Petition for Special Leave to Appeal No 5844 of 1980
From the Judgment and Order dated 1 2 1979 of the Karnataka High Court in OSA No 5 of 1975
Y section Chitale and P R Ramases for the Petitioner
NEMO for the Respondent
The Order of the Court was delivered by BHAGWATI J We think that the view taken by the High Court is the correct view on the interpretation of sections 529 and 530 of the 
Section 529 provides that in the winding up of an insolvent company the same rules shall prevail and be observed with regard to the provable debts as are in force to the time being under the law of insolvency with respect to the estate of persons adjudged insolvent
This provision brings in the applicability of section 46 of the Provincial Insolvency Act which reads Where there have been mutual dealings between an insolvent and a creditor proving or claiming to prove a debt under this Act an account shall be taken of what is due from the one party to the other in respect of such mutual dealings and the sum due from the one party shall be set off against any sum due from the other party and the balance of the account and no more shall be claimed or paid on either side respectively
 This rule enacted in section 46 of the Provincial Insolvency Act with regard to the debts provable by a creditor against the insolvent must therefore likewise apply in regard to debts provable against a company in winding up
Consequently when the respondent in the present case claimed to prove her debt against the company in liquidation she was entitled to the benefit of the rule enacted in Section 46 of the Provincial Insolvency Act and she could legitimately claim that since there were admittedly mutual dealings between her and the company in liquidation an account should be taken in respect of such mutual dealings and only that amount should be payable or receivable by her which is due at the foot of such account
It is true that section 530 provides for preferential payments but that provision cannot in any way detract from full effect being given to section 529 and in fact the only way in which these two sections can be reconciled is by reading them together so as to provide that whenever any creditor seeks to prove his debt against the company in liquidation the rule enacted in Section 46 of the Provincial Insolvency Act 351 should apply and only that amount which is ultimately found due from him at the foot of the account in respect of mutual dealings should be recoverable from him and not that the amount due from him should be recovered fully while the amount due to him from the company in liquidation should rank in payment after the preferential claims provided under section 530
We find that the same view has been taken by the English Courts on the interpretation of the corresponding provisions of the English Companies Act 1948 and since our Companies Act is modelled largely on the English Companies Act 1948 we do not see any reason why we should take a different view particularly when that view appears to be fair and just
We may point out that Gore Browne in his book on Company Law 43rd Ed at page 34 14 also confirms this view Indeed all claims provable in the winding up may be the subject of set off provided that there is mutuality Moreover we find that the observations of the House of Lords in National Westminster Bank Ltd vs Halesowen Presswork  Assemblies Ltd are also to the same effect
We may also usefully refer to the observations of Sir Ernest Pollock M R in re
City Life Assurance Co Ltd where the learned Master of the Rolls after referring to section 207 of the Companies Act 1908 section 317 of the Companies Act 1948 which corresponds to section 529 of and section 31 of the Bankruptcy Act 1914 which corresponds to section 46 of the Provincial Insolvency Act says It is to be observed that section 31 of Bankruptcy Act 1914 is definite in its terms that where there is a mutual credit mutual debt or other mutual dealings the sums are to be set off and the balance of the account and no more shall be claimed or paid on either side respectively
It is not merely permissive it is a direct statutory enactment that the balance only is to be claimed in bankruptcy
 We are in agreement with these observations and affirm the view taken by the Karnataka High Court in the judgment sought to be appealed against
We accordingly dismiss the special leave petition on merits after condoning the delay in filing it
PBR Petition dismissed


Summary:
The respondent claimed that since there were mutual dealings between her and the company in liquidation an account should be taken in respect of such mutual dealings and only that amount should be payable or receivable by her which is due at the foot of such account
She claimed that she was entitled to the benefit of the rule enacted in section 46 of the Provincial Insolvency Act
The High Court upheld her contention
Dismissing the special leave petition by the Official Liquidator  HELD 1 In view of the provisions of section 529 of the the rule enacted in section 46 of the Provincial Insolvency Act with regard to debts provable by a creditor against the insolvent must equally apply in regard to debts provable against a company in winding up
350 F 2 Although section 530 provides for preferential payments that provision cannot in any way detract from full effect being given to section 529 which enacts that in the winding up of an insolvent company the same rules shall prevail and be observed with regard to provable debts as are in force for the time being under the law of insolvency with respect to the estate of persons adjudged insolvent
The only way in which sections 529 and 530 can be reconciled is by reading them together so as to provide that whenever any creditor seeks to prove his debt against the company in liquidation the rule enacted in section 46 of the Provincial Insolvency Act should apply and only that amount which is ultimately found due from him at the foot of the account in respect of mutual dealings should be recoverable from him and not that the amount due from him should be recovered fully while the amount due to him from the company in liquidation should rank in payment after the preferential claims provided under section 530350H Gore Brown on Companies 43rd Ed
at page 34 14
National Westminster Bank Ltd vs Halesowen Presswork and Assemblies Ltd 19721 All E R 641 at 659 and Re City Life Assurance Co Ltd at 457 referred to