TaxTMI 
TaxTMI 
TaxTMI 
1961 (11) TMI 34
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.... business in India was at Kodur, .Vizagapatam District. The company took certain land on lease from the Rajah of Vizianagaram, the appellant. Its business did not prove profitable and it was not in a position to pay the rent to the lessor or to pay its creditors. On the application on behalf of the Rajah of Vizianagaram, orders for the winding up of the company were passed by the High Court on March 6, 1946. The Official Receiver of Vizagapatam was appointed official liquidator of the company. Thereafter, the liquidation proceedings were transferred to the District Court of Vizagapatam. The official liquidator realised about two lakhs of rupees from the assets of the company in India. Certain foreign creditors of the company filed proofs of their claims before the official liquidator. The appellant objected to their claims being entertained on the ground that these liquidation proceedings were only for the benefit of the Indian creditors and that foreign creditors were not entitled to prove their debts in these proceedings. The official liquidator rejected these objections and allowed the foreign creditors to prove their claims. The appellant then filed an application under secti....
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....took the correct view of the legal position in holding that the foreign creditors could prove their claims in these winding up proceedings. Section 270 of the Act defines "unregistered company " and it includes any partnership, association or company consisting of more than seven members and does not include certain companies which come within the companies excluded by the section. This definition of "unregistered company" is for the purpose of Part IX of the Act, which consists of sections 270 to 276 and deals with the winding up of unregistered companies. Sub-section (3) of section 271 provides that where a company incorporated outside India which has been carrying on business in India ceases to carry on business in India, it may be wound up as an unregistered company under Part IX, notwithstanding that it has been dissolved or otherwise ceased to exist as a company under or by virtue of the laws of the country under which it was incorporated. It is in pursuance of the provisions of this sub-section that the company is being wound up as an unregistered company. Sub-section (1) of section 271 which deals with the winding up of unregistered companies, provides that any unregister....
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....ding up proceedings. All the creditors including the foreign creditors will get rateably out of the assets of the company which have been collected. When that company itself is wound up, all of them would be entitled to similar rateable share in the assets collected during the winding up proceedings of the company in the country where it is incorporated. Likewise, section 211 provides that the property of a company shall, on its winding up, be applied in satisfaction of its liabilities pari passu and, subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company, and thus makes it clear that all the creditors of the company have to get a rateable share out of the property of the company and that surplus, if any, will be distributed among the members of the company. Section 228 provides that in every winding up all debts payable on a contingency and all claims against the company shall be admissible to proof against the company. No exception is made. All the debts against the company in the winding up can be proved. Such claims can include the claims of foreign creditors. It is, t....
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....ple, should be able to do what creditors and contributories resident in India can do in the winding up proceedings. There has been case law with respect to the nature of winding up proceedings in the various countries and the procedure followed in such winding up. In In re Commercial Bank of South Australia [1886] 33 Ch. D. 174, a company incorporated in Australia carried on business in England where it had a large number of creditors and a large number of assets. A petition for winding up was made in England. Subsequently, proceedings for the winding up of the company were also taken in Australia. The jurisdiction of the English court to continue the winding up proceedings was questioned. In considering this question, North J. said at page 178 : "I think, therefore, that the English creditors are entitled to have a winding-up order made by this court. I do not think it would be right to insert any special directions in the order ; this is not the proper time for giving such directions. But I will say this, that I think the winding-up here will be ancillary to a winding-up in Australia, and, if I have the control of the proceedings here, I will take care that there shall be no c....
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....s, it was said at page 394 [1393] 3 Ch 385, 394 (CA) : "One knows that where there is a liquidation of one concern the general principle is-ascertain what is the domicil of the company in liquidation ; let the court of the country of domicil act as the principal court to govern the liquidation; and let the other courts act as ancillary, as far as they can, to the principal liquidation. But although that is so, it has always been held that the desire to assist in the main liquidation -the desire to act as ancillary to the court where the main liquidation is going on-will not ever make the court give up the forensic rules which govern the conduct of its own liquidation." This makes it clear that the liquidation of the company in countries other than where the company is incorporated and has its principal office, is just ancillary to the simultaneous liquidation of that company in the country of its domicil or any winding up of the company in future. That is to say, the winding up of the company in those countries is just complementary to the winding up of the company in the country of its domicil. The rights and liabilities of the creditors and contributories respectively when a co....
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....feat our municipal provisions for winding up a corporation. This does not appear to me to be recreating or reconstituting a new corporation : it is for particular and limited purposes refusing to recognise the dissolution of the old." It is clear from these observations that the winding up of the dissolved company incorporated in Russia was deemed to be the winding up of that very company and not of any fictitious company composed of the branch of that company in England. The main question before us, however, was deliberately left open for consideration later. The observations, however, go against the appellant's contention that the so called unregistered company which is being wound up should be deemed to be a separate entity from the original company incorporated in England. In In re Azoff-Don Commercial Bank [1954] 1 All. ER 947 ; 24 Comp. Cas. 418 (Ch. D.) proceedings for the winding up of a Russian company which had been carrying on business in England was taken in England. This company had been dissolved prior to the proceedings under the laws of the Union of Soviet Socialist Republics. The petitioners for the winding up of this company were certain Norwegian banks who were....