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Civil Original Application No. 2 of 1963, decided on 25th May 1964.

‑S. 188 merely substitutes "bank" for "Official Liquidator"‑Does not enlarge jurisdiction of Court as to persons other than those mentioned in S. 185 to whom orders could be issued:

In re: United English and Scottish Assurance Co. Ex parte Hawkins (1867‑68) 3 Ch. App. 787; In re : Vimbos, Ltd., (1900) 1 Ch. 470; Hollingworth's case 54 E R 399; Tarachand Jermadas v. Official Liquidator People's Bank of India, Limited 46 P R 1915 and Messrs John Bros. v. Official Liquidator, Agra Spinning and Weaving Mills Co., Ltd. A I R 1936 All. 808 rel.

In the matter of Lakshhmi Flour Mills Co. A I R 1925 All. 101 ref.

Dilawar Mahmood (Official Liquidator) for Petitioner

Akhtar Ahmad Shah for Respondent.

Dates of hearing : 4th and 5th May 1964.

The Eastern Aid Society Ltd., (in Liquidation) was a private limited company. Its Memorandum and Articles of Association are Annexure A'. It sponsored a scheme known as "Small Savings Scheme", the particulars of which are stated in Annexure B'. This Scheme worked on a group system. Each group consisted of 450 members. Each member contributed Rs. 5 as monthly instal ment and As. 8 as monthly office charges, for a period of hundred months. There were to be draws each month as a result of which a member might earn Rs. 500 to Rs. 1,000 as reward, otherwise known as kameti, but when a person's name had been drawn, he ceased to make further contributions. If a member of the Scheme was unable to pay the monthly instalments, he had to pay one anna for the first month, two annas for the second month and three annas for the subsequent month as extra contribution. If a member's monthly subscriptions fell in arrears, he was called upon to execute a pronote at the end of a year for the amount which had fallen in arrears and was due from him towards subscription and office expenses, as has been explained by Mr. Wali Muhammad, who was one of the Directors of the Eastern Aid Society Ltd. In accordance with this practice, a pronote, which is the basis of this claim, was got executed from the respondent.

2. The Eastern Aid Society was wound up by an order of this Court, dated 1st of March 1960, and an official liquidator was appointed. He moved an application under section 185 of the Companies Act against the respondent for an order directing the latter to pay the sum secured by the pronote plus interest at 6% P. A. from the date mentioned in the petition to the date of the passing of the order.

3. The application has been resisted by the respondent mainly on the ground that the pronote was executed without consideration and that this Court had no power, under section 185 of the Companies Act, to order the respondent to make the payment by a summary order, as the respondent did not fall under the category of persons mentioned 1n section 185 of the Companies Act. The latter objection has been raised in argu ments. The Official Liquidator, however, relies on section 188 of the said Act and argues that the respondent falls within the scope of the words "or other person from whom money is due to the company", occurring in this section. It is not the claim of the Official Liquidator that the case of the respondent falls under section 185 of the Companies Act. The section provides as follows:‑

"The Court may, at any time after making a winding up order, require any contributory for the time being settled on the list of the contributories and any trustee, receiver, banker, agent, or officer of the company to pay, deliver, surrender or transfer forthwith, or within such time as the Court directs, to the Official Liquidator any money, property or documents in his hands to which the company is prima facie entitled."

Section 188 of the Companies‑ Act, on which the Official Liquidator relies, runs as under:‑

"The Court may order any contributory, purchaser or other person from whom money is due to the company to pay the same into the account of the liquidator in any scheduled bank as defined in clause (e) of section 2 of the State Bank of Pakistan Order, 1948, instead of to the official liquidator, and any such order may be enforced in the same manner as if it had directed payment to the official liquidator."

4. At first glance it may appear that the object of section 188 is to enlarge the powers of the Court and to enable it to order any contributory, purchaser or other person to pay the money due to the company into the specified bank, but this is not so, as I shall presently show. Section 185 corresponds to section 100 of the English Companies Act of 1862, and section 188 to section 103 thereof. These two sections are reproduced below for facility of reference:‑

"100. The Court may at any time after making an order for winding up a company, require any contributory for the time being settled on the list of contributories, trustee, receiver, banker, or agent, or officer of the company to pay, deliver, convey, surrender, or transfer forthwith, or within such time as the Court directs, to or into the hands of the official liquidator, any sum or balance, books, papers, estate, or effects which happen to be in his hands for the time being, and to ‑which the company is prima facie entitled."

"103. The Court may order any contributory, purchaser, or other person from whom money is due to the company to pay the same into the Bank of England or any branch thereof to the account of the official liquidator instead of to the official liquidator; and such order may be enforced in the same manner as if it had directed payment to the official liquidator." These sections came up for interpretation before the English Courts in In re : United English and Scottish Assurance Co. Ex parte Hawkins ((1867‑68) 3 Ch. App. 787 = 19 L T 232) and in In re : Vimbos, Ltd. ((1900) 1 Ch. 470 = 69 L J Ch. 209). In the first case, a creditor of a joint stock company obtained a garnishee order attaching money of the company in the hands of a banker, and subsequently a petition for winding up of the company was presented; and after presentation of the petition, but before the winding up order, the creditor obtained payment of the money from the banker. The Official Liquidator then applied under section 100 of the Companies Act, 1862, for the creditor to refund the money, on the basis that the creditor could be considered a trustee within the meaning of section 100, but section 103 was even pressed into service. The Vice‑Chancellor passed an order for repayment to the Liquidator, but on appeal, Sir. W. Page‑Wood, L. J., held that in his opinion the 100th section was intended in the first place to prevent expense in the company's proceedings against its own officers. The operation of the section must be limited to the classes of persons, which it mentioned. He said this more confidently because of Hollingworth's case (54 E R 399) and Cox's case (64 E R 435), which were under an analogous section of the earlier Act of Parliament. The 103rd section did not enlarge the provisions of the 100th, but only gave the Court power to order payment into the Bank of England to the accounts of the Official Liquidator, instead of payment to the Official Liquidator himself. The italicised words above give the true import of section 188.

