T.V.R. Tatachari, J.

1. This appeal has been preferred by South Asia Industries (P) Limited against the judgment of Prakash Narain. , dated May 24, 1971, in company petition No. 100 of 1970 filed on the Original side of this Court.

2. For a proper appreciation of the points that arise for determination in this appeal it is necessary to set out in detail the facts which have given rise to this appeal. The Indian National Airways Limited was a public limited company within the meaning of the Indian Companies Act, 1913, (hereinafter referred to as "companies Act, 1913"). Its authorised capital was Rs. 1. 00 crore and its issued and subscribed capital was Rs. 90 lacs. The South Asia Industries (P) Limited, which was formerly known as Lahore Electric Supply Company Limited, was also a company incorporated under the Companies Act, 1913, having its registered office at Biscuit Factory, Rajpura, in the State of Punjab and also carrying on business at No. 10, Daryaganj, Delh. At all material times and up to October 1, 1955, Govan Brothers Private Limited, having its registered office at No. 10, Daryaganj, Delhi and whose Directors were v. H. Dalmia and Rarnkrishna Dalmia, was the Managing Agent of Indian National Airways Limited. After the aforesaid date. e., October 1, 1955, Govan Brothers Private Limited resigned from its office as the Managing Agent of Indian National Airways. It is in controversy between the parties whether Govan Brothers Private Limited was also the Managing Agent of South Asia Industries Private Limited and continued to be so even after October 1, 1955.

3. The undertaking of the Indian National Airways Limited, by and under the provisions of the Air Corporations Act, No. XXVII of 1953, vested in the Indian Airlines Corporation with effect from August 1, 1953. Under section 27 of the Air Corporations Act, the Indian National Airways Limited was to receive compensation partly in cash and partly in Bonds in instalments spread over 5 years, and was also to receive interest thereon until the Bonds were redeemed. It appears that the net book value of the assets of Indian National Airways Limited on the date of the vesting was Rs. 66,10,699/13/9. Out of the said assets, the Indian Airlines Corporation refused to take over the book debts amounting to Rs. 6,83,730/3/4 and the same were left to the company to be realised. The Indian Airlines Corporation also deducted a sum of Rs. 3,50,833 towards Contingent liability (Rs. 2,15,417), Leave salary etc. (Rs. 1,29,979) and exchange adjustment (Rs. 5,437 ). As against the remaining value of the assets, the Indian Airlines Corporation paid Rs. 65,000. 00 upto December 31, 1954 in account, Rs. 9,71,683. 00 in cash and Bonds of the value of Rs. 45,62,790. 00. Upto December 31, 1955, the Indian National Airways Limited collected Rs. 3,19,398. 00 as interest from the Indian Airlines Corporation. In that manner, the Indian National Airways Limited received Rs. 69,18,871. 00 upto December 31, 1955. It is stated that there was a loss of Rs. 29,922 in the sale of the Bonds. Thus, the total compensation received upto the aforesaid date was Rs. 68,88,949. 00. It also appears that during the period 1956-57 to 1968-69, a total sum of Rs. 55,72,038. 35 was paid to the various classes of shareholders of the Indian National Airways Limited. On the vesting of the Indian National Airways Limited in the Indian Airlines Corporation, the former virtually ceased to carry on any further business activities.

4. His Excellency General Krishna Sham Sher Jung Bahadur Rana was at all material times the owner and registered holder of 24,499 fully paid up ordinary shares of the face value of Rs. 10 each and 44,125 fully paid up deferred shares of the face value of Rs. 1. 00 each in the Indian National Airways Limited. As such, he was entitled to partake and had an interest or right in the properties, assets and moneys of the Indian National Airways Limited including the compensation received by it and/or the distribution thereof in proportion to his aforesaid shareholding. According to him, at all material times, he kept his aforesaid shares in safe custody with his Bankers, the State Bank of India, at its Head Office at Calcutta. It is his case that Dividend Mandates were being issued by him in favour of the said Bank in respect of the aforesaid shares, and the said Bank used to collect from time to time, as his agent, such dividends as were declared by the Indian National Airways Limited during the time it carried on business and credit the same in the current account maintained with it by General Krishna Shamsher Jung Bhadur Rana.

5. Govan Brothers Private Limited resigned from its office as Managing Agent of Indian National Airways Limited with effect from October 1,1955.

6. Then, on February 25, 1956, a majority of the Directors of Indian National Airways Limited made a declaration to the Registrar of Companies with regard to the solvency of the said company under section 207 of the Companies Act, 1913. On March 3, 1956, a notice (Annexure C-1) was issued that an Extraordinary General Meeting of the Shareholders of the Indian National Airways Limited will be held at the registered office of the Company at Daryaganj at 12. 00 noon on March 28, 1956, to consider the following:-

"(1) To consider and if thought fit to pass the following Resolution as Special Resolution. "resolved that the Company be wound up voluntarily, a Members Voluntary Winding-up".

(2) To consider and if thought fit to pass an Ordinary Resolution for the appointment of a Voluntary Liquidator and for fixing his remuneration.

(3) To consider and if thought fit to pass the following Resolution as Special Resolution. "resolved that the Voluntary Liquidator be and is hereby given a general authority to enter into an arrangement on such terms he considers proper under Section 208-C of the Indian Companies Act, 1913, or in the alternative to take steps for obtaining the sanction of the Court to an arrangement by way of reconstruction, amalgamation or otherwise under Sections 153 and 153-A of the Indian Companies Act, 1913."

(4) To consider and if thought fit to pass the following Resolution as Extra-Ordinary Resolution. "resolved that the Voluntary Liquidator be and is hereby empowered to exercise all the powers given under the clauses (d), (e), (f) and (h) of Section 179 read with Section 212 (l) (a) of the Indian Companies Act, 1913, as also to exercise all the powers given under Section 234 of the Indian Companies Act, 1913. By order of the Board, S. K. SANGHI Dated the 3rd March 1956. Director N. B.-1. The transfer books of the Company will remain closed from Monday the 12th March to 28th March, 1956 (both inclusive).

2. Share-holders are requested to attend the meeting but those unable to do so, may kindly send in their proxy (form enclosed) so as to reach the Company at least 72 hours before the meeting. "

7. According to the Appellant, the said notice was sent to all the share-holders including General Krishna Shamsher Jung Bahadur Rana under a certificate of posting (Annexure C-2). The said notice was also published in the Times of India, dated March 5, 1956 (Annexure C-3). The meeting was held on March 28, 1956, and the Registrar of Companies, by his letter (Annexure "d"), dated March 24, 1956, deputed one of his Assistants, Shri Radhey Kishen, to attend the meeting as his representative. Shri Radhey Kishan accordingly attended the meeting. Annexure "e" is a copy of the minutes of the meeting, and it shows that the meeting was attended by 40 share-holders in person and 35 share-holders by proxy. It also shows that all the four resolutions specified in the notice were unanimously passed. Shri Prem Nath Chadha and Shri Din Dayal Sharma, Advocates, were appointed as Voluntary Liquidators jointly for the purpose of winding up the Indian National Airways and distributing its assets. The said liquidators were informed of their appointment by a letter (Annexure F-l), dated March 28, 1956. Copies of the Resolution were filed with the Registrar of Companies in the prescribed form under section 82 (1) of the Companies Act, 1913, (vide Annexure F-2), and copies of the resolutions were published in the Times of India (Annexure F-3), dated March 30, 1956, and the Gazette of India, Part IV, dated April 7, 1956 (Annexure F-4 ). The liquidators filed the prescribed notice (Annexure F-5) under section 214 of the Companies Act, 1913, with the Registrar of Companies notifying their appointment as liquidators.

8. On August 15, 1956, the two liquidators, in exercise of the general authority given to them by the special resolution to enter into an arrangement of such terms as they consider proper under section 208-C of the Indian Companies Act, 1913, entered into an agreement (Annexure "g") with the South Asia Industries Private Limited accepting a scheme offered by the latter. The said scheme was set out in a schedule attached to the agreement. The relevant portion of the agreement and the scheme is as follows:-

"now THESE PRESENTS WITNESS AND IT IS HERE BY AGREED BY AND BETWEEN THE PARTIES HERE TO AS FOLLOWS:-

The Transferor Company shall transfer to the Transferee Company, and the Transferee Company shall take over a transfer from the Transferor Company, of all the assets, including outstandings, credits, things in action and securities in respect thereof and of all the property, rights, powers, liabilities and duties of the transferor Company, within a week from the date hereof in terms of the Scheme dated 14-8-1956 set out in Schedule hereto, and the Transferee Company shall thereafter be bound to discharge all the liabilities of the Transferor Company and of the Joint Liquidators arising out of the Liquidation. SCHEDULE REFERRED TO ABOVE South Asia Industries Private Limited Scheme of Arrangement with Mis. Indian National Airways Limited {in Voluntary Liquidation) under Sec. 208 C of the Indian Companies Act, 1913 1. Ail the rights, properties and assets including outstandings credits, things in action and securities in respect thereof, of the Indian National Airways Limited (In Voluntary Liquidation) (hereinafter referred to as the "transferor COMPANY") be transferred to the South Asia Industries Private Limited (hereinafter referred to as the "transferee COMPANY") and the transferee Company shall accept, without investigation, such title as the Transferor Company has to such properties, assets, etc. 2. All the liabilities of the Transferors Company, as on the date of the transfer, be transferred to the Transferee Company so as to become the liabilities of the Transferee Company to be fully discharged by it. 3. The Transferee Company shall pay, and the members of the Transferor Company shall be entitled to receive, in full and final settlement of their claims, in respect of their Preferred- Ordinary and Ordinary shares held by them in the Transferor Company, at the rate of Rs. 10. 00 (Rupees Ten) for every preferred-Ordinary share and of Rs. 7/2- (Rupees Seven, annas two) for every Ordinary share, half in cash and the balance half in the form of Fixed Deposit Receipts to be issued by the Transferee Company for a period of three years, and in addition thereto, a right to participate proportionately in 20% of the net profits of the Transferee Company determined in the manner hereinafter motioned. The amount of the share of profits payable to any such member shall bear the same proportion to the total amount of the said 20% profits as half the face value of his share or shares surrendered by him to the Transferee Company in respect of (a) the net profits for the aforesaid purposes shall be determined on the basis of the audited balance sheets of the Transferee Company for the period ending 31-3-1957, 31-3-1958 and 31-3-1959, after deducting or making provision for depreciation allowed under the Income-tax Act: (b) the amount of profit mentioned above shall be paid to such members in the first year on the expiry of twelve months from the date of the issue of the Deposit Receipts on the basis of the said Balance Sheet for the year ending 31-3-1957, in the second year on the expiry of a further period of twelve months on the basis of the balance sheet for the year ending 31-3-1958, and finally in the third, year on the expiry of a further period of twelve months on the basis of the balance sheet for the year ending 31-3-1959; and the balance sheets of the Company, duly audited by a chartered Accountant, shall be final and conclusive and binding on the members of the Transferor Company, participating in the profits, as aforesaid: PROVIDED further (a) That the amount of the share of profits payable to any such member shall not be less than the amount calculated, at the rate of 7% per annum on the amount of his fixed deposit Receipt, from the date of its issue till the date of payment or the date of its maturity, whichever, is earlier; (b) the members of the Transferor Company holding Deferred shares shall not be entitled to any compensation in respect of their shares, for even the members holding ordinary shares, who have a preferential right over them, cannot be paid; their capital in full.

