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of <h1>Company liquidation date dispute resolved: assets, funds status clarified in court ruling.</h1> <h3>GR. Deo Versus F. Karim</h3> The liquidation of a company was in question due to discrepancies in the commencement date and the status of funds in a joint current account. The court ... Winding up – Meeting of Creditors. Issues Involved:1. Date of commencement of liquidation.2. Status of Rs. 6,491-5-3 in the joint current account as part of the company's assets.Issue-wise Detailed Analysis:1. Date of Commencement of Liquidation:The liquidator questioned the date of the commencement of the liquidation of the C.P. and Berar Govt. Clerks' Mutual Benefit Fund. The lower court's order was accepted for the facts, which stated that the company could not meet its liabilities and decided to go into a creditors' voluntary liquidation. An extraordinary resolution was passed on June 9, 1940, but it was later discovered that a creditors' meeting had not been called as required by section 209A of the Indian Companies Act. A fresh meeting was held on September 22, 1940, complying with section 209A. The Registrar, Joint Stock Companies, considered June 9, 1940, as the commencement date. The court examined sections 203 and 204, which state that a voluntary winding-up commences at the time of passing the resolution. However, section 209A (1) requires a creditors' meeting to be summoned simultaneously with the company's meeting. The court concluded that the omission to comply with section 209A (1) is an irregularity that can be cured and not an illegality that vitiates the resolution. Therefore, the liquidation commenced on June 9, 1940.2. Status of Rs. 6,491-5-3 in the Joint Current Account:The second issue was whether Rs. 6,491-5-3 standing in the joint current account of the president and secretary of the company formed part of the company's assets. The sum represented contributions collected from members after September 30, 1939. The company, an insurance company governed by the Insurance Act of 1938, did not obtain a certificate of registration required to carry on insurance business after October 1, 1939. Consequently, it was prohibited from receiving contributions after that date. The court held that the company could not claim these moneys as its own because they were received in violation of the law. The funds were traceable and had not mixed with other assets. The court referred to the House of Lords' decision in Sinclair v. Brougham, which held that moneys received ultra vires must be refunded if traceable. Therefore, Rs. 6,491-5-3 did not form part of the company's assets and must be refunded to the contributors, less legitimate charges.The court also addressed a third question dealt with by the District Judge, but it was not challenged in the grounds of appeal. Other questions raised by the liquidator were outside the scope of the court's jurisdiction as they were not raised in the lower court or in the reference under section 216.Conclusion:The appeal was dismissed. The costs of the appeal were to come out of the moneys in the hands of the company, debitable half and half to the legitimate assets of the company and to the Rs. 6,491-5-3 in the liquidator's hands.
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