HARINAGAR SUGAR MILLS LTD. versus M. W. PRADHAN

Citation: [1966] 3 S.C.R. 948 · Decided: 21-03-1966 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed
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Judgment (excerpt)

HARINAGAR SUGAR MILLS LTD. 
A 
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v. 
M. W. PRADHAN 
....... 
March 21, 1966 
(K. SUBBA RAO, V. RAMASWAMJ AND]. M. SHELAT, JJ.) 
B 
CivU Procedure Code 1908, OXL r. 1 (d)-Receiver directed by court 
,
lo flU winding up pOl/tlon agabut debtor Company--Such direction whether 
permltl1d by said rwlt. 
Indian Compania Act, 1956, ss. 439(1) and 434-Wiuthtr Receiver 
appolnttrd by Court is a 'creditor' within the meaning of s. 439-Notl~ 
11iven by Receiver to company asking It to pay 10 the Additional Collector c 
t~ income tax demanded from it under s. 46 of the Indian Income-tax Act, 
1922--.s'uch notice whether contravenes s. 434-Company not moking pay-
ment to Additional Collector whttMr 'negkcts to pay lls deb(, within 
meaning of •. 434. 
Tho appellant company purchased a farm from a joint Hindu family 
tor Rs. 40 laca out of which Rs. 25 lacs remained to be paid. The lncome-
IAX Ofllcer served a notice under s. 46 of the Indian Income-tax Act, 
1922 on the company asking it not to pay the said amount of Ra. 2S lacs 
to the joint family but towards income-tax payable by the said family. 
Thereafter ooe of the mernben of the joint family filed a suit for the 
partition of the family assets and at his request the coon appointed a 
Rocciver. 
The Receiver by notice 
under s. 434 of the Companies Act 
asked the company to pay Rs. 25 lacs towards income-lax to the Addi-
tional Collector and when it did not do so he 90Ught 
permis.ion from 
the Coun under 0.XL r. I (d) of the Code of c:vil Procedure to filo a 
~tition for winding up against 
the company .. which was allowed. 
The 
Company's appeal to the Division Bench of the High Court failed 
and 
it appealed to this Court by special leave. 
The Court had to comider (i) 
whether the coun could under O.XL r. l(d) of the Code authorise the 
Receiver to file a winding-up petition against the company, (ii) whether 
a received was a 'creditor' within the meaning of s. 439(1) of the Indian 
Companies Act, (iii) whether in asking the company to pay the sum 
in question to the Additional Collector the Receiver contravened s. 434, 
(iv) whether in not making the payment the company 'neglected to pay 
its debt' and (v) whether there was a bona fide dispute as to the liability 
of the company to pay the debt. 
HELD : 
(i) AMuming that a petition for winding up of a company 
WolS not a suit wilhin t~c meaning of O.XL r. I (d) of the Code, the other 
powers mentioned therein wero comprehensive enough to enable the Re-
ceiver to take D"""-'sary proceedings to realise the property of and debl5 
due to the joint family. 
A winding up petition ia one of the modes of 
realising deb ta form a company, and the Respondent therefore bad power 
to file such a petition. 
Bowes v. Hope Lift Insurance a1ld GUIJ1'antt1 Co. (1865) II H.L.C. 
388, Rt Gtneral Company for Promotion of Land Credit, (1870) L.R. S 
Ot.D. 380 and Re National Ptrmontnt Building Socitty, (1869) L.R. S 
Ch.D. 309, Relied on. 
That apart, under 0.XL. R. I ( d) the Court can also confer on the 
Rcc:eivor ailch of those powers as the Coun think& ftL 
It is implicit in 
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HARINAGAR MILLS v. PRADHAN (Subba Rao, J.) 
949' 
this apparently wide power that it shall be confined to the scope of the 
Receiver's administration of the estate. If, for the proper and effective 
management of the estate of which the Receiver has been appointed the 
Court thinks fit that it shall confer power on the said Receiver to talce 
steps for the winding up of the debtor-company, it must be conceded that 
the Court shall have power to give necessary directions to the Receiver 
in that regard. [951 G-952 E] 
(ii) The Receiver was a 'creditor' within the meaning of s. 439(1) (b} 
of the Indian Companies Act. [956 DJ 
In Re Sacker, Ex Parle Sacker (1888) L.R. 22 Q.B. 179 and In re-
Macoun, L.R. (1904) 2 K.B. 700, considered. 
K. V. Mallayya v. T. Ramaswami & Co .• [1963) II M.L.J. 100 (S.C.), 
relied on. 
(iii) By asking the company to pay the sum in question to the Addi-
tion Collector the requirements of s. 434 wer~ not contravened. [957 DJ 
Japan Cotton Trading Co. Ltd. v. Jajodia Colton Mll/J Ltd. (1926) 
l.L.R. 54 Cal. 345, Kureshi v. A.rgu Footwear Ltd. A.I.R. 1931 Rang. 306 
and W. T. Henley's Telegraph Works Co. Ltd., Calcutta>". Gorak/ipur Elec-
tric Supply Co. Ltd., Allahabad, A.I.R. 1936 All. 840, referred to. 
(iv) By not paying the amount in question to the Additional Collec-
tor the compa
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