Case: The Collector of Sabarkantha Vs. Shankarlal Kalidas Patel &amp; Another

he could not have recourse to the provisions of S. 186 of the Act.13. Mr. Rane then points out that in his application to the Court the Liquidator has claimed interest at 9 per cent from the date of the resolution and, therefore, it must be inferred that the demand made by the Liquidator was based on the resolution. The most that can be said is that the demand for interest was based on that resolution but nothing more. We do not think that this circumstance conclusively indicates that the Liquidator had based his demand for the unpaid call money on the resolution of the Board of Directors.14. Under the Companies Act a Liquidator is given a right to move the court for recovery of moneys due under certain provisions of that Act. Section 187 of the Act is a provision which empowers the Court to order in certain circumstances the payment to the Liquidator of moneys which he can claim under the Statute. It is contended by Mr. Rane that even in such a case the question of interest would arise. Whether it does so or not it is sufficient for the purpose of this case to say that no proper application was made by the liquidator under S. 187 of the Act. The Companies Act provides a form for making an application in this behalf. The Liquidator should have made an application in that particular form and given all the particulars which are required to be mentioned in the application. Then again before the Court can grant an application under S. 187 it must be satisfied that the payment of the money sought by the Liquidator is necessary to satisfy the debts and liabilities of the company and costs, charges or expenses of the winding up or for the adjustment of the rates of the contributories themselves. The application which is before us cannot be ascribed to S. 187 of the Act because all the particulars which are necessary to be placed before the Court for enabling it to decide the various matters referred to in S. 187 are not set out in that application. There is apparently no time limit for making an application under this section, and it will be open to the Liquidator to make such an application even now. The consequence of our view would, therefore, be that the order of the court below requiring the State to pay Rs. 50,000 to the Liquidator in respect of the call money will have to be set aside.15. The next question to be considered is whether the direction regarding the payment of interest at 9 per cent on Rs. 50,000 is correct. In our opinion, in the absence of a provision in the Companies Act and in the absence of a demand for interest in the letter of the Liquidator it was not competent to the Court to award interest against the State. That direction is also liable to be set aside.16. Finally, there remains the question of payment of rent. It is said that the Court was competent to make such an order under S. 185 of the Act. That section runs thus:-"At any time after the making of the winding up order, the Court may require any contributory and any trustee, 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".We have already held that the State must be regarded as a contributory and that the contention that it does not appear that a list of contributories had been settled ought not to be permitted to be raised on behalf of the State. From this it would follow that the provisions of S. 185 could be availed of against the State. There is, however, nothing in those provisions which entitled the Court to require a contributory to pay rent in respect of property in the possession of the contributory. If the State had collected any money belonging to the company or had in its possession any money belonging to the company then, of course, an order could have been made by the Court requiring the State to pay such money to the Liquidator. Mr. Shah, who appears for the respondent, says that the State of Bombay had let out the buildings belonging to the company to the Civil Supplies Department on a rent of Rs. 500 per month and that after collecting the rent from the Civil Supplies Department, the State had actually paid a part of the rent so collected to one of the Directors of the Company and that consequently the State must be held liable to pay the rent for the entire period during which the Civil Supplies Department was in occupation of the building. For one thing it does not appear that any rent was collected by the State from the Civil Supplies Department except for a period of five months or so and a part of the rent for this period was actually paid by the Government to a Director of the Company. Apart, however from that it cannot be disputed that the Civil Supplies Department is a limb of the State and is not a separate entity. Therefore, even though the premises may have been made available for the use of the Civil Supplies Department and even though a rent of Rs. 500 per month was fixed with respect to those premises and actually recovered for a period of five months, it cannot be said that the State had in its hands moneys belonging to the Company collected by the State from any person or entity. In these circumstances, we are of the opinion, that no order can be made against the Government requiring it to pay rent of Rs. 500 per month to the Company in respect of rent payable by the Civil Supplies Department.