holders of those Debentures, the Debentures having been negotiated. It must in this connection be clearly seen that the right of the appellants being the Debenture-holders when those Debentures were issued was not disputed, and further that that right, of being the original Debenture-holders stood on a different footing from their right to be able to give a valid discharge in respect of those Debentures at the time when the question of giving a discharge arose. As we pointed out earlier, the Official Liquidator never challenged the assertion of the appellants that they were Deben--ture-holders, for indeed, at one stage, the Official Liquidator was prepared to pay up those Debentures. The question with which the Official Liquidator became later concerned, as we pointed out earlier, was raised subsequently, and the question that was raised was in regard to only the capacity of the appellants to give a valid discharge of those Debentures of the second series at the time when they were called upon to give a valid discharge in respect of the Debentures, It cannot be denied that one of the methods by which a Debenture can be discharged is by cancelling the Debenture, on the face of-it, and making an endorsement on the Debenture itself that payment in respect of the Debenture had been received, but then that was not the only method by which a Debenture could be discharged or the liability under a Debenture could be set at rest by discharge.;