STRAUSS AND CO LIMITED; IN RE BHIMRAJ HARLALKA Vs. STATE

JUDGEMENT

(1.) THIS petition raises a somewhat difficult and important question under Sections 270 and 271 of the Indian Companies Act, 1913. In form the question is whether this Court has jurisdiction to make a winding up order against an unregistered foreign company not consisting of more than seven members.

(2.) THE facts which do not seem to be in dispute are briefly as follows : THE respondent company was incorporated in England with limited liability under the English law. It carries on business in India and its principal place of business in India is situate in Bombay. It was stated in the petition that the company consisted of more than seven persons, but it is now admitted that that statement was made, inadvertently and that the company consists of five members only. THE petitioning creditor is a creditor in the sum of about Rs. 60,000 and admittedly there are other creditors whose claims exceed that of the petitioning creditor. THE petition is founded upon the allegation that the company has stopped payment and has ceased to carry on business, and this is not disputed. From the affidavits made at a later stage of the hearing of this petition, it appears that a winding up petition was presented against the company in England on January 29, 1935, and an official liquidator was appointed. THE actual winding up order was made on February 11, 1935, that is five days after the presentation of the present petition to this Court. From the report made by the official liquidator in England it appears that there are heavy liabilities of the company and a heavy deficit, and that the unsecured creditors in England are not likely to get even half a shilling in a pound. THE company has more than forty branches in India and used to carry on extensive business in Bombay, Karachi, Madras and other places in India.

(3.) UNDER the English Act of 1862, Section 199, it was held that an unregistered company could not be wound up under that Act unless there were more than seven members: In re Bowling and Welby's Contract [1895] 1 Ch. 663. Then came the Act of 1908, which by Section 267 gave a definition of the expression " unregistered company " materially different from that contained in Section 199 of the Act of 1862. The Act of 1908 was followed by the Act of 1929, and the corresponding section in that Act is Section 337, which is in the terms following : 337. For the purposes of this Part of this Act, the expression ' unregistered company' shall include any trustee savings bank certified under the Trustee Savings Bank Act, 1863, and any partnership, whether limited or not, any association and any company with the following exceptions : (1) a railway company incorporated by Act of Parliament, except in so far as is provided by the Abandonment of Railways Act, 1850, and the Abandonment of Railways Act, 1869, and any Acts amending them; (2) a company registered in any part of the United Kingdom under the Joint Stock Companies Acts or under the Companies Act, 1862, or under the Companies (Consolidation) Act, 1908, or under this Act; (3) a partnership, association or company which consists of less than eight members and is not a foreign partnership, association or company; (4) a limited partnership registered in England or Northern Ireland. As observed by Palmer in his Company Precedents, Vol. II, 14th Edn. , at p. 48, the definition of " unregistered company " in this Act differs from that contained in Section 267 of the Act of 1908, especially in providing that a partnership, association or company which consists of not less than eight members is not an unregistered company unless it is a foreign partnership, association or company. Section 270 of the Indian Companies Act is in the same terms as Section 267 of the English Act of 1908.