Winding up appeals and surety liability turn on transferred suits, contractual appropriation, and no discharge without material variation.

Orders passed in winding up proceedings, including disposed of transferred suits, are appealable under the Companies Act's special appellate provision. In guarantee disputes, a bank's appropriation from one cash credit account does not, by itself, preserve liability against guarantors who did not consent to or guarantee later independent accounts; amounts already adjusted from the borrower's account were not recoverable from the original surety, while the unpaid instalment remained due. A surety is not discharged merely because later cash credit facilities are opened, absent a material variation of the original contract without consent. Interest was recoverable at the contractual bank rate where the agreement so provided.

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Issues: (i) whether appeals arising from orders passed in winding up proceedings and transferred suits were maintainable under the Companies Act; (ii) whether the bank could appropriate amounts from one account towards liability under a deferred payment guarantee so as to extinguish the liability of guarantors who had not guaranteed the later accounts; (iii) whether the subsequent cash credit arrangements discharged the original guarantors by variation of contract; and (iv) whether interest was recoverable at the contractual bank rate.

Issue (i): whether appeals arising from orders passed in winding up proceedings and transferred suits were maintainable under the Companies Act

Analysis: Where a suit pending in another High Court was transferred to the court conducting the winding up and was disposed of in the course of the winding up proceedings, the resulting order related to the matter of winding up. An appeal from such an order lay under the special appellate provision governing orders made in winding up matters, and the same position applied to the suit instituted in the winding up court itself and tried under the company jurisdiction.

Conclusion: The appeals were maintainable under the Companies Act.

Issue (ii): whether the bank could appropriate amounts from one account towards liability under a deferred payment guarantee so as to extinguish the liability of guarantors who had not guaranteed the later accounts

Analysis: The bank's general right of lien and appropriation is governed by the contract between the parties. On the facts, the debiting of instalments from the borrower's cash credit account at another branch amounted to appropriation only against that account and did not preserve liability against guarantors who had not consented to or guaranteed the later accounts. The seventh instalment, however, remained unpaid and recoverable because it had not been adjusted from any account of the borrower.

Conclusion: The four instalments already appropriated from the cash credit account could not be recovered from the original guarantor who had not stood surety for the later accounts, but liability for the unpaid seventh instalment survived.

Issue (iii): whether the subsequent cash credit arrangements discharged the original guarantors by variation of contract

Analysis: A surety is discharged if the original contract is materially varied without consent. Here, the later cash credit facilities were separate transactions and the subsequent guarantees did not refer to the deferred payment guarantee. Mere debit entries and internal adjustment by the bank did not amount to a variation of the original guarantee, and the guarantors remained bound to the extent of their original undertaking and any separate guarantee they had given for later accounts.

Conclusion: The original guarantee was not discharged merely because later cash credit accounts were opened.

Issue (iv): whether interest was recoverable at the contractual bank rate

Analysis: The agreements provided for interest at the minimum bank rate, and the Banking Regulation Act empowered regulation of interest on advances and financial accommodation. The lower rate mentioned in the plaint did not control the contractual entitlement where the agreement itself stipulated the bank rate and there was default in payment.

Conclusion: Interest was recoverable at the contractual bank rate.

Final Conclusion: The judgment upheld the bank's claim in part, but modified the decree by granting the principal appellant relief against recovery of the appropriated instalments while sustaining liability for the unpaid instalment and preserving the separate liabilities of other guarantors according to their respective undertakings.

Ratio Decidendi: In winding up matters, an order passed on a transferred suit is appealable under the special company appellate provision; and a surety is discharged only by a material variation of the guaranteed contract without consent, not by a separate appropriation or adjustment made in later independent account arrangements.

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