Case: Central Bank of India Vs. M/s. Elmot Engineering Company

The averments in the plaint are briefly asThe first respondent is a limited company. Third and 4th Respondents are the Advisers and Directors respectively of that firstThe first respondent deposited with the appellant the documents of title relating to its landed property at Industrial Development Area, Nacharam Tehsil, District Hyderabad (presently Rangareddy District) with an intention to create an equitable mortgage of immovable property covered by those documents together with all structures and buildings thereon.On 6.10.76, the third and fourth respondents executed separate guarantee in respect of the facilities granted to the first respondent guaranteeing repayment of amounts. On 20.1.84, one of the Directors declared that equitable mortgage by deposit of title deeds dated 6.10.75 would also form security for the letters of credit, fresh funded term loan, guarantee limited and other facilities allowed to the first respondent, by the appellant. The necessary forms in this regard were filed before the Registrar of Companies, Maharashtra at Bombay for registering the charges.In order to secure the amount under the various heads/credit facilities the first respondent deposited on 17.8.79 with the appellants Sundernagar Branch, Bombay, an agreement for sale in respect of the first floor of the building belonging to the first respondent. The first respondent requested that its account be transferred from Sundernagar Branch, Bombay to Hyderabad Main Branch of the appellant. O.S. No. 507 of 1989 came to be filed by the appellant for recovery of a sum of Rs. 58,783.25 being expenses incurred from time to time in respect of these properties. Both the suits are pending adjudication.Premium Automobiles Limited filed a winding up petition against the first respondent in Company Petition No. 645 of 1988 before the High Court of Bombay. By an order dated 23.6.90 the first respondent was ordered to be wound up. An official Liquidator (Respondent No. 2) was appointed as Liquidator of the Company. On 23.7.90 a meeting was held in the presence of the Office Liquidator. The appellant brought to the notice of the Official Liquidator the pendency of these two suits.The appellant filed Company application No. 229 of 1991 in the aforesaid Company Petition under Section 446 of the Companies Act (hereinafter referred to as the Act). The prayer in the application was for leave to prosecute the two Original Suits bearing Nos. 7 of 1986 and 507 of 1989 pending on the file of the Additional Subordinate Judge, Rangareddy District at Saroor Nagar. According to the appellant since the properties were suitable in Rangareddy District it would be just and convenient to continue to prosecute the suits in Hyderabad.On 26.3.92, the learned Single Judge passed an order directing the two suits be transferred to the Bombay High Court. Aggrieved by that order Appeal No. 428 of 1992 was preferred by the appellant. That was dismissed summarily by the impugned order dated 15.12.1992. Hence, the special leave petition.

Court's reasoning:
As far as matters which could be expeditiously and cheaply decided by the Company Court. In granting leave under this Section, the court always takes into consideration whether the company is likely to be exposed to unnecessary litigation and cost.That case no doubt dealt with theto Section 446, namely, Section 171 of the Indian Companies Act, 1913. But that does matter.In this case the appellant is admittedly a secured creditor. It sues on a mortgage by deposit of title deeds. Such a suit is not likely to involve a long drawn out trial.Without intending to lay down the law broadly but confining only to the facts of this case, we feel that the order or transfer of the suits to the High Court of Bombay cannot be supported. We are unable to uphold the finding of the High Court when itexamination of facts and circumstances of the case, I am of the opinion that defending at a far distance in the Court of Additional Subordinate Judge, Rangareddy District at Saroor Nagar in Andhra Pradesh is going to be more expensive than if the said suits are continued and tried in this Court on the same being transferred to this Court. It is neither convenient nor proper that the official Liquidator appointed Liquidator of the Respondent No. 1 should be asked to defend the said suits in that Court since the wasteful expenditure is to be avoided.This transfer will result in greater expenditure to the appellant Bank which certainly is avoidable "than the wasteful expenditure to the Official Liquidator.