5. In the second case, the debenture‑holders had appointed a receiver to realize the assets of the company and there was also a proceeding for the liquidation of the company. The receiver of the debenture‑holders received certain assets and made pay ments to the debenture‑holders and retained a certain sum as his remuneration. The liquidator called by summons in the winding up for an order to fix the remuneration of the receiver and claiming that the balance should be paid over to the Liquidator. It was held by the Court that this was not a matter in which the Court in liquidation had any jurisdiction. The claim against the receiver was one for which the Liquidator must bring a suit. The summons were dismissed, holding that the Court had no jurisdiction in the matter.

6. Sections 185 and 188 of the Companies Act, 1913, also correspond to sections 149 and 152 of the Indian Companies Act, 1882. These sections are reproduced below:‑

"149. The Court may, at any time after making an order for winding‑up a company, require any contributory for the time being settled on the list of the contributories, trustee, receiver, banker or agent or officer of the company to pay, deliver, convey, surrender or transfer forthwith, or within such time as the Court directs, to or into the hands of the Official Liquidator, any sum or balance, books, papers, estate or effects which happen to be in his hands for the time being, and to which the Company is prima facie entitled."

"152. The Court may order any contributory, purchaser or other person from whom money is due to the Company to pay the same into the Bank of Bengal, the Bank of Madras or the Bank of Bombay, as the case may be or any branch thereof respectively, to the account of the Official Liquidator instead of to the Official Liquidator; and such order may be enforced in the same manner as if it had directed payment to the Official Liquidator."

These sections came up for consideration by the Lahore Chief Court in Tarachand Jermadas v. Official Liquidator People's Bank of India, Limited (46 P R 1915). In this case the People's Bank of India, Limited, was being wound up by the Court at Lahore, and in the course of the winding up proceedings, and on the application of the Official Liquidators, the District Judge had issued notices to certain persons to refund to the Official Liquidators sums of money respectively realised by them in execution of decrees obtained in suits against the Bank instituted after the said Bank had suspended payment. Eventually, the learned District Judge had directed the respondent to refund to the Official Liquidators such sums as they had respectively realised in execution of their decrees, and the Official Liquidators to take action under the Act to recover such amounts. On appeal the learned Judges of the Chief Court held that the order was without jurisdiction as there were no provisions in the Indian Companies Act, 1882, which enable the Court directing the winding up to recover or authorise the recovery of moneys in the hands of persons other than those expressly mentioned in section 149, by summary process. Their Lordships observed that section 152 merely provided that in cases where the Court directs certain persons to pay money, it may, instead of directing the money to be paid to the official liquidator, direct that such money shall be paid into the Bank therein specified. In other words, it was in the nature of a supplement of section 149, and did not per se enlarge the jurisdiction of the Court as to the persons to whom such orders may be given. Reliance was placed on the above‑mentioned case, United English and Scottish Assurance Company: ex pane Hawkins. It was further observed that sections 149 and 152 of the Indian Companies Act, 1882, corresponded with sections 100 and 103 of the English Companies Act, 1862, and that it had been authoritatively settled by the Courts in England that section 100 of the English Act was applicable only to the persons therein specifically mentioned and must not be extended to include other persons. The same view was taken by a Division Bench of the Allahabad High Court in Messrs John Bros. v. Official Liquidator, Agra Spinning and Weaving Mills Co., Ltd. (A I R 1936 All. 808). It was specifically held in this case that the words "or other person from whom money is due" have a reference to a person from whom money is due under section 185 so far as it is intended that an order enforcing payment should be made, but as regards other persons, from whom money is due, it is open to the Court to pass an order asking them to pay the money into the Bank, instead of to the Liquidator. The two English cases, cited already, were relied on.

7. In the matter of Lakshhmi Flour Mills Co. (A I R 1925 All. 101), it was held that a mere debtor of a company in liquidation was not a contributory of the company within the meaning of section 158 of the Indian Companies Act, 1913, which defines "contributory" as "every person liable to contribute to the assets of a company in the event of its being wound up, and, in all proceedings for determining and in all proceedings prior to the final determination of the persons who are to be deemed contributories, includes any person alleged to be a contributory." It was observed that a debtor of the company was liable to pay, at all times whether the company was going on or had gone into liquidation, and that it could not, therefore, be said that the debtors were liable to contribute to the assets of the company in the event of its being wound up.

8. Thus, it has been held on good authority, that the Court has power to require the persons who are mentioned in section 185 of the Companies Act to pay money due or hand over property or documents, etc., to the Official Liquidator, while under section 188 of the Act, the Court has power to order contributory or a purchaser from a contributory or the other persons mentioned in section 185 from whom the money is due to the company to pay the money due into the account of the Official Liquidator in a scheduled bank instead of to the Official Liquidator. In other words, this section merely substitutes the bank for the Official Liquidator. It does not enlarge the jurisdiction of the Court as to the persons to whom orders could be given.

9. The respondent does not fall in the category of persons mentioned in section 185 of the Companies Act. He is, at best, a debtor of the society and is not a contributory or a trustee, receiver, banker, agent or officer of the Bank. Consequently, he cannot be directed to pay the amount in respect of which he executed the pronote, which is the basis of the claim in these proceedings under section 185, the pronote being for the amount due from the respondent for the unpaid subscription as a member of the Small Savings Scheme.

10. For these reasons, this petition is dismissed, but there will be no order as to costs.

S. Q.

Petition dismissed.

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