THE RAJAH OF VIZIANAGARAM versus OFFICIAL RECEIVER, VIZIANAGARAM

Citation: [1962] SUPP. 1 S.C.R. 344 · Decided: 06-11-1961 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

1961 
;.·tsar Sing.'a 
V, 
Ba/u:ant SinKh 
1Vanrh~ J. 
1961 
}lo~mbtr G. 
;144 SUPHEME COURT REPORTS (19li2] SUPP. 
1
which they arc servitors. In view of our decision 
on issue No. li, it is unnecessary to consider issull 
No. 2 on which a finding was called for by this 
Court by ita interlocutory judgment in 1958. 
The appeal therefore fails; 
there would be 
no order as t-0 costs. 
Ap11eril dismissed. 
THE RAJAH OJ<' VIZIANAGAHA!il 
v. 
OFFICIAL RECEIVEit, VIZIANAGARAM 
(K. SUBBA RAO, J. c. SHAH, RAGHUHAR DAYAL 
and J. R MUDHOLKAR, JJ.) 
JV inding up-Com puny I 11Wrporaled in England-U11-
1-.uistered 
company-Fureign credit-Or1-l/ can prove their 
claims-Indian Companies Act, ]913 (VII of 1913), ss. 270 
to 276. 
The company was incorporated in England. The com-
pany took lease of certain land from the appellant. On the 
application of the appellant the company was being wound up 
as an unrcghtcrcd company. Certain foreign creditors of the 
company filed proofs of their claim before the official liqui-
dator. The appellant objected to their claim• being entertain-
ed on the ground that these liquidation proceedings were 
only for the benefit of the Indian creditors, and that the 
foreign creditors were not entitled to prove their debts in' these 
proceedings. The official liquidator rejected these objections 
and allowed the foreign crediton to prove their claims. 
Htld, that both on account of specific provisions of the 
Act and of the general principles, foreign creditors can prove 
their claims in the winding up of an unregistered company. 
The order of winding up of an unrcgiitercd company 
operates in favour of all the crcd.itors and of all the c_ontri-
butorics of the company. There 1s no reasonable basu for 
depriving the foreign creditors 
from participa~in~ in t~e 
I
distribution of the assets collected by the official hqu1dator m 
the winding up proceedings 
in India. 
All the creditors 
including the foreign creditors will get ratcably out of the 
assets of the company which have been collected. 
When that 
company itself is wound up, all of them would be enutled to 
(1) S.C.H.. 
SUl'REME COURT REPORTS 
345 
similar rateable •hare in the assets collected during the wind-
ing up proceedings of the company in the country Y..'here it is 
incorporated. The liquidation of the company_in countr~es 
other than where the company is incorporated and has its 
principal office, is just ancillary to the simultaneous liquidation 
of that company in the country of its domicil. or any winding 
up of the company in future. . 
The rights and liabilities of the creditors and contri-
butories respectively when a company is wound up in the 
country of its domicil will be limited to their original rights 
and liabilities after taking into consideration how much of 
those rights and liabilities have been already satisfied during 
the winding t1p proceedings of its offices in other countries. 
The couits of a country dealing with the winding up of 
a co1npany can ordinarily deal with the assets within their 
jurisdiction and not with the assets of the company outside 
their jurisdiction. 
It is therefore necessary that if a company 
carries on business in countries other than tht country in which 
it is incorporated, the courts of those countries too should be 
able to conduct winding up proceedings of its business, in their 
respective countries. 
Such winding up of the business in a 
country other than the country in which the company was 
incorporated is really an ancillary winding up of the main 
company whose winding up may have been taken up already 
in that country or may be taken up at the proper time. 
'· 
In re Commercial Bank of South Australia, L. R. [1886] 
33 Ch. D. 174; In re Hibernian Met·chants Ltd., L. R. [1958] 
I Ch. D. 76; In re English, Scottish, and Australian Chartered 
Bank, L. R. [!893] 3 Ch. D. 385; Russian and English Bank 
v. Baring Bros. [l 936] I All. E. R. 505 and Re Azoff-Don 
Commercial Bank, [!954] I All. E. R. 947, referred to. 
CIVIL APPELLATE JumsDIOTION: Civil Appeal 
No. 225 of 1£61. 
Appeal from the judgment and order dated 
February 9, 1951, of the Madras High Court in 
A. A.O. No. 249 of 1949. 
R. Thiagarajan and P . .Ram Reddy, for the 
appellant. 
K. Bhimasankaram and T. V. R. 'I'atachari, for 
respondent No. 1. 
D. N. Mukherjee and B. N. 
Ghosh, for 
respondent No. 2. 
1961 
The Rajah of 
Vizianagaram 
•• 
Official Rtctiver,, 
Vizianegaram 
j !JtjJ 
'J'/1e ltajah oJ. 
Vi::ianogart

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