4. The members of the Transferor Company would, however, have the option to receive payment, in respect of their Preferred Ordinary or Ordinary shares, wholly in cash, calculated at the rate or rates mentioned in clause 3 above,. e. Rs. 10. 00 (Rupees ten) for each Preferred Ordinary share and Rs. 7/2. 00 (Rupees seven and annas two) for each ordinary share, instead of receiving payment in the mode prescribed by clause 3 above, but the members exercising such option shall not be entitled to participate in the profits of the Transferee Company at all. 5. In order to entitle any member of the Transferor Company to receive benefit or right under clause 3 or 4 above, he shall, within a period of one year from the date on which notice of acceptance of this Scheme is sent to him by the Joint Liquidators of the Transferor Company, intimate to the Transferee Company, in the mode in which he desires to receive payment,. e. , whether under clause 3 or clause 4 above, and send the relative share scrip (a) in respect of his share or shares in the Transferor Company to the Transferee Company by Registered Post acknowledgment due deliver the same by hand to the Secretary of the Company at its Administrative Office at 10, Daryaganj, Delh. No claim shall be entertained by the Transferee Company after the expiry of the said period of one year. "

9. On August 17, 1956, the Secretary of the South Asia Industries (P) Limited sent a circular letter along with a copy of the Scheme and an option form to all the members of the Indian National Airways Limited (Annexure G-l ). Annexure G-2 is a Photostat copy of the certificate of posting, dated August 17, 1956, containing the names of the various members. It is in controversy between the parties as to whether this certificate of posting related to the aforesaid circular letter sent by the Secretary of the South Asia Industries (P) Limited. The joint Liquidators published a notice, addressed to all the members of the Indian National Airways Limited (in Voluntary Liquidation), setting out the Scheme and a list of the share-holders of the Indian National Airways Limited in the newspaper, "the Times of India", (Annexure G-3), on August 17, 1956; in the newspaper, "the Tribune", (Annexure G-4), on August 20, 1956; in the newspaper, "the Hindu", (Annexure G-5), on August 21, 1956; and in the newspaper, "the Indian Express", (Annexure G-6), on August 21, 1956.

10. Thus, in pursuance of the aforesaid agreement all the assets and liabilities etc. of the Indian National Airways Limited (in Voluntary Liquidation) (hereinafter referred to as the "transferor Company") were transferred to the South Asia Industies (P) Limited (hereinafter referred to as the "transferee Company"), and the Transferee Company was to make payments to the shareholders of the Transferor Company in terms of the Scheme. It appears that most of the share-holders of the Transferor Company, who had filed their claims in compliance with the terms and conditions of the Scheme of Arrangement, were paid, but General Krishna Shamsher Jung Bahadur Rana was not so paid as he did not file his claim within the time fixed in the Scheme. In order to lay the accounts before the members of the Transferor Company in pursuance of section 208-E of the Companies Act, 1913, a notice was published by the joint Liquidators in the newspaper, "the Statesman", (Annexure H-2), on September 19, 1956, and in the "gazette of India", (Annexure H-l), on September 22, 1956, notifying the members that a general meeting of the members will be held at the registered office of the Company at 10, Daryaganj, Delhi, at II A. M. , on October 23, 1956, for purposes of laying the accounts before them, showing the manner in which the winding up has been conducted and the property of the Company disposed off, and hearing any explanation that might be given by the Joint Liquidators. On October 24, 1956, the Joint Liquidators wrote a letter to the Registrar of Joint Stock Companies, Delhi, staling that the general meeting, pursuant to section 208-E of the Companies Act, 1913, was summoned for October 23, 1956, but that no quorum was present at the meeting. They also filed a statement of account under section 208-E (3) and form No. 7 pursuant to the said section on the same date before the Registrar. Subsequently, on September 30, 1957, the Registrar of Companies wrote a letter (Annexure 1-2) to the Joint Liquidators that the statement of account and the Return of Final winding up were registered in his office on July 1, 1957, pursuant to section 208-E (4) of the Companies Act, 1913. Consequently, in view of the provision in section 208-E (4), the Transferor Company was to be deemed to have been dissolved on the expiration of 3 months from the date of the registration of the Return.

11. Nothing further happened thereafter till 1962 so far as General Krishna Shamsher Jung Bahadur Rana was concerned. On September 18, 1962, Shri B. U. Advani, advocate, wrote a letter to Messrs Govan Brothers Private Limited staling that some of his clients had shares in the Indian National Airways Limited which went into liquidation some years back, and that he may be furnished with information as to when the Company went into liquidation and how much distribution has so far been made and also on what dates such distributions were made. He added that the information was required to enable his clients to prepare and submit their wealth tax returns (vide Annexure b (collectively) to the Company Petition). In reply, the South Asia Industries (P) Limited sent a letter on October 11/13, 1962, informing Shri Adivani that they had been making payments to the shareholders of the Indian National Airways Limited. A copy of the Scheme was enclosed and Shri Advani was requested to ask his constituents to send the shares in terms of the Scheme. On October 19, 1962, Shri Advani wrote a letter to the State Bank of India, Calcutta, stating that the latter was holding 7875 ordinary and 4125 deferred shares of the Indian National Airways Limited (in Voluntary Liquidation) on account of General Krishna Shamsher Jung Bahadur Rana. That under a Scheme of Arrangement the South Asia Industries (P) Limited had taken over the assets and liabilities of the Indian National Airways Limited and the shareholders of the said Company were to receive in full and final settlement of their claims at the rate of Rs. 10. 00 for every deferred. ordinary share and the claims in the form of fixed deposit receipts to be issued by the South Asia Industries (P) Limited for a period of 3 years, and that in addition thereto the share-holders had also the right to participate proportionately in 20 "" of the net profits of the Transferee Company. Shri Advani enquired from the State Bank whether it had received any compensation from the South Asia Industries (P) Limited, and if so, on what dates the amounts were received by the Bank. He added that the information was required for General Krishna Shamsher Jung Bahadur Ranas wealth tax purposes. Shri Advani forwarded a copy of the letter to General Krishna Shamsher Jung Bahadur Rana. Thereupon, the State Bank of India, Calcutta, wrote a letter on October 29, 1962. to South Asia Industries (P) Limited stating that they held in safe custody 7875 ordinary shares and 4125 deferred shares in the Indian National Airways Limited (in Voluntary Liquidation) on account of General Krishna Shamsher Jung Bahadur Rana, and requesting that South Asia Industries (P) Limited may send the claim form to enable it to take payment of the return of capital of the shares in question. A copy of the letter was forwarded to Shri Advan.

12. But, nothing further happened thereafter till 1967. On November 9, 1967, General Krishna Shamsher Jung Bahadur Rana wrote a letter to South Asia Industries (P) Limited staling that he was a registered holder of ordinary and deferred shares in the Indian National Airways Limited (in Voluntary Liquidation), that he was given to understand that there was an arrangement between the said company and South Asia Industries (P) Limited, to pay the share-holders of the Indian National Airways Limited according to a certain Scheme, that his Bankers, the State Bank of India, Calcutta, had approached the South Asia Industries (P) Limited on his behalf for the said payment several years ago, but the payment had not so far been made, that in view of certain fresh rules published by the Central Board of Direct Taxes for the valuation of shares under the Wealth-tax Act he was running a risk of avoidable tax on the value of the said shares, and that he may, therefore, be informed as to when he could expect payment for the shares held by him. He added that he may be guided as regards the formalities to be fulfilled for the said payment. In reply, the South Asia Industries (P) Limited sent a letter, dated November 10, 1967, inviting the attention of General Krishna Shamsher Jung Bahadur Rana to paragraph 5 of the Scheme of Arrangement, and stating that by virtue of the said paragraph no claim could be entertained by them regarding the shares of General Krishna Shamsher Jung Bahadur Rana as the latter did not intimate them the mode in which he desired to receive payment nor sent the relevant share scripts to them within a period of one year from August 17, 1956, the date on which notice of acceptance of the Scheme was sent to General Krishna Shamsher Jung Buhadur Rana by the Joint Liquidators of the Indian National Airways Limited. They also enclosed a copy of the Scheme of Arrangement. In answer to that letter. General Shamsher Jung Bahadur Rana wrote a letter, dated January 9. 1968, staling that no notice of acceptance of the Scheme of Arrangement alleged to have been sent to him on August 17. 1956, by the Joint Liquidators, was ever received by him. that as such he was amazed at the stand taken by the South Asia Industries (P) Limited, that had. . he received (he said notice there was no reason why he would not have intimated the South. Asia Industries (P) Limited his choice of the mode of payment and also sent the share scripts which were in safe custody with his Bankers the State Bank of India. Calcutta and that since the said notice had never reached him. the fault was not his. and his claim for payment could not therefore, be forfeited. He requested that his case might be re-considered and a favourable reply be sent to him at an early date. He also wrote a letter on January 11, 1968. to the State Bank of India. Calcutta, informing the Bank about the reply received from South Asia Industries (P) Limited, and requesting for advice as to where the error of omission lay and. about the steps to be taken for recovery of his claim amounting to about Rs. 1. 74. 199. 00. On February 15. 1968. the South Asia Industries (P) Limited informed General Krishna Shamsher Jung Bahadiui Rana that they had looked into the records of the Indian National Airways Limited (now dissolved) and found that a copy of the Scheme along with application form were duly sent by the Joint Liquidators on August 17, 1956, under a postal certificate, and that the position of General Krishna Shamsher Jung Bahadur Ranas claim had already been clarified in their earlier letter, dated, November 10, 1967.

13. The State Bank of India. Calcutta, wrote to the Company Law Board. Government of India. Delhi, regarding the matte". and Sliri C. R. Mehfa. Under Secretary to the Company Law Board, replied on May 30, 1968, slating that the question whether the failure on the part of General Krishna Shamsher jung Bahadur Rana to elect the mode of payment within the time limits specified in the Scheme of Arrangement could deprive General Krishna Shamsher Jung Bahadur Rana of his right to obtain payment in respect of the shares was a dispute of a civil nature in which the Company Law Board was unable to interfere, and that in the facts and circumstances of the case General Krishna Shamsher Jung Bahadur Rana might take such legal action in the matter as might be considered necessary. Shri Mehta, however, stated that in case General Krishna Shamsher Jung Bahadur Rana decides to take the matter to the Court, the following points might possibly be agitated in support of his claim:-

"(i) The Transferee Company is liable to make payment in terms of clause 3 of the scheme if no option is exercised under clause 4 thereof because otherwise the transfer of the shares would be without any consideration and as such void. (ii) The scheme being a sale of the undertaking of the transferor company, the consideration for the sale must be distributed among the members of the transferee company in proportion to their rights and interests. Otherwise, the sale will be without any consideration. (iii) The Joint Liquidators should also be made parties in such action on the ground that such a scheme does not relieve the Liquidators of the transferor company from the obligation of seeing that the debts are duly paid before the transferor company is dissolved. To leave everything to the transferee company is "a gross dereliction of duty of liquidators."

