1933 (5) TMI 12 - HC - Companies Law

Appeal dismissed in dispute over decree assignment, shareholder resolutions, and Companies Act compliance.

The appeal filed by the Pabna Dhanabhandar Company, Limited (in Liquidation) against the disallowance of their objection to the assignment of a decree was ... Winding up – Suits stayed on winding-up order Issues:1. Appeal against disallowance of objection to assignment of a decree.2. Interpretation of resolutions passed by shareholders and depositors.3. Validity of assignment under section 231 of the Companies Act.4. Consideration of fraudulent preference in the assignment.5. Compliance with section 171 of the Indian Companies Act for execution proceedings.6. Construction of compromise decree regarding payment instalments.7. Application of section 67 of the Transfer of Property Act and section 99.Analysis:1. The appeal was filed by the Pabna Dhanabhandar Company, Limited (in Liquidation) against the disallowance of their objection to the assignment of a decree made by the Company in favor of the respondents. The objection raised was regarding the validity of the assignment, alleging it to be a fraudulent preference. The Court discussed the applicability of Civil Procedure Code section 47, clause (3) concerning such disputes between the decree holder and their representative. Although various case laws were cited, the Court ultimately dismissed the appeal on its merits rather than deciding on the preliminary objection.2. The Court examined the resolutions passed by the shareholders and depositors of the Company, allowing set-off of dues against debts. The Appellant argued that these resolutions were ultra vires as they did not follow the procedure under section 153 of the Companies Act. However, since this objection was not raised in the initial petition, the Court held that it could not be considered on appeal. The resolutions were deemed valid as they were passed in meetings with proper notice to shareholders.3. The assignment of the decree was challenged under section 231 of the Companies Act, alleging it to be a fraudulent preference. The Court referred to established principles of fraudulent preference and emphasized the need to establish the presence of pressure or free will in such transactions. It was concluded that the assignment was made under real pressure to save the Company from liquidation, rather than as a voluntary preference, thus upholding the Subordinate Judge's decision.4. In another aspect of the case, the judgment-debtors raised objections related to the execution proceedings concerning the assignment of the decree. They argued against the continuation of the proceedings without obtaining necessary leave after the winding-up order, as required by section 171 of the Indian Companies Act. However, the Court found this objection invalid as it was not raised at the initial stage and could not be brought up at the appeal.5. The judgment-debtors further contested the construction of the compromise decree regarding payment instalments, claiming that certain sums had not yet become due. The Court rejected this argument, stating that the decree clearly outlined the payment schedule, and the execution proceedings were initiated after the relevant instalments had fallen due.6. Lastly, an objection was raised based on the provisions of the Transfer of Property Act and section 99, challenging the termination of execution proceedings without following the required procedures. This objection was also dismissed by the Court, as it was not raised in the lower court and lacked substance upon examination of the relevant provisions in the compromise decree.In conclusion, all objections raised by the judgment-debtors in the appeal were found to be without merit, leading to the dismissal of the appeal with costs awarded to the respondents. The Court's decision was unanimous, with both judges concurring.