Court clarifies court-fee rules in joint company petition, emphasizing collective creditor action

AV Krishna Versus Karnataka Leasing & Commercial Corporation Ltd.

AV Krishna Versus Karnataka Leasing & Commercial Corporation Ltd. - [1995] 83 COMP. CAS. 764 (KAR.) Issues:
- Interpretation of provisions related to court-fees in company petitions involving multiple creditors
- Conflict of opinions regarding payment of separate court-fees by each creditor in a joint company petition

Analysis:
The judgment dealt with a company petition under sections 433(e) and (f) of the Companies Act, 1956, where all petitioners were creditors of the respondent company, alleging its inability to pay debts and commercial insolvency. The office raised an objection regarding court-fee payment, suggesting that separate court-fees should be paid by each creditor in a joint petition. This issue arose due to conflicting opinions in previous cases. In one instance, the court allowed a joint petition by several creditors, emphasizing the permissibility under section 439(1)(b) of the Act. However, another judge later opined that each creditor, having distinct transactions with the company, must pay separate court-fees. This conflicting view led to the matter being referred to a Division Bench for resolution.

The court considered the application of section 6 of the Karnataka Court-fees and Suits Valuation Act, 1958, which mandates fees based on the aggregate value of reliefs sought in suits with distinct causes of action. The Government advocate argued that each creditor's cause of action was distinct, requiring separate court-fees. Citing precedents like Mota Singh v. State of Haryana and Ramesh Pande v. State of Karnataka, the advocate emphasized the need for individual fees when causes of action are separate. However, the court rejected this argument, asserting that the cause of action in a winding-up petition is the company's commercial insolvency, benefiting all creditors collectively. It distinguished cases where separate fees were required for distinct reliefs sought by individual petitioners.

The judgment highlighted that a winding-up petition is akin to class interest litigation, benefiting all creditors and contributories collectively. It emphasized that the order resulting from such a petition operates in favor of all creditors and contributories, as per section 447 of the Act. Drawing from legal principles, the court underscored that a company petition is not an individual litigation but a representative action for the entire class of creditors. It rejected the argument that distinct causes of action necessitate separate court-fees, emphasizing the collective nature of the relief sought in a winding-up petition.

In conclusion, the court held that a single court-fee on a joint company petition by creditors is maintainable. It overruled the office's objection, emphasizing the collective nature of the cause of action in a winding-up scenario. The judgment clarified that the benefit of a winding-up order accrues to all creditors collectively, justifying the acceptance of a single court-fee in such cases.