14. On June 15. 1968, General Shamsher Jung Bahadur Rana sent a notice to South Asia Industries (P) Limited through his Solicitors demanding payment of the amount due to him, and staling that in default of payment appropriate legal proceedings for recovery of the amount with interest thereon would be taken. A reply was sent by South Asia Industries (P) Limited through their Lawyer on July 2, 1968, reiterating that a copy of the notice of acceptance of the Scheme of Arrangement was definitely sent to General Krishna Shamsher Jung Bahadur Rana on August 17, 1956 by the Joint Liquidators of the Indian National Airways Limited, and that the claim of General Krishna Shamsher Jung Bahadur Rana could not be entertained in view of the provision in paragraph 5 of the Scheme of Arrangement, and stating that in the circumstances if any legal proceedings were taken by General Krishna Shamsher Jung Bahadur Rana he would be responsible for the costs of South Asia Industries (P) Limited. The Solicitors of General Krishna Shamsher Jung Bahadur Rana again wrote a letter to the counsel for South Asia Industries (P) Limited reiterating that no notice was received by General Krishna Shamsher Jung Bahadur Rana from the Joint Liquidators, and requesting that in the circumstances the amount due to General Krishna Shamsher Jung Bahadur Rana may be paid. It was added that in case of default of payment appropriate legal proceedings would be taken for recovery of the amount with interest. But, there was no further reply to the said letter. Some more attempts appear to have been made by the State Bank of India, Calcutta, by requesting its Delhi Office to obtain a reply from the Transferee Company in the light of the remarks made by the Company Law Board in their letter, dated May 30, 1968. Despite several reminders in 1969, the Transferee Company appears to have sent no reply.

15. Then, on November 2, 1970, General Krishna Shamsher Jung Bahadur Rana filed petition No. 100 of 1970 on the original side of this Court against respondent I, Indian National Airways Limited; respondent 2. The South Asia Industries (P) Limited; respondent 3, Prem Nath Chandha; respondent 4, Din Dayal Sharma; respondent 5, Registrar of Joint Stock Companies; respondent 6. Govan Brothers Private Limited; respondent 7, v. H. Dalmia and respondent 8, Rarnkrishna Dalmia. The prayers in the petition were as follows:-

"a. That the dissolution of Respondent No. 1 be rescinded and/or set aside and Respondent No. 5 be directed, to restore the name of Respondent No. 1 in the register of Companies maintained at his office.

B. The Respondent No. 2 be directed to refund,, repay and return all moneys, assets etc. received by it from the Respondent No. 1 back to it. C. Accounts and enquiries and all financial benefits and advantages which had accrued to Respondent No. 2 because of the transfer of the property assets and moneys of Respondent No. 1 to Respondent No. 2 be ascertained and thereafter the assets and amounts of such

benefit and advantages be directed to be refunded and paid by Respondent No. 2 to Respondent No. 1. D. Alternatively (i) the Respondent No. 2 be directed to pay to your Petitioner the total sum of Rs. l,74,199. 00 together with interest thereon at 12% per annum until payment and also such sums as may be found due. (ii) Enquiries and accounts be directed against Respondent No. 2 and the latter be directed to pay such other amounts as are payable to Your Petitioner under the said arrangement upon such enquiries and accounts. E. In the further alternative a direction upon Respondents 3 and 4 to forthwith have the entire moneys payable under the said arrangement to the shareholders of the Respondent No. 1 but which have not yet been paid deposited in the Companys Liquidation Account in the Reserve Bank of India in accordance with the first Act and/or the Second Act. F. Enquiry and accounts against the Respondents 3 and 4 for misfeasance and nonfeasance and a direction that they do pay to your Petitioner such sums as may be found due to him upon such enquiries and accounts as damages or otherwise. G.

Enquiries and accounts against the Respondents except Respondent No. 5 and a direction that they do pay to your Petitioner such sums as may be found due to him upon such enquiries and accounts as damages or otherwise. H. An injunction restraining the Respondent No. 2 from dealing with, disposing off transferring, utilising, using or in any manner parting with the sum of Rs. 7,87,150-42 lying with it as moneys due to the Share-holders of Respondent No. 1 under the said arrangement. 1. Receiver be appointed in respect of the said sum of Rs. 7,87,150-42.. Ad-interim orders in terms of prayers H and I above until the disposal of this application. K. Such further and other orders be passed or directions given as to this Honble Court may deem fit and proper in the interest of equity and justice. L. The Respondents excepting Respondents Nos. 5 do pay the costs of and incidental to this application further and other reliefs."

16. In opposition to the petition, replies were filed on behalf of the various respondents, and General Krishna Shamsher Jung Bahadur Rana filed a common rejoinder to the said replies.

17. The various Annexures viz.. "a" to "h-2" referred to above in the course of the narration of the facts were all Annexures to the reply filed on behalf of respondents 2 and 8. Out of the prayers A to L in the Company Petition, the main prayers fall into three alternative groups as under:-

(1) That the dissolution of the Indian National Airways Limited be rescinded or set aside and the consequential reliefs of (a) restoring its name in the Register of Companies. (b) refunding or repaying all moneys, assets etc. , received by the South Asia industries (P) Limited from the Indian National Airways Limited to the latter, and (c) taking of accounts of all financial benefits and advantages which had accrued to the South Asia Industries (P) Limited because of the transfer in its favour by the Joint Liquidators and refunding the amounts of such benefits and advantages found due. be directed; or

(2) alternatively. e., in case the dissolution is not set aside, that the South Asia Industries (P) Limited be directed to pay to General Krishna Shamsher Jung Bahadur Rana the total sum of Rs. 1,74,199 together with interest thereon at 12% per annum and all other sums which. on taking accounts, may be found payable to him under the Scheme of Arrangement; or (3) alternatively (a) that the Joint Liquidators be directed to deposit all the moneys payable under the Scheme of Arrangement to the share-holders of the Indian National Airways Limited but which have not yet been paid in the Companys Liquidation Account in the Reserve Bank of India in accordance with the provisions of the Companies Act, 1913, (b) that the Joint Liquidators be directed to pay such damages as may be found due to General Krishna Shamsher Jung Bahadur Rana for misfeasance and nonfeasance, (c) that the respondents other than the Registrar of Joint Stock Companies be directed to pay to General Krishna Shamsher Jung Bahadur Rana such sums as may be found due to him on taking accounts, (d) that an injunction be issued restraining the South Asia Industries (P) Limited from dealing with. disposing of, transferring, utilising, using or in any manner parting with the sum of Rs. 7,87,150/42 lying with it as moneys due to the share-holders of the Indian National Airways Limited under the Scheme of Arrangement, and (e) that a Receiver be appointed in respect of the said sum of Rs. 7,87,150/42. "

18. In support of the prayers mentioned above it. was contended before the learned Single Judge (1) that the voluntary winding up of the Indian National Airways Limited was illegal as the winding up could only be effected under section 28 of the Air Corporations Act and not under the Companies Act. 1913: (2) that the dissolution of the Indian National Airways Limited was liable to be set aside on the ground that the Companies Act imposed certain duties and obligations on the Liquidators which could neither be abdicated nor delegated, and the Joint Liquidators in the present case had abdicated and delegated their duties an obligations in favour of the South Asia Industries (P) Limited by entering into the Scheme of Arrangement with if; (3) that the resolutions passed on March 28. 1956, were illegal as no notice of the meeting was served on General Krishna Shamsher Jung Bahadur Rana: and (4) that General Krishna Shamsher Jung Bahadur Rana was in any case entitled to the payment of his amount from the Joint Liquidators or the South Asia Industries (P) Limited, under the various provisions in the Scheme of Arrangement.

