1934 (8) TMI 6

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....he Pabna Dhanabhandar Co., Ltd., which had not then gone into liquidation, had, before the revenue sale, advanced money to the Pakrasis on a mortgage of the said Zemindary. At the date of the revenue sale and at all material times the position of the respondent company was that of a mortgagee. The appellant paid the whole of the purchase money which remained in deposit in the Pabna Collectorate. The respondent company instituted on the 10th July, 1925, a suit to set aside the revenue sale. To the said suit the appellant was Defendant No. 1 and the Pakrasis defendants Nos. 2 to 11. The learned Subordinate Judge decreed the suit with costs against the appellant, which cost was assessed at Rs. 989-11. The appellant before us preferred an ap....

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....ay be passed by this Court. The appellant also paid revenue and cess amounting to Rs. 543-5-6 that fell due from the date of his purchase at the revenue sale. The respondent company has since gone into liquidation. The said company represented by the liquidator applied on the 30th May, 1932, for execution of the decree for cost awarded by His Majesty in Council. The appellant preferred objections under Section 47 of the Code and of the many objections he preferred only one is now for consideration before us, namely, whether he is entitled to claim a deduction of the sum of money recovered on account of the decree for costs awarded by the Subordinate Judge, which decree was ultimately reversed, and of the sum of money paid by him on accou....

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.... such a Court can give effect to such a claim. We do not also consider that the winding up of the respondent company has any effect on the claim of the appellant and that if he is otherwise entitled to have credit for the moneys paid by or recovered from him, the fact that the company has gone into liquidation would not stand in his way. Long before the making of statutory provisions on the subject it was the practice in bankruptcy, where there was a debtor and creditor account between the bankrupt and another person, to take the account between them and to adjust the balance, provided that the debts were connected with each other (See Young v. Bank of Bengal [I. M. I. A. 87 at pp. 142-143 (1836)]). The statutory provisions on the sub....

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....[1910] 1 KB 745 and Reference under Presidency Small Cause Courts Act [1904] 1 LR 28 Mad. 240). Section 229 of the Indian Companies Act makes these principles applicable to a company in liquidation. The only exception to these rules is the case of a contributory. A shareholder of a limited company who is also a creditor of the same in the event of the company being wound up is not entitled to set off the debt due to him against the calls, nor set off against the calls a dividend which may come to him thereafter: Overend Gurney & Co. In re [1866] LR 1 Ch. App. 528. We are accordingly of opinion that the second ground assigned by the Subordinate Judge for overruling the claim of the appellant cannot be sustained. The rejection of his claim....