Court orders bank to refund Rs. 13,000 + interest. Dismisses another case. Creditor bank allowed to prove debt.

The court in C.A. No. 85 of 1965 directed the creditor-bank to refund Rs. 13,000 with interest at 6% per annum from February 25, 1965, to the date of payment and proportionate costs. C.A. No. 134 of 1965 was dismissed with no order as to costs. The creditor bank was permitted to prove its debt before the official liquidator within six weeks.

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Issues Involved:
1. Payment of Rs. 1,000 on July 12, 1957, and Rs. 12,000 on September 9, 1957, towards the decree.
2. Whether the payments were made by the company on behalf of Khaleeli personally.
3. Entitlement of the official liquidator to claim Rs. 12,417.15 paid into court on January 8, 1958.
4. Whether the payments were made bona fide and in the ordinary course of the company's business.
5. Whether the application by the official liquidator is barred by time.

Detailed Analysis:

Issue 1: Payment of Rs. 1,000 on July 12, 1957, and Rs. 12,000 on September 9, 1957, towards the decree.
The evidence presented by P.W. 1 and R.W. 1 confirmed that the company made payments of Rs. 1,000 on July 12, 1957, and Rs. 12,000 on September 9, 1957, towards the decree obtained against the company and others in O.S. No. 115/56 on the file of the Sub Court, Vellore. The payments were made by cheques drawn by C.P. Sarathi Mudaliar and Ameen Khaleeli respectively, and were recorded in the company's account books.

Issue 2: Whether the payments were made by the company on behalf of Khaleeli personally.
The court was not satisfied with the assertion that the payments were made by C.P. Sarathi Mudaliar and Ameen Khaleeli in their personal capacity. The accounts showed that they were entered in the books of the company as creditors for the amounts paid towards the decree. The positive evidence indicated that the debtor was Vegetols Ltd., and the payments were made in discharge of the company's liability. The point was held against the creditor's contentions.

Issue 3: Entitlement of the official liquidator to claim Rs. 12,417.15 paid into court on January 8, 1958.
The creditor's evidence, uncontradicted by the official liquidator, showed that the sum of Rs. 12,417.15 was received from the liquidator of the Carnatak Electric Supply Corporation Ltd. and paid to the bank on January 8, 1958. This amount was recovered from the assets of Ameen Khaleeli and did not belong to Vegetols Ltd. The court concluded that the official liquidator was not entitled to claim this amount as it was not a payment made from the company's assets.

Issue 4: Whether the payments were made bona fide and in the ordinary course of the company's business.
The court referred to the leading case on the subject of validating payments made in the ordinary course of the company's business, In re Wiltshire Iron Company, Ex Parte Pearson [1868] 3 Ch, App. 443, and other relevant cases. The evidence showed that the debt was incurred by the company by March 5, 1954, and the winding-up petition was filed on April 4, 1957. There was no evidence that the company was carrying on its ordinary business at the time of the payments. The payments were made in discharge of a debt subsequent to the winding-up and were not connected to any ordinary business carried on by the company. The court found that the payments were not made bona fide in the ordinary course of the company's current trade.

Issue 5: Whether the application by the official liquidator is barred by time.
The court examined the applicability of article 137 of the Limitation Act, 1963, and concluded that the application by the official liquidator was not barred by time. Section 536(2) of the Companies Act, 1956, does not prescribe any limitation period, and the court could adjudicate on the matter of disposition of property of the company in liquidation as long as the winding-up proceedings are pending. The court also addressed the jurisdiction issue and concluded that it had the jurisdiction to direct a refund under section 536(2) of the Companies Act.

Conclusion:
In C.A. No. 85 of 1965, the court directed the creditor-bank to refund Rs. 13,000 with interest at 6% per annum from February 25, 1965, to the date of payment and proportionate costs. C.A. No. 134 of 1965 was dismissed with no order as to costs. The creditor bank was permitted to prove its debt before the official liquidator within six weeks.

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