19. By his is judgment, dated May 24. 1971, (he learned Single Judge held on the first contention that it could not be said that the Company could be wound up only by the procedure prescribed by section 28 of the Air Corporations Act, that a Company going into voluntary liquidation has to comply with the requirements of the Indian Companies Act, 1913, but in the case of a Company whose undertaking has been acquired under the Air Corporations Act certain relaxation has been made and an alternative mode of proceedings to voluntarily wind up the Company has been provided, and that the winding up of the Indian National Airways Limited under the provisions of the Companies Act, 1913, did not in any way violate the provisions in the said section 28 of the Air Corporations Act. On the second contention, the learned Single Judge held that both general and special authority was conferred on the Joint Liquidators to enter into an arrangement with another Company under section 208-C of the Companies Act, 1913, that the said section was so comprehensive as to justify the Scheme of Arrangement arrived at by the Joint Liquidators, that the said Scheme of Arrangement was validly entered into by the Joint Liquidators, particularly, when in terms of the special resolution, dated March 28, 1956, they did not have to get the Scheme of Arrangement entered into approved by the share-holders at any stage, and that the share-holders of the Indian National Airways Limited as well as the South Asia Industries (P) Limited were bound by the Scheme of Arrangement entered into by the Joint Liquidators. On the third contention, the learned Single Judge held that the resolutions, dated March 28, 1956, were perfectly valid and legal and that an argument advanced on behalf of General Krishna Shamsher Jung Bahadur Rana that the said resolutions were vitiated because no notice of the meeting was served on General Krishna Shamsher Jung Bahadur Rana did not have any force. As regards the fourth contention, the learned Single Judge held that the right of General Krishna Shamsher Jung Bahadur Rana to recover money from the South Asia Industries (P) Limited really flowed from the service of the notice of acceptance of the Scheme, that there was no proof of service of the said notice on General Krishna Shamsher Jung Bahadur Rana and the presumption raised by Illustration (f) of section 114 of the Evidence Act on the basis of the alleged despatch of the notice under a certificate of posting could not be pleaded against General Krishna Shamsher Jung Bahadur Rana by the South Asia Industries (P) Limited or the Joint Liquidators in view of Genera l Krishna Shamsher Jung Bahadur Ranas categorical denial that he never received the notice, that General Krishna Shamsher Jung Bahadur Rana could at best be regarded as served with a notice of the acceptance of the Scheme for the first time when the South Asia Industries (P) Limited sent its letter, dated October 11/13, 1962, to Mr. B. U. Advani and enclosed a copy of the Scheme with that letter, that General Krishna Shamsher Jung Bahadur Rana was, therefore, entitled to claim payment either under paragraph 3 or paragraph 4 of the Scheme of Arrangement within I year at least after Mr. Advani received the letter, dated October 11/13,1962, that, however, nothing has been placed on the record by General Krishna Shamsher Jung Bahadur Rana to show that he ever exercised his option either under paragraph 3 or paragraph 4 of the Scheme of Arrangement or that he ever delivered to South Asia Industries (P) Limited the share scrips of his shares within the said period in spite of his being asked to do so by the letter, dated October 11/13, 1962, by South Asia Industries (P) Limited, and that in those circumstances the rejection of the claim made by General Krishna Shamsher Jung Bahadur Rana in November, 1967, could well be regarded as justified, particularly, when the South Asia Industries (P) Limited could not be expected nor was required in the Scheme to keep money available for payment to the members of the Indian National Airways Limited indefinitely. The learned single Judge also held that the agreement between the South Asia Industries (P) Limited and the joint liquidators was that all the assets and liabilities of the Indian National Airways Limited were taken over by the former as its own in consideration of paying to the share-holders certain sums of money to be calculated either under paragraph 3 or paragraph 4 of the Scheme of Arrangement, that the realization of the compensation was wholly immaterial and any provision made by the South Asia Industries (P) Limited in its balance sheet to pay to the share-holders was from its own assets and not as trustees distributing the assets of the Indian National Airways Limited, and that in that view of the matter it could not be contended on behalf of General Krishna Shamsher Jung Bahadur Rana that there could not be any bar of limitation on the ground that the South Asia Industries (P) Limited was in the position of a trustee. The learned single Judge further held that since the South Asia Industries (P) Limited had undertaken to pay to the share-holders of the Indian National Airways Limited moneys from its own assets and not from those of the company that was being wound up, the relationship between the share-holders of the Indian National Airways Limited and the South Asia Industries (P) Limited was that of a creditor and a debtor, that irrespective of whether the South Asia Industries (P) Limited held any assets of the Indian National Airways Limited or not, it was bound to pay the shareholders the moneys which it had undertaken to pay by virtue of paragraphs 3 and 4 of the Scheme of Arrangement if its liability to pay was sought to be enforced within the period of limitation. Dealing then with the question as to whether the claim of General Krishna Shamsher Jung Bahadur Rana was barred by time, the learned Judge held. that the South Asia Industries (P) Limited, explaining its then current liabilities, had shown in its balance sheet (Annexure j) as on May 31, 1969, that there was a sum of Rs. 7,87,150/42 as a liability and held in Share-holders Suspense Account for payment to the share-holders of the Indian National Airways Limited (in Voluntary Liquidation-since dissolved), that it had, thus, made an admission in the balance sheet as on May 31 1969, that it has to pay the said amount to the share holders, that the same amounted to an admission within the meaning of section 19 of the Limitation Act, and that there was, therefore, no bar of limitation against the claim of General Krishna Shamsher Jung Bahadur Rana. The learned Judge further held that the provision in paragraph 5 of the Scheme of Arrangement that no claim shall be entertained by the transferee company after the expiry of I year from the date of service of a notice of the acceptance of the Scheme sent by the joint liquidators to the share-holder was not like a provision in a statute f limitation, that under the Scheme it was the joint liquidators who had to serve General Krishna Shamsher Jung Bahadur Rana with a notice of the acceptance of the Scheme, and they having failed to do so, the former could exercise his option even on the date of the judgment of the learned Judge on being served with a notice of acceptance of the Scheme by the joint liquidators. Referring to a contention on behalf of the South Asia Industries (P) Limited that inasmuch as the Indian National Airways Limited stood dissolved in 1957, the only remedy of General Krishna Shamsher Jung Bahadur Rana was to file a civil action and not to approach this High Court invoking its jurisdiction under the Companies Act, the learned Judge held that the Scheme of Arrangement fell within the ambit of the Companies Act. that the South Asia Industries (P) Limited was not in the position of a third. Party that once the liability to pay was taken over by it the contract remained to be enforced between it and the share-holders including General Krishna Shamsher Jung Bahadur Rana, that the enforcement of the contract could no doubt be done by civil action, but when the validity of the contract or the dissolution of the company had been challenged it could be enforced through the Company Court also inasmuch as the Scheme was formulated within the provisions of the Companies Act, and that the petition was maintainable as the South Asia Industries (P) Limited was bound by the Scheme of Arrangement vis--vis General Krishna Shamsher Jung Bahadur Rana. The learned Judge also held that the Liquidators had done all that was necessary to be done in accordance with the authority vested in them both by the resolutions of the Indian National Airways Limited and the statute, that once the liability to pay was taken over by the South Asia Industries (P) Limited there was nothing more to be done by them and they were justified in filing the final return claiming dissolution of the Company. And that in the circumstances no claim could be enforced against them. In the result, the learned Single Judge came to the conclusion that the dissolution of the Indian National Airways. Limited could not be rescinded or set aside, and that the South Asia Industries Limited was liable to pay to General Krishna Shamsher Jung Bahadur Rana the amounts due to him in terms of paragraphs (clauses) 3 and 4 of the Scheme of Arrangement. However, observing that at that point of lime a share in the profit of the South Asia Industries (P) Limited would create complications, the learned Judge directed that the payment be made by the South Asia Industries (P) Limited to General Krishna Shamsher Jung Bahadur Rana in terms of paragraph (clause) 4 alone. The learned Judge observed further that General Krishna Shamsher Jung Bahadur Rana also was responsible for the delay and could not be regarded as a person who had acted with any promptitude, and for that reason refused to award any interest to him. The claim of General Krishna Shamsher Jung Bahadur Rana against the other parties was dismissed, and all the parties were directed to bear their own costs.

20. Feeling aggrieved by the said judgment, the South Asia Industries (P) Limited filed the present Letters Patent Appeal, and General Krishna Shamsher Jung Bahadur Rana filed cross-objections under Order XLI Rule 22 of the Code of Civil Procedure against the said judgment in so far as it negatived some of the contentions urged on his behalf.

21. WE shall first deal with the contentions urged in the appeal. Sliri Rameshwar Dial, learned counsel for the appellant, contended firstly that the learned single Judge having held that the Indian National Airways Limited had been rightly dissolved and that the said dissolution could not be rescinded or set aside, ought to have held that the company, after its dissolution, ceased to exist as a legal entity and the High Court, on its original side and in company matters, had no jurisdiction to entertain the petition of General Krishna Shamsher Jung Bahadur Rana for directions regarding the implementation of the terms of the Scheme of Arrangement entered into with the appellant by the joint liquidators of Indian National Airways Limited in the course of its members voluntary winding up, and that the only course open to General Krishna Shamsher Jung Bahadur Rana was, if at all, to file a civil suit and not to move the Court under the Companies Act. For a proper appreciation of this contention, a reference has to be made to the relevant provisions of law regarding winding up of companies and the facts connected therewith.

22. It is common ground that the instant case is governed by the provisions in the Companies Act, 1913, and not the Companies Act, 1956. Part V of the former Act consisting of sections 155 to 247 deals with winding up. Section 155 provides that the winding up of a company may be by one of three modes, namely, (1) by the Court (sections 156 to 202), sometimes referred, to as compulsory winding up, or (2) voluntary (sections 203 to 220) or (3) subject to the supervision of the Court (sections 221 to 226 ). We are concerned in this case only with voluntary winding up. Sections 203 to 207 contain provisions regarding all cases of voluntary winding up. Section 203 enumerates the circumstances in which a company may be wound up voluntarily by passing any of the resolutions mentioned in clauses (1) to (3) thereof. Section 204 provides that a voluntary winding up shall be deemed to commence at the time of the passing of a resolution for voluntary winding up under any of the clauses of section 203. Section 205 lays down that when a company is wound up voluntarily, it shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof, but that the corporate state and corporate powers of the company shall, not withstanding anything to the contrary in its articles, continue until it is dissolved. Section 206 prescribes that notice of any special or extraordinary resolution for winding up a company voluntarily shall be given within ten days of the passing of the same by advertisement in the official Gazette and in some newspaper. Section 207 provides that the directors of the company may, before the date on which notices of the meeting at which the resolution for the voluntary winding up of the company is to be passed are sent out, make a declaration of the solvency of the company,. e. , that the company would be able to pay its debts in full within a period, not exceeding three years, from the commencement of the winding up and deliver it to the Registrar for registration before the date mentioned above. The section also states that a winding up in the case of which a declaration has been so made and delivered has been referred to in the Act as a "members voluntary winding up", and a winding up in the case of which a declaration has not been so made and delivered has been referred to as a "creditors voluntary winding up".

23. Thus, a voluntary winding up may be either the members or the creditors. Sections 208 to 208-E contain provisions which are applicable only to a members voluntary winding up, while sections 209 to 209-H contain provisions which are applicable only to a creditors voluntary winding up. Sections 210 to 220 contain provisions which are applicable both to a members and a creditors voluntary winding up. Sections 221 to 226 deal with winding up subject to supervision of Court. The remaining sections 227 to 247 contain some supplementary provisions, etc. The present case was one of members voluntary winding up. A declaration of solvency was made by the directors of the Indian National Airways Limited on February 25, 1956, under section 207 of the Act, and notices (Annexure C-l) were issued on March 3, 1956, that an extraordinary general meeting would be held on March 28, 1956, for passing resolutions regarding members voluntary winding up of the Indian National Airways Limited. Section 208-A empowers the company to appoint and fix remuneration of liquidator. Section 208-B contains provision for filling lip a vacancy occurring by death, resignation or otherwise in the office of liquidator appointed by the company. Section 208-C (1) provides as follows:-

"where a company is proposed to be, or is in course of being, wound up altogether voluntarily, and the whole or part of its business or property is proposed to be transferred or sold to another company, whether a company is within the meaning of this Act or not (in this section called "the transferee company"), the liquidator of the first-mentioned company (in this section called "the transferor company") may, with the sanction of a special resolution of that company conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, receive, in compensation or part compensation for the transfer or sale, shares, policies or other like interests in the transferee company, for distribution among the members of the transferor company, or may enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies or other like interests or in addition thereto participate or receive any other benefit from the transferee company. "

24. As stated earlier in the course of narration of the facts, appropriate resolutions were passed on March 28, 1956 (Annexure "e") for the voluntary winding up of the Indian National Airways Limited, and two joint liquidators were appointed. The liquidators were informed about their appointment, copies of the resolutions were filed with the Registrar of Companies and were also published in the official Gazette and in a newspaper, and the liquidators delivered the notice prescribed under section 214 of the Act to the Registrar of Companies notifying their appointment as liquidators.

25. One of the resolutions passed on March 28, 1956, was a special resolution giving general authority to the liquidators to enter into an arrangement on such terms as they consider proper under section 208-C of the Indian Companies Act, 1913, or in the alternative to take steps for obtaining the sanction of the Court to an arrangement by way of reconstruction, amalgamation or otherwise under sections 153 and 153-A of the Act. The joint liquidators, purporting to act in exercise of the general authority given to them under the first part of the said resolution, entered into an agreement (Annexure "g") with the South Asia Industries (P) Limited accepting a Scheme of Arrangement offered by the latter. 26. Section 208-D is not material for the purposes of the present case. Section 208-E (1) contains provisions regarding the final meeting and dissolution of the company. It provides, inter alia, that as soon as the affairs of the company are fully wound up the liquidator (or liquidators) shall make up an account of the winding up showing how the winding up has been conducted and the property of the company has been disposed of, and call a general meeting of the company in the manner provided in section 208-E (2) for the purpose of laying before it the account, and giving any explanation thereof. Section 208-E (3) provides that within one week after the meeting, the liquidator (or liquidators) shall send a copy of the account to the Registrar of Companies and make a return to the latter of the holding of the meeting and of its dale. It also provides that, if a quorum was not present at the meeting, the liquidator (or liquidators) shall, in lieu of the said return, make a return that the meeting was duly summoned and that no quorum was present thereat. Section 208-E (4) lays down that the Registrar, after receiving the aforesaid account and either of the returns mentioned in sub-section (3), shall forthwith register them. and that on the expiration of three months from the registration of the return the company shall be deemed to be dissolved. As stated earlier, a general meeting pursuant to section 208-E (1) was summoned for October 23, 1956, but no quorum was present at that meeting. The joint liquidators, therefore, filed an account and a return before the Registrar as provided in the proviso to section 208-E (3), and the same were registered by the Registrar on July 1, 1957, pursuant to section 208-E (4). Consequently, in view of the provision in section 208-E (4), the transferor company,. e. , the Indian National Airways Limited has to be deemed to have been dissolved with effect from October I, 1957.