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Here we have the fact that the State of Idar had entered into possession of this property by virtue of the agreements of 1945 on the ground that it was a share-holder to the extent of two lakhs of rupees. After the merger the State of Bombay entered into possession of this property. It would therefore, follow that the State of Bombay intended to assert the same rights which the former Idar State purported to assert when it had entered into the agreement. Those rights were based, as already stated, upon the initial fact that the State of Idar was a shareholder to the extent of Rs. 2 lakhs and in respect of which it had paid,Rs. 1,50,000 by way of share money. A balance of Rs. 50,000 was payable by the State to the company. This liability must naturally attach to the right which the State of Idar had by reason of the fact that it had paid Rs. 1,50,000. Now the State of Idar could not have exercised those rights and ignored the liabilities which were attached to those rights. The State of Bombay did not repudiate expressly any liability after it entered into possession of this property. It could, therefore, be said that by implication the State of Bombay accepted that liability. Apart from that the Court cannot permit a party to allow itself to take only the benefits arising out of a contract or a bargain and dispute the liabilities arising therefrom. Therefore, looking at the matter either way, it would be clear that the State of Bombay as the successor State is bound by the same obligation by which the State of Idar was bound. Alternatively it can be said that the State of Bombay cannot be allowed to assert their rights as share-holders but dispute the liabilities arising from the fact that they are the share-holders.As regards the second ground we may point out that though the agreement between the State of Idar and the M.D. Industries Ltd. whereunder the latter had undertaken to take over the shares standing in the name of the State and pay for them and though there is also an agreement between the company on the one hand and the M.D. Industries on the other that the latter would pay the price of the shares to the Idar State and get the shares transferred to themselves, there has in fact been no transfer of the shares in the name of M. D. Industries Ltd.In the absence of any such transfer we are clear that the liability of the original share-holders, i.e., the State of Idar, continued. Since the State of Idar was liable, the State of Bombay, which is the successor of the State Idar, is alsoS. 185 provides that an order of the Court could be made against a contributory whose name is settled in the list of contributories. Mr. Rane points out that no such list has been made and at any rate the State of Bombay has not been settled in the list of contributories. That may be so. Here again the point was not taken either in the Court below or in the Memo of appeal. In such a circumstance we do not permit Mr. Rane to raise thisseems to us that this contention is not correct because no reference whatsoever is made to that resolution in the Liquidators letter. Apart from that, under that resolution only Rs. 25 per share, i.e., in all a sum of Rs. 25,000 was called, while the total amount of unpaid share-money was Rs. 50,000.The Liquidator in his letter had made a demand for the amount of Rs. 50,000. Therefore, it is clear that his demand is not based upon the resolution. Since it is not based upon that resolution he could not have recourse to the provisions of S. 186 of the Act.13.Mr. Rane then points out that in his application to the Court the Liquidator has claimed interest at 9 per cent from the date of the resolution and, therefore, it must be inferred that the demand made by the Liquidator was based on the resolution. The most that can be said is that the demand for interest was based on that resolution but nothing more.We do not think that this circumstance conclusively indicates that the Liquidator had based his demand for the unpaid call money on the resolution of the Board ofCompanies Act provides a form for making an application in this behalf. The Liquidator should have made an application in that particular form and given all the particulars which are required to be mentioned in the application. Then again before the Court can grant an application under S. 187 it must be satisfied that the payment of the money sought by the Liquidator is necessary to satisfy the debts and liabilities of the company and costs, charges or expenses of the winding up or for the adjustment of the rates of the contributories themselves. The application which is before us cannot be ascribed to S. 187 of the Act because all the particulars which are necessary to be placed before the Court for enabling it to decide the various matters referred to in S. 187 are not set out in that application. There is apparently no time limit for making an application under this section, and it will be open to the Liquidator to make such an application even now. The consequence of our view would, therefore, be that the order of the court below requiring the State to pay Rs. 50,000 to the Liquidator in respect of the call money will have to be setour opinion, in the absence of a provision in the Companies Act and in the absence of a demand for interest in the letter of the Liquidator it was not competent to the Court to award interest against the State. That direction is also liable to be setone thing it does not appear that any rent was collected by the State from the Civil Supplies Department except for a period of five months or so and a part of the rent for this period was actually paid by the Government to a Director of the Company. Apart, however from that it cannot be disputed that the Civil Supplies Department is a limb of the State and is not a separate entity. Therefore, even though the premises may have been made available for the use of the Civil Supplies Department and even though a rent of Rs. 500 per month was fixed with respect to those premises and actually recovered for a period of five months, it cannot be said that the State had in its hands moneys belonging to the Company collected by the State from any person or entity. In these circumstances, we are of the opinion, that no order can be made against the Government requiring it to pay rent of Rs. 500 per month to the Company in respect of rent payable by the Civil Supplies Department.