1998 (2) TMI 446 - HC - Companies Law

Court dismisses suit against E.I.D. Parry Ltd., deems gift deed void, and finds claim time-barred.

The court dismissed the plaintiff's suit, ruling that the loan was not a group loan of E.I.D. Parry Ltd., the gift deed was void, and the suit was ... Lifting of Corporate Veil Issues Involved:1. Jurisdiction to entertain the suit.2. Barred by limitation.3. Defendant's liability for predecessor's assets and liabilities.4. Settlement of the suit claim through compromise.5. Classification of the loan as a group loan of E.I.D. Parry Ltd.6. Acknowledgement of liability by the liquidators of Parry Murray Foods Ltd.7. Validity of the alleged gift.8. Relief entitlement of the parties.Issue-wise Detailed Analysis:1. Jurisdiction to entertain the suit:The issue of jurisdiction was not pressed by the defendant during the hearing, and the matter was argued on merits. Therefore, it was not necessary to deal with this issue.2. Barred by limitation:The lending occurred in 1973, and no acknowledgment of liability by the defendant or its predecessors was established. The plaintiff claimed an acknowledgment of liability in the defendant's annual report for 1980, but the court determined that including the balance sheet of Parry Murray & Co. Ltd. in the annual report did not constitute an acknowledgment of liability by the holding company. Consequently, the suit was deemed barred by limitation.3. Defendant's liability for predecessor's assets and liabilities:The defendant admitted that it took over the assets and liabilities of E.I.D. Parry & Co. Ltd. following a court-sanctioned scheme of amalgamation and arrangement. However, the court found that the claim made in this suit was not one of the liabilities taken over by E.I.D. Parry (India) Ltd., as E.I.D. Parry Ltd. had no liability towards the plaintiff's donor.4. Settlement of the suit claim through compromise:The court did not pronounce any finding on this issue, as it concerned companies not before the court. However, the documents produced by the plaintiff showed that the plaintiff's donor had proved its claim against Parry Murray Foods Ltd. and received payments from the liquidator. The plaintiff's donor did not take legal action against Parry Murray & Co. Ltd., indicating that it did not regard Parry Murray & Co. Ltd. as liable for the loan after the compromise.5. Classification of the loan as a group loan of E.I.D. Parry Ltd.:The court considered this the core issue. It found that the defendant and its predecessors were not parties to any documents relied on by the plaintiff. The plaintiff failed to establish that the loan was a group loan of E.I.D. Parry Ltd. The court noted that the plaintiff's donor and its assignor did not address any communication or record the companies liable for the repayment of the loan advanced to Parry Murray Foods Ltd. The court also found no evidence supporting the plaintiff's claim that the loan was treated as a group loan.6. Acknowledgement of liability by the liquidators of Parry Murray Foods Ltd.:This issue was deemed inconsequential for determining the plaintiff's entitlement to the suit claim. The court noted that the plaintiff's donor had received payments from the liquidator of Parry Murray Foods Ltd. before and after filing the suit, totaling over lb60,000.7. Validity of the alleged gift:The court found the gift deed void as it purported to gift a non-existent debt. The gift was in respect of a non-existent liability, and the fact that the document was executed in accordance with Swiss law did not make it valid. The court also noted that the plaintiff's donor continued to receive payments from the liquidator of Parry Murray Foods Ltd. even after the execution of the gift deed.8. Relief entitlement of the parties:The court concluded that the plaintiff's suit was speculative and failed to establish its case. The suit was dismissed with costs.Conclusion:The plaintiff's suit was dismissed, with the court finding that the loan was not a group loan of E.I.D. Parry Ltd., the gift deed was void, and the suit was barred by limitation. The court also noted that the plaintiff's donor continued to receive payments from the liquidator of Parry Murray Foods Ltd., indicating that the action was speculative and brought for the sole benefit of the donor.