27. There are two more sections which require to be noticed. They are sections 216 and 243. Section 216 (1) provides that the liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls, staying of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court. Section 216 (2) provides that the aforesaid persons may also apply to the Court for an order setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up. Section 243 provides that where a company has been dissolved, the Court may at any time within two years of the date of the dissolution, on an application being made for the purpose by the liquidator of the company or by any other person who appears to the Court to be interested, make an order, upon such terms as the Court thinks fit, declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.

28. Coming now to the contention on behalf of the appellant, the argument of the learned counsel was that when the company had become dissolved, the Company Court or Judge had. no jurisdiction under the Companies Act, 1913, except that on an application made under section 243 within two years after the date of dissolution, the Court could set aside the dissolution on the ground that it was void. The learned counsel also submitted that the learned single Judge relied upon section 216, and that he was in error in doing so as the said section refers only to the stage when the winding up is going on and not to a stage when the company has become dissolved under section 208-E. It is not quite correct to say that there is no section in the Act apart from section 243 which provides for the exercise of jurisdiction by the Company Court or Judge under the Act subsequent to the dissolution of a company. There is section 244-B under which the Court can exercise its jurisdiction even after dissolution. In that connection, reference may also be made to the view expressed, though obiter, by Jadgish Saha. , in Shankar Lal and another v. Narendra Bahadar Tandon, 1967 Company Cases 773 at page 782,c) that the control of the Court is not lost even after the winding up is over and the company dissolved. It cannot, therefore, be said as an absolute proposition of law that the Court ceases to have jurisdiction or becomes functus officio, so to say, on the dissolution of a company. It is, however, true that the reliance by the learned single Judge on section 216 was not appropriate as the said section in terms applies only to the stage when the winding up is still going on. But, the question for consideration is whether apart from the jurisdiction to set aside the dissolution on an application under section 243, the Court has no jurisdiction to do anything else, even if it is unconnected with the setting aside of the dissolution, merely because there is no specific provision in that regard in the Act. The learned single Judge held that there was a valid dissolution, and that there was no ground for rescinding or setting aside the same. He, however, held further that the Company Court had jurisdiction to direct the implementation of the terms of the Scheme of Arrangement entered into by the joint liquidators with the South Asia Industries (P) Limited under section 208-C on the ground that the said Scheme of Arrangement fell within the ambit of the Companies Act, and also by virtue of the provision in section 216. As stated earlier, the reliance upon section 216 was not appropriate inasmuch as the said section refers to a stage when the winding up is still in progress and there has yet been no dissolution of the company. The question, however, remains as to whether after the company had become dissolved the Court bad no jurisdiction to implement the terms of the agreement and Scheme of Arrangement which were entered into by the joint liquidators with the transferee company under section 208-C of the Act and which were thus. within the ambit of the Act as pointed out by the learned Judge.

29. For answering the above question, the scope and effect of an agreement and/or Scheme of Arrangement contemplated by section 208-C vis--vis the dissolution of the company provided for by section 208-E, has to be considered. A reading of sections 208-C and 208-E shows that there is a clear distinction between their respective scope and effect or operation. Under section 208-C, the whole or part of the business and/or property of the company is transferred or sold to the transferee company. On such transfer or sale, all the assets of the transferor company vest in the transferee company, and in consideration thereof the transferee company becomes liable to discharge all the liabilities of the transferor company. It has to be noted that the transfer of the assets is only by way of consideration for the taking over of the responsibility for the discharge of the liabilities of the transferor company, and the said discharge of liabilities is in no way dependent upon the assets which vest in the transferee company. It is not as if the transferee company is to discharge the liabilities from out of the assets of the transferor company. The transferee company, if necessary, has to discharge the liabilities of the transferor company from the farmers own resources or assets. The said liability of the transferee company continues to subsist till all the liabilities of the transferor company are discharged irrespective of the continuance of the winding up proceedings or the termination thereof resulting in the dissolution of the transferor company.

30. On the other hand, once an agreement and Scheme of Arrangement has been effected transferring or selling the entire business and/or property of the transferor company to the transferee company and making provision for the discharge of all the liabilities of the transferor company by the transferee company, the liquidator is left with nothing further to do so far as the affairs of the company are concerned, and the affairs of the company can be regarded as fully wound up within the meaning of section 208-E. Consequently, the liquidator has thereafter only to proceed under section 208-E and file the account and return before the Registrar for being registered. On the expiration of three months from the registration of the return, the company has to be deemed to be dissolved. Thus, the discharge of the liabilities of the wound up company by the transferee company is distinct and independent of the dissolution of the said company.

31. Now, it cannot be disputed that so long as the winding up is going on the Court can be approached by the liquidator or a contributory or any other person interested for directions regarding the implementation of the Scheme of Arrangement. That is so by virtue of the facts that the terms "court" is defined in section 2 (3) as "the Court having jurisdiction under the Act", which again is stated in section 3 (1) to be the High Court having jurisdiction in the place at which the registered office of the company is situate, and that the jurisdiction thus conferred on the High Court in company matters is the jurisdiction to deal with matters for which provision is made in the Act, and the aforesaid agreement or Scheme of Arrangement is a matter provided for in section 208-C of the Act. If then the High Court has jurisdiction to give directions regarding the implementation of the agreement or Scheme of Arrangement entered into by the liquidator or liquidators with) the transferee company under section 208-C while the winding up is still going on, there is no valid reason for holding that the said jurisdiction ceases on the dissolution of the company which event, as explained above, is entirely distinct from and independent of the obligations of the transferee company under the Scheme of Arrangement. The relief by way of directions to implement the terms of the Scheme of Arrangement is directed as against the transferee company and not the transferor company, and, therefore, the fact that the transferor company had become dissolved is immaterial. We are, therefore, of the opinion that there is no force in the contention of the learned counsel that on the dissolution of the company, the Company Court or Judge ceased to have jurisdiction to give directions regarding the implementation of the terms of the agreement and Scheme of Arrangement entered into by the liquidators with the South Asia Industries (P) Limited.

32. Shri Rameshwar Dial referred to the decision in Liquidator Ganda Rubber Works v. Collector of Bombay, AIR 1950 East Punjab 204, and argued that the controversy between the parties amounted to an assertion of title by General Krishna Shamsher Jung Bahadur Rana and a denial of the same by the appellant and that the said question of title could not be adjudicated upon by the Court as the appellant was a third party. According to the learned counsel, the only remedy of General Krishna Shamsher Jung Bahadur Rana was to file a civil suit and not be approach the High Court under the Companies Act. This contention was addressed before the learned single Judge also, but was rejected. It was held in the aforesaid decision that the Companies Act, 1913, does not give any power to the Court to adjudicate upon questions of title which are in dispute, between a liquidator and third parties. The said proposition cannot be disputed. But, as pointed out by the learned single Judge, the ratio of the said decision does not apply to the present case as the South Asia Industries (P) Limited cannot be regarded as a third party. Admittedly, General Krishan Shamsher Jung Bahadur Rana was a registered shareholder of the Indian National Airways Limited which was in voluntary liquidation. The share-holders of the company in voluntary liquidation were entitled to be paid by the liquidators, and the Scheme of Arrangement entered into by the liquidators with the South Asia Industries (P) Limited was only a mode of such payment provided for in section 208-C of the Companies Act, 1913. The learned single Judge was, therefore, right, in our opinion, when he observed that the Scheme of Arrangement fell within the ambit of the Companies Act. Under the said Scheme of Arrangement, the South Asia Industries (P) Limited undertook to do that which had to be done by the liquidators, and as such cannot claim to be a third party. The ratio of the decision of the Punjab High Court cannot, therefore, be of any assistance to the learned counsel, and his contention that the remedy of General Krishna Shamsher Jung Bahadur Rana was only to file a civil suit and not to approach the High Court under the Companies Act has to be held to be untenable.

33. THE second contention of Shri Rameshwar Dial was that even if the Company Court had jurisdiction and power to give directions regarding the implementation of the terms of the Scheme of Arrangement, such directions could be given only in accordance with the terms of the Scheme of Arrangement. There cannot be any dispute about the said general proposition, and in fact Shri Mukherjee, learned counsel for General Krishna Shamsher Jung Bahadur Rana, did not dispute the same.

34. The third contention of Shri Rameshwar Dial was that under paragraphs 3, 4 and 5 of the Scheme of Arrangement, an option was to be exercised by the shareholders within a particular time, that General Krishna Shamsher Jung Bahadur Rana did not exercise and intimate his option within that time, and that consequently he was not entitled to any payment. Under paragraph 3 of the Scheme of Arrangement, the members of the transferor company were to receive payment from the transferee company in the mode set out therein. Paragraph 4, however, provided a different mode and gave an option to the members to receive payment in the mode set out therein instead of receiving payment in the mode set out in paragraph 3. Under paragraph 5, a member of the transferor company had to exercise his option to receive payment under paragraph 3 or paragraph 4 within a period of one year from the date on which the notice of acceptance of the Scheme of Arrangement was sent to him by the joint liquidators of the aforesaid transferor company, and no claim was to be entertained by the transferee company after the expiry of the said period of one year. Under paragraph 6, the transferee company was bound to pay within three months of receiving the option mentioned in paragraph 5.

35. Shri Rameshwar Dial sought to argue in the first instance, that the fixation of a period of one year and the provision that no claim was to be entertained by the transferee company after the expiry of the said period of one year in paragraph 5 of the Scheme of Arrangement were quite valid and were not rendered void by section 28 of the Contract Act. In support of his submission, the learned counsel referred to the decisions in Pearl Insurance Co. v. Atma Ram, AIR 1960 Punjab 236 (F. B.) New Asatic insurance Co. Ltd. v. Bihar State Co-operative Bank Ltd. , AIR 1966 Patna 69; Pt. Prifhvi Nath Malta v. Union of India, AIR 1962 Jammu and Kashmir 150 and Kasim Ali Bulbul v. The New India Assurance Co. , AIR 1968 Jammu and Kashmir 39 ( ). We may also point out that it was held in Postlethwaite v. Port Phitlip and Colonial Gold mining Company, (1890) 43 Ch. D 452 0 and Burdett-Coutts v. True Blue Gold Mine (1899) 2 Ch. 616 that an agreement by which time is fixed within which share-holders must elect whether they will take the shares or not is valid. It is, however, not necessary to examine this aspect as it was not contended either before the learned single Judge or before us on behalf of General Krishna Shamsher Jung Bahadur Rana that the aforesaid stipulations in paragraph 5 were invalid under section 28 of the Contract Act.

