Televista Electronics P. Ltd. vs Mass Communications And ...
1979 Latest Caselaw 70 Del

JUDGMENT

Sultan Singh, J.

1. The question for decision is whether an interpleader suit is a suit or a proceeding within the meaning of Section 446 of the Companies Act, 1956, maintainable only with the leave of the court in which liquidation proceedings are pending.

2.An application under Section 446 of the Companies Act, 1956, read with Rule 9 of the Companies (Court) Rules, 1959, has been filed on behalf of the official liquidator, Bombay, representing defendant No. 1.

3. The plaintiff filed this interpleader suit on 6th May, 1976, praying that defendants be required to interplead concerning their claims to the amount of unpaid bills admittedly payable by the plaintiff. Defendant No. 1, namely, Mass Communications and Marketing Pvt. Ltd., was doing the business of advertising agents and was accredited agent to various agencies of publications and it was getting advertisements of the products of the plaintiff and used to publish the same in various newspapers, magazines, periodicals, etc. It used to submit bills for such published advertisements to the plaintiff who has been making payments from time to time to defendant No, 1. Defendant No. 1 after deducting its commission used to pay the publication charges to the various newspapers, magazines and periodicals. In July, 1975, the plaintiff, started receiving communications on behalf of various other defendants asking the plaintiff not to pay the amount due from it to defendant No. 1 and to pay the same to other defendants. On the other hand, defendant No. 1 by its communication dated 7th August, 1975, told the plaintiff that any payment made by it to any other defendant shall not discharge the plaintiff from its liability to defendant No. 1. The plaintiff, therefore, did not make payment to any of the defendants. According to the bills received from defendant No. 1, plaintiff admits its liability to pay a sum of Rs. 1,40,064.15. According to the plaintiff, defendant No. 2 claims that it holds power-of-attorney on behalf of defendant No. 1 and that the amount due to defendant No. 1 be paid to it and to no one else. Plaintiff further says that the other defendants claim amounts from the plaintiff and dispute the right of defendant No. 1 to receive the money in question from the plaintiff. The plaintiff received a notice dated 9th September, 1975, under Section 226(3) of the I.T. Act, 1961, issued by the ITO, Companies Circle VI(10), Bombay, defendant No. 4, informing the plaintiff that the amount was due from defendant No. 1 on account of income-tax arrears and the said notice required the plaintiff not to pay the amount to defendant No. 1. The defendant No. 7 has also filed a suit at Madras against the plaintiff regarding the money in question claimed by defendant No. 1. The plaintiff, therefore, prays that the defendants be restrained by an injunction from taking any proceeding against the plaintiff in relation to the subject-matter of the suit, that the High Court of Madras in Original Suit No. 181/75 filed by defendant No. 7 against the plaintiff be informed about the institution of the present suit to stay proceedings in that suit, and that the plaintiff be discharged from all liabilities in relation to the aforesaid amount of money upon the plaintiff delivering the same to such person or persons who may be authorised by the court to receive the same. By this application the official liquidator, Bombay, alleges that defendant No. 1, Mass Communications Private Ltd. (hereinafter called "the company"), has its registered office at the 7th Floor, Nirmal, Nariman Point, Bombay, that the company was ordered to be wound up by the High Court of Bombay by an order dated 23rd January, 1976, that he was appointed as a liquidator of the company by the High Court of Bombay. The official liquidator alleges that the present suit cannot proceed without the leave of the Bombay High Court.

4. The plaintiff alleges that it has not filed the suit affecting the assets of the company, that Section 446 of the Companies Act, does not apply to interpleader suit as the plaintiff is not claiming any relief against the company in liquidation (defendant No. 1), and, therefore, the question of obtaining leave of the Bombay High Court does not arise.

5. Section 446 of the Companies Act, 1956, is as under :

"(1) When a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with against the company, except by leave of the court and subject to such terms as the court may impose.

(2) The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of--

(a) any suit or proceeding by or against the company ;

(b) any claim made by or against the company (including claims by or against any of its branches in India);

(c) any application made under Section 391 by or in respect of the company;

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company ;

whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).

(3) Any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court.

(4) Nothing in Sub-section (1) or Sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court."

6. The applicant has filed a copy of the notification issued by the High Court of Bombay to the official liquidator regarding winding up of the company, defendant No. 1. Under Section 446(1) a suit against a company cannot be filed when a winding up order has been made against such a company except by obtaining leave of the court where the winding up proceedings were taken. Admittedly, the plaintiff has not obtained any such leave from the High Court of Bombay which passed the winding-up order. The learned counsel for the plaintiff submits that the present suit does not affect the assets of the company, that Section 446 of the Companies Act does not apply to interpleader suit and, as such, no leave of the court is necessary. From the reading of the plaint it appears that defendant No. 1 is entitled to certain commission of advertisement charges payable by the plaintiff to the various agencies through defendant No. 1. Plaintiff has admitted in the plaint that defendant No. 1 after deducting its commission used to pay the advertisement charges to the various advertising agencies. Defendant No. 1-company, thus, has an interest in the amount in suit which may be limited to the extent of its commission in the amount payable by the plaintiff. According to the allegations contained in the plaint it appears that there was a contract between the plaintiff and defendant No. 1 for payment of the amount in question, but other defendants laid claim to pay all such payments due to defendant No. 1 from the plaintiff and it is, under these circumstances, that the plaintiff in order to obtain full discharge has filed the present interpleader suit requiring the defendants to interplead amongst themselves.