36. Shri Rameshwar Dial next argued that the learned single Judge held that there was no proof of service of the notice of acceptance of the Scheme of Arrangement on General Krishna Shamsher Jung Babadur Rana, and that the said finding was erroneous. In paragraph 55 of his company petition. General Krishna Shamsher Jung Bahadur Rana stated that no notice as required under paragraph 5 of the Scheme of Arrangement was ever issued or served upon him at any time. In paragraph 24 of its reply, the transferee company stated that a notice along with the Scheme was sent to all the share-holders under Certificate of Posting and filed a photo-stat copy of the relevant Certificate of Posting as Annexure G-2. The said Certificate showed that a letter was sent to General Krishna Shamsher Jung Bahadur Rana to his address at Kathmandu, Nepal, on behalf of the Indian National Airways Ltd. (in voluntary liquidation) on August 17, 1956, from the General Post Office, Delhi. In paragraph 17 of his replication. General Krishna Shamsher Jung Bahadur Rana, while reiterating the statement made by him in paragraph 55 of his petition, asserted that no notice along with the Scheme of Arrangement was sent at all to him at his address at Bangalore or to his bankers, the State Bank of India, Calcutta. Shri Rameshwar Dial sought to argue that there was only a denial of the receipt of the notice at Bangalore and not at Kathmandu. We do not think so. His denial of the receipt of the notice in his company petition was quite comprehensive and the same was reiterated in his replication. He no doubt added in paragraph 17 of his replication that no notice was sent to him at his address at Bangalore or to his bankers at Calcutta. A reading of the said paragraph as a whole shows that the additional statement in that paragraph was made in the context of his assertion that the transferee company was originally prepared to pay his amount without raising any objection on the ground of non-exercise of the option within the period of one year mentioned in paragraph 5 of the Scheme of Arrangement, but subsequently changed its attitude and sought to raise the said objection. Lower down in the same paragraph, he again averred that no such notice was received by him. The learned single Judge held that in view of the categorical denial of General Krishna Shamsher Jung Bahadur Rana, the presumption under illustration (f) of Section 114 of the Evidence Act regarding service under Certificate of Posting could not be pleaded against him by the transferee company or the voluntary liquidators, and that there was, thus, no proof of service of the notice on General Krishna Shamsher Jung Bahadur Rana in August, 1956. The said finding is one of fact and we are unable to find any valid reason for interfering with the same in this Letters Patent appeal. We may add that it was not the case of any of the parties that the liquidators sent any separate notice of acceptance of the Scheme of Arrangement other than the one alleged to have been sent by the transferee company.

37. Shri Rameshwar Dial then urged that even if there was no service of notice such as was contemplated by paragraph 5 of the Scheme of Arrangement in August, 1956, the learned single Judge had observed in his judgment that General Krishna Sham- sher Jung Bahadur Rana could at best be regarded as served with the notice of acceptance of the Scheme of Arrangement for the first time when the transferee company sent its letter (Annexure "b" collectively), dated 11/13-10-1962, to Shri B. U. Advani enclosing a copy of the Scheme, that by virtue of the provision in paragraph 5 of the Scheme of Arrangement General Krishna Shamsher Jung Bahadur Rana should have intimated his option and claimed payment within one year at least from the date of the receipt of the aforesaid letter to Shri B. U. Advani, and that since he did not so intimate within one year from 11/13-10-1962 he was not entitled to put forward his claim by filing the company petition in November, 1970. It is true that the learned Judge, after holding that there was no proof of service of the notice on General Krishna Shamsher Jung Bahadur Rana, observed that the latter could at best be regarded as served with a notice of the acceptance of the Scheme for the first time when the transferee company sent its letter, dated 11/13-10-1962. The learned Judge also observed that nothing has been placed on the record by General Krishna Shamsher Jung Bahadur Rana to show that he ever exercised his option either under paragraph 3 paragraph 4 of the Scheme of Arrangement or that he ever delivered to the transferee company the share scrips of his shares in spite of having been asked to do so by the letter, dated 11/13-10-1962, addressed to Shri Advani by the transferee company, and that in the circumstances the rejection of the claim made by General Krishna Shamsher Jung Bahadur Rana by his letter, dated November 9, 1967, could well be regarded as justified. This, however, does not mean that General Krishna Shamsher Jung Bahadur Rana was precluded from putting forward his claim subsequently by filing his company petition. It has to be noted that the letter, dated 11/13-10-1962, was sent by the transferee company and not by the joint liquidators. As pointed out by the learned Judge in the later portion of his judgment, it was the joint liquidators who were required under paragraph 5 of the Scheme of Arrangement to serve the share-holders with a notice of the acceptance of the Scheme, and since they failed

to serve such a notice on General Krishna Shamsher Jung Bahadur Rana, the period of one year mentioned in paragraph 5 of the Scheme of Arrangement cannot be said to have begun to run.

38. Thus, the stipulation in paragraph 5 of the Scheme of Arrangement that no claim shall be entertained by the transferee company after the expiry of the period of one year cannot be regarded as a bar to the claim petition of General Krishna Shamsher Jung Bahadur Rana.

39. The last contention of Shri Rameshwar Dial was that the claim of General Krishna Shamsher Jung Bahadur Rana was barred by limitation. His argument was that the cause of action accrued to General Krishna Shamsher Jung Bahadur Rana in 1962 when he was informed by the transferee company by its letter, dated 11/13-10-1962, that the period of limitation for filing his company petition was three years, and that his company petition filed in November, 1970, was, therefore, barred by limitation. In answer to the said contention, which was put forward before the learned single Judge also, it was pleaded on behalf of General Krishna Shamsher Jung Bahadur Rana that the transferee company had admitted, its liability in its balance sheet as on 31st May, 1969 that the said admission amounted to an admission within the meaning of section 19 of the Limitation Act, 1908 (section 18 of the Limitation Act, 1963), and that the company petition was, therefore, within time. The learned single Judge accepted the said plea and held that there was such an admission, and that the company petition was, therefore, within time. Shri Rameshwar Dial contested the correctness of the said view of the learned single Judge, and his first argument was that the statement in the balance-sheet was not an admission of the liability of the transferee company, and that in any case it could not be regarded as an acknowledgment within the meaning of section 19 of the Limitation Act, 1908, or section 18 of the Limitation Act, 1963.

40. In paragraph 71 of the company petition, it was stated that the transferee company had by its balance-sheets of 1957 to 1968 and. lastly, of 31st May, 1969, acknowledged, inter alia, its liability to the share-holders including General Krishna Shamsher Jung Bahadur Rana under the Scheme of Arrangement, that the said balance-sheets constituted an acknowledgment of liability in respect of the claim and/or right of General Krishna Shamsher Jung Rana, that the said balance-sheets were in writing signed by the transferee company and/or by an agent duly authorised by it in that behalf, and that the company petition filed on November 2, 1970, was within time. It was also stated that the cause of action of General Krishna Shamsher Jung Bahadur Rana could not be said to have arisen until November 10, 1967, when the transferee company rejected his claim for the first time. In paragraph 71 of its reply, it was stated by the transferee company, inter alia, as under:-"it is denied that the balance-sheets constituted any acknowledgment. They were kept on a uniform pattern from the very beginning and have continued to be kept in the same manner for all those years. Respondent No. 2 specifically denied the validity of the petitioners claim in the letter, dated 10-11-67. It was followed by the admissions and refusals again and again. In such circumstances, the entries in the balance-sheets were never intended and cannot be construed to be acknowledgment of the petitioners claim."

41. It was also stated that the cause of action arose when under the arrangement General Krishna Shamsher Jung Bahadur Rana became entitled to ask the transferee company for payment, and that limitation began to run when the amount became payable and not when after several years the creditor chose to claim and invite a refusal to pay from the debtor. General Krishna Shamsher Jung Bahadur Rana reiterated his contention in paragraph 34 of his replication. 42. Thus, two questions arise for determination. The first is as to when the cause of action had arisen for filing the company petition, and the second is as to whether the statement in the balance-sheet amounted to an acknowledgment of liability. 43. As regards the first question, the argument of Shri Rameshwar Dial was that the cause of action arose when under the Scheme of Arrangement General Krishna Shamsher Jung Bahadur Rana became entitled to ask the transferee company for payment, and limitation began to run when the amount became payable. On the other hand, the argument of Shri Mukherjee was that the cause of action arose and limitation began to run only when the transferee company rejected the claim of General Krishna Shamsher Jung Bahadur Rana for the first time. For deciding which of these arguments is correct, it has first to be ascertained as to which Article of the Limitation Act, 1963, applies to the company Petition.

44. As pointed out by the Privy Council in Hansraj Gupta v. Dehra Dun-Mussoorie Electric Tramway Co. Ltd. , AIR 1933 Privy Council 63,0 the word "suit" ordinarily means a proceeding instituted by the presentation of a plaint. The company petition filed by General Krishna Shamsher Jung Bahadur Rana can in no sense be described as a plaint and the proceeding instituted "by him cannot, therefore, be regarded as a suit. There being no specific Article in the Limitation Act, 1963, which is applicable to the petition, the only Article applicable to it is the residuary Article 137 which provides the period of limitation as three years and states that the said period begins to run when the right to apply accrues.

45. As regards the applicability of Article 137, our attention has been drawn to two decisions of the Supreme Court. In Town Municipal Council Athani v. Presiding Officer, Labour Court, Hubli, AIR 1969, Supreme Court 1335, 0 the Supreme Court held that Article 137 of the Limitation Act 1963 does not apply to applications under section 33-C (2) of the Industrial Disputes Act so that no limitation is prescribed for such applications. After referring to earlier decisions of the Supreme Court in which it was held that Article 181 of the Limitation Act 1908, was confined to applications under the Code of Civil Procedure, it was observed in paragraphs 10 and II that the said view must be held to be applicable even when considering the scope and applicability of Article 137 in the new Limitation Act of 1963, and that since an Industrial Tribunal or a Labour Court dealing with applications or references under the Industrial Disputes Act are not Courts and are in no way governed by the Code of Civil Procedure or the Code of Criminal Procedure, Article 137 of the Limitation Act, 1963, does not apply to applications made to an Industrial Tribunal or a Labour Court. This decision was considered in a later case, Nityananda v. Life Insurance Corporation of India, A.. R. 1970 Supreme Court 209, (" ). In the later decision it was pointed out that the aforesaid previous decision to the effect that Article 137 of the Limitation Act, 1963, does not apply to applications under section 33-C (2) of the Industrial Disputes Act was based on two grounds, namely, (1) that "in spite of changes made in the Indian Limitation Act, 1963, no drastic change was intended in the scope of Article 137 so as to include within it all applications irrespective of the fact whether they had any reference to the Code of Civil Procedure or not", and "in spite of the changes the interpretation of Article 181 of the Limitation Act, 1908, by this Court in Bombay Gas Co. Ltd. v. Gopal Bhiva (1964) 3 S. C. R. 709 (A.. R. 1964 S. C. 752) would apply to Article 137 of the Limitation Act, 1963", and (2) that it is only applications to courts that are intended to be covered under Article 137 of the Limitation Act. Then, while agreeing with and reiterating the second ground that Article 137 only contemplates applications to courts and was not, therefore, applicable to the Labour Court which is not a Court within the meaning of the Indian Limitation Act, 1963 the learned Judges observed as regards the first ground as under:-

"it is not necessary to express our views on the first ground given by this Court in Civil Appeals Nos. 17010173 of 1968, D/20-3-1969- (A.. R. 1969 S. C. 1335). It seems to us that it may require serious consideration whether applications to courts under other provisions, apart from Civil Procedure Code,, are included within Article 137 of the Limitation Act, 1963, or not. "

46. Thus, the first ground was left open. Shri Mukherjee pointed out that previously Article 181 in the group of Articles dealing with applications, and now Article 137 is placed in a separate Part II with the heading "other applications", and sought to argue that the view about Article 181 of the Limitation Act, 1908, that it is confined to applications under the Code of Civil Procedure cannot be applied to Article 137. However, since the first ground was expressly left open for consideration, and the said consideration has necessarily to be by the Supreme Court as the correctness of the view of the Supreme Court cannot be gone into by a High Court, we proceed on the footing that the petition of General Krishna Shamsher Jung Bahadur Rana was governed by Article 137 of the Limitation Act as it was a petition to the Court.

47. The next question for consideration is as to when the right to apply to the Court had accrued to General Krishna Shamsher Jung Bahadur Rana. In Mt. Balo v. Mt. Koklan, AIR 1930 P. C. 270 and again in Annamlai Chetfiar v. A. M. K. C. T. Muthukannappan Chettiar, AIR 1931 P. C. 9, it was pointed out by the Privy Council, referring to the expression "right to sue" in Article 120 of the Limitation Act, 1908, that there can be no "right to sue" until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted". The aforesaid decisions of the Privy Council were followed by the Supreme Court in Mt. Rukhmabai v. Lala Laxminarayan, (1960) 2 S. C. R. 253, 287. It seems to us that on the same reasoning it would be reasonable to hold that under Article 137 the right to apply accrues only when the right asserted in the application or petition accrued and the said right is unequivocally denied or otherwise infringed or threatened to be infringed. It follows that in the present case the right or the cause of action of General Krishna Shamsher Jung Bahadur Rana to apply to the Court could not be said to have arisen until November 10, 1967, when the transferee company rejected the claim for the first time. There was no positive refusal to pay prior to that date. The period of limitation of three years, therefore, began to run from that date, and the company petition filed on November 2, 1970, was, therefore, quite within time.

48. In the view taken by us above it is not necessary to go into the second question as to whether the statement in the balance-sheet amounted to an acknowledgment of liability. However, since detailed arguments were addressed by the learned, counsel on that question, we shall consider and express our view on that question also. The transferee company did not produce the balance-sheets relating to the years 1957 to 1968, but produced only the balance-sheet of the year 1969 made as on May 31, 1969 (Annexure J ). The relevant portion from the balance-sheet is as follows:-

"liabilities

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

current Liabilities and Provisions as per Schedule d attached.

The relevant portion in Schedule d attached to the balance-sheet is as follows:-

"figures for the Current liabilities Figures for the previous year and provisions, current year

----------------- --------------------- -----------------

Rs. 7,89,986. 17 Share-holders suspense Rs. 7,87. 150. 42

49. The balance-sheet was signed by two directors of the transferee company as well as by the Secretary of the said company and by the Chartered Accountants. As the balance-sheet was of the year 1969, the learned counsel based his argument on section 18 of the Limitation Act, 1963. Sub-section (1) of section 18 provides that -

"where, before the expiration of the prescribed period for a suit or application in respect of any property or right, the acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. "sub-section (2) provides that-"where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received. "explanation (b) to the section provides that-"the word signed means signed either personally or by an agent duly authorised in this behalf. "

50. Shri Rameshwar Dial argued that statements in the balance- sheet of a company cannot amount to acknowledgment of liability because the balance-sheet is made under compulsion of the provisions in the Companies Act. There is no force in this argument. In the first place, section 18 of the Limitation Act, 1963, requires only that the acknowledgment of liability must have been made in writing, but it does not prescribe that the writing should be in any particular kind of document. So, the fact that the writing is contained in a balance-sheet is immaterial. In the second place. It is true that section 131 of the Companies Act, 1913 (Section 210 of the Companies Act, 1956) makes it compulsory that an annual balance sheet should be prepared and placed before the Company by the Directors, and section 132 (section 211 of the Companies Act, 1956) requires that the balance-sheet should contain a summary, inter alia, of the current liabilities of the company. But, as pointed out by Bachawat. in Bengal Silk Mills v. Ismail Golam Hossain Ariff, AIR 1962 Calcutta 115c") although there was statutory compulsion to prepare the annual balancesheet, there was no compulsion to make any particular admission, and a document is not taken out of the purview of section 18 of the Indian Limitation Act 1963 (section 19 of the Indian Limitation Act, 1908) merely on the ground that it is prepared under compulsion of law or in discharge of statutory duty. Reference may also be made to the decisions in Raja of Vizianagaram v. Vizianagaram Mining Co. Ltd. , AIR 1952 Madras 1360. Jones v. Bellegrove Properties Ltd. , (1949) I All E. R. 498 ("); and Lahore Enamelling and Stamping Co. v. A. K. Bhalla, AIR 1958 Punjab 341, in which statements in balance-sheets of companies were held to amount to acknowledgments of liability of the companies.

51. Shri Rameshwar Dial referred to the decision of the Privy Council in Consolidated Agencies Ltd. v. Bertram Ltd. (1964) 3 All. E. R. 282. We shall advert to this decision presently when we deal with another argument of Shri Rameshwar Dial, and it is sufficient to state so far as the argument under consideration is concerned that even in this decision of the Privy Council it has been recognised that balance-sheets could in certain circumstances amount to acknowledgments of liability. It cannot, therefore, be said as a general proposition of law that statements in balance-sheets of a company cannot operate at all as acknowledgments of liability as contended by Shri Rameshwar Dial. [amalgamated in section 208-C of the Indian Companies Act 1913 indian National Air-ways Ltd. (in voluntary liquidation ). ]"

52. The learned counsel next argued that the words used in the entry in the balance-sheet in the present case did not amount to any acknowledgment of liability. We do not think so. The words used in the entry apparently show that in explaining its current liabilities and the provisions made for the same, it was stated that there was a sum of Rs. 7,87,150. 42 held in share-holders suspense account for payment to the share-holders of the Indian National Airways Limited (in voluntary liquidation-since dissolved ). The words used clearly acknowledge the liability. The learned single Judge also took the same view as regards the words used in the balance-sheet. In Lahore Enamelling and Stamping Co. Ltd. v. A. K. Bhalla and others (Supra) Tek Chand. held that "debts due to creditors not mentioned by name but included in the item relating to "loans (unsecured)" or as due to "sundry Creditors" mentioned in the balance-sheet amount to an "acknowledgment" of liability for the purposes of section 19 of the Indian Limitation Act, 1908. There was thus no force in the argument of the learned counsel.

53. Shri Rameshwar Dial next urged that in 1967 General Krishna Shamsher Jung Bahadur Rana sent a notice to the transferee company and the latter denied its liability, and that in view of the said denial of liability prior to the date of the balance-sheet, viz- 1969, intention to acknowledge the liability cannot be inferred from the statement in the balance-sheet. This argument also cannot be accepted. Although, the transferee company denied its liability in 1967, there was nothing to prevent it from acknowledging the liability in 1969.

54. Shri Rameshwar Dial next urged that the words "shareholders suspense" used in the statement in the statement in the balance-sheet were intended to refer to the share-holders of the transferee company itself and not the share-holders of the transferor company. No such plea was taken in the reply filed by the transferee company or was urged before the learned single Judge. It cannot, therefore, be permitted to be taken for the first time in this Letters Patent Appeal as it is a question of fact and. General Krishna Shamsher Jung Bahadur Rana had no opportunity to. meet the same by bringing relevant evidence on record.

55. The next argument was that the balance-sheet was no doubt signed by two Directors, but they did not sign as duly authorised agents of the transferee company as required by explanation (b) to section 18 of the Limitation Act. There is no substance in this argument. The Companies Act, 1956, came into force in 1956. Section 210 of the Act requires the Board of Directors to lay a balance-sheet before the company at the Annual General Meeting. Section 211 prescribes the form and contents of a balance-sheet. The form of balance-sheet is given in Part I of Schedule VI to the Act, and according to it the current liabilities and provisions have to be set out in the balance-sheet Section 215 (i) (ii) requires that the balance-sheet should be signed on behalf of the Board of Directors, inter alia, by the Secretary of the Company and by not less than two Directors of the company. Section 215 (3) provides that a balance-sheet shall be approved by the Board of Directors before it is signed on behalf of the Board of Directors in accordance with section 215 (i) (ii) and before it is submitted to the Auditors for their report thereon. Thus, the statement of current liabilities and provisions in the balance-sheet has to be approved by the Board of Directors before it is signed by the Secretary and two Directors on behalf of the Board. In other words, the balance-sheet is signed by the Secretary and two Directors at the instance and on the approval of the Board of Directors of the company. After the balance-sheet is audited, section 216 requires that the Auditors report should be attached to the balance-sheet, and section 217 requires the Board of Directors also to make a report. The balance-sheet together with the Auditors report and the Boards report are then required to be placed before the company at the annual general meeting for adoption of the balance sheet. After the balance-sheet has been so laid before the company at the annual general meeting, section 220 requires that three copies of the balance-sheet should be filed with the Registrar. In the present case, the balance-sheet (Schedule D to Annexure J) was signed by the Secretary and two Directors, and Annexure J contains the Auditors report and the Boards report. It was stated in the judgment of the learned single Judge that the balance-sheet was adopted by the company and the same was not disputed before us. It is thus quite clear that the balance-sheet was signed by duly authorised agents of the company.

56. Shri Rameshwar Dial then argued that it has now been well settled that the acknowledgment contemplated by section 18 of the Indian Limitation Act, 1963 (section 19 of the Indian Limitation Act, 1908) is one of an existing or a subsisting liability, that the liability of the transferee company had become barred by limitation by the date of the balance-sheet made as on May 31, 1969, and that the statement in the said balance-sheet could not, therefore, operate as an acknowledgement within the meaning of section 18 of the Indian Limitation Act, 1963. This argument was advanced on the premises that the claim of General Krishna Shamsher Jung Bahadur Rana had become barred by limitation on the expiry of three years from the date of the letter sent by the transferee company to him on 11/13-10-1962. The said premises is not available to the learned counsel in view of our earlier conclusion that the period of limitation began to run from November 10, 1967, and not from 11/13-10-1962, and that the claim of General Krishna Shamsher Jung Bahadur Rana was not barred by limitation by the date of his petition to the Court.