7. The learned counsel for the plaintiff has referred to the judgment in B.V. John v. Coir Yarn & Textiles Ltd. [1960] 30 Comp Case 162 and contended that for the application of Section 446 of the Companies Act the proceedings must be for the enforcement of something in the nature of a personal right against the assets of the company and further that a suit or proceeding for which leave is necessary under Sub-section (1) of Section 446 of the Companies Act must be a suit or proceeding capable of being withdrawn and disposed of by the winding up court. In this case on a reference under Section 10 of the Industrial Disputes Act, the Industrial Tribunal, Alleppey, made an award pertaining to a dispute between the company and its workmen. When these proceedings were pending before the Industrial Tribunal winding-up order was made with respect to the company. It was admitted in that case that no leave of the company court was obtained under Section 446 of the Companies Act for continuation of the proceedings before the Industrial Tribunal. The question was whether in the absence of the leave of court as required by Section 446 of the Companies Act, the liquidator was entitled to ignore the award of the Industrial Tribunal. It was held that the Industrial Disputes Act was meant to secure industrial peace so that the economy might not suffer and that a proceeding for performance of a statutory duty is not controlled by Section 446 of the Companies Act and further it was held that such a statutory enquiry cannot be held under the provisions of the Companies Act. This case is, therefore, not applicable to the facts of the present case. In the present case, there is no statutory enquiry and the subject-matter of the suit can be disposed of by the company court, i.e., the Bombay High Court.

8. The words "suit or proceeding" used in Section 446 of the Companies Act, 1956, are general and include an interpleader suit. Nothing has been painted out to exclude interpleader suit from the operation of Section 446 of the Companies Act. Who can institute an interpleader suit, and what is the procedure for it, reference may be made to Section 88 and Order 35 of the C.P.C. Rule 4 of Order 35 of the C.P.C. is as under :

"4. (1) At the first hearing the court may--

(a) declare that the plaintiff is discharged from all liability to the defendants in respect of the thing claimed, award him his costs, and dismiss him from the suit ; or

(b) if it thinks that justice or convenience so require, retain all parties until the final disposal of the suit.

(2) Where the court finds that the admissions of the parties or other evidence enable it to do so, it may adjudicate the title to the thing claimed.

(3) Where the admissions of the parties do not enable the court so to adjudicate, it may direct--

(a) that an issue or issues between the parties be framed and tried, and

(b) that any claimant be made a plaintiff in lieu of or in addition to the original plaintiff,

and shall proceed to try the suit in the ordinary manner."

9. Under this rule the court may decide the dispute, inter se, the defendants on the basis of admissions of the parties and if it is not possible to do so the court is empowered to frame the issues in the case arising between the defendants and make a claimant-defendant as plaintiff in lieu of or in addition to the original plaintiff. In the present case, according to the plaintiff, all defendants, other than defendant No. 1, claim the amount in question and dispute the right of defendant No. 1 to receive such amount from the plaintiff. In other words, defendant No. 1 has to defend the claim of the other defendants in this suit. As soon as the claimants (defendants) against defendant No. 1 are made plaintiffs in the suit in addition or in lieu of the present plaintiff, the suit is to be tried like any other suit against a company in liquidation and as such it would be a suit within the meaning of Section 446 of the Companies Act maintainable only with the leave of the court in which liquidation proceedings against the company are pending. In Eastern Holdings Establishment of Vaduz v. Singer & Friedlander Ltd. [1967] 2 All ER 1192 (Ch D) it was held that the issue of an interpleader summons to which a company in compulsory winding up is made a respondent, is a proceeding against the company within Section 231 of the Companies Act, 1948, and accordingly cannot be made without the leave of the companies court being first obtained. I, therefore, hold that interpleader suit against the company (defendant No. 1) is a suit or proceeding against the company within Section 446(1) of the Companies Act, 1956, and cannot be filed or continued without the leave of the company court.

10. Admittedly, the present suit was filed on 6th May, 1976, i.e., after the passing of the winding-up order against the company, defendant No. 1. The present suit, therefore, cannot continue unless leave of the Bombay High Court, which passed the winding-up order, is obtained by the plaintiff. I, therefore, stay the present suit directing the plaintiff to obtain the necessary leave from the High Court of Bombay under Section 446 of the Companies Act, 1956. There will be no order as to costs. Leave is granted to the plaintiff to apply for revival of the suit as and when it obtains leave from the Bombay High Court.