57. Shri Rameshwar Dial next argued that an acknowledgment within the meaning of section 18 of the Indian Limitation Act, 1963, has to be one of an existing liability and not a past liability, that the balance-sheet (schedule D to Annexure J) which was made as on May 31, 1969, was actually signed by the Secretary and the Directors of the transferee company only on October 25, 1969, and that consequently that statement in the balance-sheet cannot be regarded as an acknowledgment of a liability which existed on the date on which it was signed. The learned counsel relied upon the decision of the Privy Council in Consolidated Agencies, Limited v. Bertram Limited (Supra ). In that case; the balance-sheets of the company were signed by the Directors some months after the date at which they showed the financial position of the company, and the Privy Council held that in order to satisfy section 19 (1) of the Indian Limitation Act, 1908, an acknowledgment must be an acknowledgment of a liability that existed at the date of the signature of the acknowledgment, that in the case before them the signatures acknowledged the existence of liability on certain loans at the dates to which the balance-sheets were made up and which were long before the dates of signing, and that the balance-sheets were not, therefore, effective as acknowledgments to start fresh period of limitation under section 19 (1 ). The Privy Council pointed out that in the case before them each of the balance-sheets was signed many months after the end of the year to which the balance-sheet related and the acknowledgment was, therefore, not of an existing liability but of a past liability as at the date to which the balance-sheet was made up, and then observed that to satisfy section 19 a liability must exist at the date of the signing of the acknowledgment and the Directors signatures on the balance-sheets did not refer to a liability at the date of signatures but to a liability which existed when the balance-sheet was made up. The Privy Council further pointed out that it would be quite unreal to treat the liability shown as existing on the date of the signature, as it might have changed and had in fact in the case of one balance-sheet been reduced by the time of signature. It has, however, to be noted that at page 288, the Privy Council added that "there may be cases where it would be proper to assume that the liability persisted upto date of the signature which would then be an acknowledgment of an existing liability", and that "some further consideration may have to be given to the general question whether and in what circumstances balance-sheets may operate as acknowledgments of debts comprehended therein". In the present case, the balance-sheet was made as on May 31, 1969, but was signed on October 25, 1969. That is to say, the statement in the balance-sheet mentioned the liability as existing on May 31, 1969, and as pointed out by the Privy Council it would normally be unreal to treat the said liability as existing even in October, 1969, the date on which the balance-sheet was signed. But, the present case is one which falls within the exception mentioned by the Privy Council at page 288 of the report. The balance sheet does contain the statement as to the existence of the liability as on May 31, 1969. In view of the same, it is for the transferee company to show that the said liability had since become reduced or ceased to exist by October 25, 1969, when the balance-sheet was actually signed. No such plea was taken by the transferee company in its reply to the company petition, and there was much less any proof of the same. Since it has not been pleaded or proved by the transferee company that the liability had become reduced or otherwise ceased to exist by October 25, 1969, it is a case where it would be proper to assume that the liability persisted upto October 25, 1969, the date on which the balance-sheet was signed. Thus in our view, the statement in the balance-sheet amounted to an acknowledgment of an existing liability.

58. We may point out that in Bengal Silk Mills v. Ismail Golam Hossain Ariff (Supraw") S. C. Lahiri C.. and R. S. Bachawat. while dealing with a similar point, observed that there would necessarily be a time lag between the date of the signing of the balance-sheet and the end of the previous year, and the balance-sheet would not contain an admission of the amount due on the date of the signature, and that the amount may be and often is different from the amount shown as due at the end of the previous year, but that fact alone does not take the amount out of the purview of section 19. The said view runs counter to the view expressed by the Privy Council, and this decision was not brought to the notice of the Privy Council. We need not, however, go into the question further as we have taken the view that the case before us falls within the exception mentioned by the Privy Council. Thus, the contention of Shri Rameshwar Dial that the claim of General Krishna Shamsher Jung Bahadur Rana was barred by limitation cannot be accepted.

59. Shri Mukherjee, learned counsel for General Krishna Shamsher Jung Bahadur Rana, contended that learned single Judge should have set aside the dissolution itself as being void. The learned counsel advanced three grounds in support of his contention. The first ground was that the Scheme of Arrangement was a nullity, in that the transferor company had only assets in the form of cash, and such ready cash was not "property" within the meaning of section 208-C, with the result that the Scheme of Arrangement was not within the purview of section 208-C. The argument was that on the enactment of the Air Corporations Act, 1953, the Indian National Airways Limited virtually ceased to carry on any further business activity, that all its assets consisted only of the compensation paid under the provisions of the aforesaid Act partly in cash and partly in bonds which have since been encashed, that the assets of the transferor company thus consisted only of ready cash and the same was not "property" within the meaning of section 208-C of the Companies Act, and that the Scheme of Arrangement was not, therefore, within the purview of section 208-C of the Companies Act. The argument is without substance as the term "property" used in section 208-C is, in our opion, comprehensive enough to include cash also.

60. The second ground was that the liquidators had, under the Scheme of Arrangement, divested themselves of their functions under the statute, and that consequently the Scheme of Arrangement and the subsequent dissolution of the transferor company were void. We are unable to accept the argument. As pointed out by the learned single Judge, authority was conferred on the joint liquidators to enter into an arrangement under section 208-C with another company. Under section 208-C, the liquidators could enter into an arrangement with another company, and the Scheme of Arrangement entered into by the joint liquidators with the transferee company was quite in accordance with the provisions in section 208-C. In fact, the Scheme of Arrangement was so to say ratified in the General Meeting of the members of the transferor company held on October 23, 1956. when the account and the manner in which the company was wound up were laid before the members by the liquidators as required by section 208-E. It is thus clear that the Scheme of Arrangement was validly entered into by the joint liquidators, and the same was binding on the members of the transferor company by virtue of the provision in section 208-C (2 ). The contention of the learned counsel cannot, therefore, be accepted.

61. The learned counsel also argued that the last portion in paragraph 5 of the Scheme of Arrangement, viz. the provision that "no claim shall be entertained by the transferee company after the expiry of the said period of one year" was opposed to the provision in sub-sections (5) and (6) of section 244-B according to which the amount could be claimed even after the dissolution. , and that consequently the aforesaid provision in paragraph 5 prohibiting the entertainment of a claim by a share-holder after the expiry of a period of one year was invalid in law.

62. It seems to us that this argument also cannot be accepted, The language of section 244-B shows that the provisions therein are applicable to unclaimed dividends and undistributed assets in the hands of the liquidators in the course of the winding up of a company otherwise than under section 208-C, and not to the undistributed assets or amounts lying with the transferee company mentioned in section 208-C. Further, as stated earlier, the Scheme: of Arrangement which was entered into by the joint liquidators. on specific authorisation by the members of the transferor company was binding on the latter, and, therefore, the provision in. paragraph 5 of the Scheme of Arrangement mentioned above was not liable to be impugned by any of the shareholders, including General Krishna Shamsher Jung Bahadur Rana.

63. The third ground urged by Shri Mukherjee was that the voluntary winding up of the Indian National Airways Limited under the provisions of the Companies Act was invalid and liable to be set aside in view of the provision in section 28 of the Air Corporations Act, 1953. The argument was that the voluntary winding up of the transferor company could only be effected under the aforesaid section 28 and not under the Companies Act. This argument was advanced before the learned single Judge also, and he took the view that while a company going into a voluntary liquidation, has normally to do so in accordance with the provision in the Indian Companies Act, 1913, an alternative mode of proceeding to voluntary winding up was provided in the aforesaid section 28 in the case of companies whose undertakings were acquired under the Air Corporations Act. A reading of section 28 shows that it is not stated in the said section that in the case of a company acquired under the Air Corporations Act its voluntary winding up should necessarily be in accordance with the procedure set out in the said Act, nor is there any prohibition of a voluntary winding up of the company under the provisions of the Companies Act. In the absence of such a provision or prohibition, it seems to us that the procedure in section 28 is only an alternative mode, as suggested^ by the learned single Judge.

64. Shri Mukherjee further argued that even if a company acquired under the Air Corporations Act could be voluntary wound up in accordance with the provisions of the Indian Companies Act, 1913, section 28 of the Air Corporations Act required the previous authorisation of the Central Government, and that since no such previous authorisation was obtained in the present case, the entire winding up proceedings and the dissolution of the transferor company were invalid and liable to be set aside. We are unable to agree with this argument also. As stated earlier, the mode prescribed in section 28 is only an alternative mode and, as such. the requirement of previous authorisation by the Central Government mentioned in the section would be necessary only in a case in which the company is sought to be voluntarily wound up in accordance with the provision in section 28, and not in a case in which the company is sought to be wound up voluntarily under the provisions of the Companies Act.

65. Thus, none of the contentions urged by Shri Mukherjee are tenable. We have already considered and negatived the contentions urged by Shri Rameshwar Dial on behalf of the appellant transferor company. The appeal, therefore, fails and is accordingly dismissed, but in the circumstances without costs.

66. We shall now deal with the cross-objections filed by General Krishna Shamsher Jung Bahadur Rana. The cross-objections were filed under Order 41 Rule 22 of the Code of Civil Procedure. the main objections are : (1) that the Indian National Airways Limited could be wound up only by the procedure prescribed by section 28 of the Air Corporations Act; , (2) that the learned single Judge should have set aside the dissolution of the transferor company on various grounds mentioned in the cross-objections; (3) that the money left undistributed should have been directed to be deposited in the Companys Liquidation Account with the Reserve Bank of India; and (4) that the joint liquidators also should have been made liable to pay the dues of General Krishna Shamsher Jung Bahadur Rana.

67. Shri ilaroans Singh, learned counsel for the joint liquidators (respondents 3 and 4), raised an objection that the cross-objections were not maintainable inasmuch as, according to him, Order 41 Rule 22 applied only to an appeal against a decree within the meaning of the Code of Civil Procedure, and. there was no provision in the Companies Act, 1913 making an order of the Company Court a decree within the meaning of the Code of Civil Procedure. There is no force in this contention. Order 43 Rule 2 clearly provides that the rules of Order 41 shall apply so far as may be to appeals from orders. Even otherwise, it is a settled principle that a respondent to an appeal can always support the judgment of the lower Court by contentions which were advanced but negatived by the lower Court. Objections I and 2 mentioned above were of such a nature, and they could be advanced by General Krishna Shamsher Jung Bahadur Rana for supporting the judgment of the learned single Judge without filing a cross-appeal or cross-objections. We have already considered the said contentions and negatived the same in dealing with the appeal.

68. The third and fourth objections mentioned above seek for reliefs against the appellant-transferee company and. the joint liquidators (respondents 3 and 4) respectively which were refused by the learned single Judge.

69. The relief of a direction to the transferee company to deposit the undistributed, amount in the Companys Liquidation Account in the Reserve Bank of India cannot be granted because, as pointed out by the learned single Judge, the compensation amount recovered by the transferee company was not as such to be distributed to the share-holders inasmuch as under the agreement between the transferee company and the joint liquidators all the assets and liabilities of the Indian National Airways Limited were taken over by the transferee company as its own in consideration of its paying to the share-holders certain sums of money to be calculated either under clause 3 or clause 4 of the Scheme of Arrangement, and the transferee company was to pay to the shareholders from its own assets and not necessarily from the compensation amount received by it. Further, as pointed out earlier, a direction to deposit undistributed, assets or amount in the Companys Liquidation Account can be given to the liquidator under section 244-B, and the said provision is not applicable to a transferee company mentioned in section 208-C of the Companies Act.

70. As regards the fourth objection about the liability of the joint liquidators, it has to be noted that it is a relief sought for against the joint liquidators who are respondents 3 and 4 in the appeal. Even if the cross-objections were maintainable it is well settled that under Order 41 Rule 22 a cross-objection can be urged against the appellant but not as a rule against a correspondent (vide Panna Lal v. State of Bombay, AIR 1963 S. C. 1516 ). It is thus clear that the said relief sought for against the joint liquidators, who are co-respondents, cannot be asked for in the cross objections.

For the above reasons, the cross-objections fail and are, therefore, dismissed but in the circumstances without cost.