Baraboni Coal Concern Ltd. vs Ram Chandra Marwari

These two miscellaneous appeals and the civil revision application arise out of two applications for the execution of a decree obtained by the respondent, Ramehandr a Marwari, against the appellant, the Baraboni Coal Concern Ltd. One Economic Coal Co. Ltd., (now defunct) worked among others a colliery called Ganeshpur. Half of this coalfield belonged to the respondent-decree-holder and the other hall to one Mr. Forbes. The latter sub-leased his half to the Economic Coal Co. Ltd., and the former entered into a partnership with that company in respect of the other half, and thus the company worked the whole of the Ganeshpur coalfield. This company went into voluntary liquidation, and the liquidator amalgamated it with the Baraboni Coal Concern Ltd., with effect from 1st April 1926. (The effect of this amalgamation will be dealt with later.) The decree-holder, Ramchandra Marwari, instituted a suit, No. 54 of 1927, against the Economic Coal Co. Ltd., the Baraboni Coal Concern Ltd., and others for dissolution of the partnership and accounts. The suit was decreed and the amount due to the plaintiff was ascertained at a sum of over Rs. 88,000. The order portion of the decree runs thus:

For the amount that would be found due to the plaintiff on rendition of account defendants 1 and 2 (that is the Economic Coal Co. Ltd., and the Baraboni Coal Concern Ltd.,) would be liable to the extent of the assets of the Economic Coal Co. in their hands.

This is the decree under execution. In one of the two executions the decree, holder attached a decree obtained by (1) the Baraboni Coal Concern Ltd., (2) Chandanmal Indra Kumar, the petitioner in the civil revision application, and another, in Suit No. 66 of 1930, against the proprietor of one C.M. & Co. for an encroachment by the latter on the coal lands of the Phularitand Coal Co. Ltd., which company among others had also been amalgamated with the Baraboni Coal Concern Ltd. Two objections were preferred against this attachment. One was by the Baraboni Coal Concern Ltd., and was to the effect that the decree which was attached was not a part of the assets of the Economic Coal Co. Ltd. but was the property of the Phularitand Coal Co. Ltd. and was not therefore attachable in execution of the decree of the decree holder-respondent. The second was a claim under Order 21, Rule 58, Civil P.C. made by Chandanmal Indra Kumar, who alleged that he was also a decree-holder of the attached decree and that as he was under no liability to pay the decree of the respondent, Ram, chandra Marwari, the decree could not be attached.

The objection and the claim were allowed by the learned Subordinate Judge. The decree-holder preferred an appeal and a civil revision application to this Court (Miscellaneous Appeal No. 107 of 1934 and Civil Revision No. 450 of 1934). These were heard by a Division Bench (Agarwala and Varma, JJ.) before which it was admitted on behalf of the Baraboni Coal Concern Ltd., a respondent in the miscellaneous appeal, that

if they are unable to account for any part of the assets of the Economic Coal Co. Ltd., which passed into their hands at the amalgamation, they are personally liable to satisfy the decree.

It was however contended on their behalf that this could be effected only after the appellant decree holder had first proceeded against the assets of Economic Coal Co. Ltd. The Court held-that for the purpose of determining whether the right, title and interest of the Baraboni Coal Concern Ltd. in the decree was liable to attachment, it was necessary to ascertain whether they had accounted for the assets of the Economic Coal Co. Ltd. which passed into their hands at the amalgamation. The cases were therefore remanded and the Court below directed to institute an enquiry on the lines indicated above, and the miscellaneous appeal and the civil revision application were allowed on these terms.

In pursuance of the aforesaid order of remand, the Court below has instituted an enquiry and found that the Baraboni Coal Concern has failed to account; for the assets of the Economic Coal Co. Ltd. which came into their hands. It has accordingly allowed the attachment to stand, and Miscellaneous Appeal No. 211 of 1936 is directed against this order. The lower Court has also disallowed the claim of Chandanmal Indra Kumar as to his being a parb holder of the decree against C.M. & Co. and Civil Revision Application No. 606 of 1936 is directed against this order.

In the meantime, after the objection of the Baraboni Coal Concern Ltd., and the claim of Chandanmal Indra Kumar were allowed, the decree-holder-respondent took out another execution of his decree. In this execution he attached another decree--a decree for costs in favour of the Baraboni Coal Concern obtained on the Original Side of the Calcutta High Court against Sri Gopinathji Thakur, amounting to about Rs. 10,000. To this also, the Baraboni Coal Concern raised the same objection, namely that the decree attached was their personal, property and was no part of the assets of the Economic Coal Co. Ltd. This objection was heard along with the oases remanded by the High Court, and with a similar result, namely that the Court held that though the decree attached was the personal property of the Baraboni Coal Concern, this party had not accounted for the assets of the Economic Coal Co. which came into their hands and were therefore personally liable to satisfy the decree of Bamchandra Marwari. Miscellaneous Appeal No. 232 of 1936 is directed against this order.

Sir Manmatha Nath Mukharji who appears on'' behalf of the appellant company the Baraboni Coal Concern�has attacked the order of the Court below on the following grounds: (1) The decree under execution, on a proper construction, only means that it was executable against such specific properties of the Economic Coal Co. as might be found in the hands of the Baraboni Coal Concern, and that there is no obligation on the latter to account for the assets of the defunct Economic Coal Co. It was contended that the Court below was wrong in applying the principle of Section 52, Civil P.C. to the present case, as the Economic Coal Co. was not a deceased person within the meaning of the Section nor the Baraboni Coal Co., its legal representative. (2) The reasoning of the learned Subordinate Judge in holding that the Baraboni Coal Concern had failed duly to account for the assets of the Economic Coal Co. is wrong. The learned advocate urged that the appellant had duly accounted for all the assets that came into their hands, and that as regards various items in the accounts dealt with by the learned Subordinate Judge, his con elusions were based upon wrong premises.

Mr. Section M. Mulliek, who appears on behalf of the decree-holder-respondent, has, on the other hand, contended that the Baraboni Coal Concern was accountable and that this matter was concluded by the order of remand of this Court and could not be reopened. He supported the main findings of the learned Subordinate Judge as to the value of the assets of the Economic Coal Co. which were not duly accounted for by the Baraboni Coal Concern, Ltd. He also urged that the decree under execution, so far at any rate as it relates to costs, is a personal decree against the Baraboni Coal Concern Ltd., and that to that extent the Baraboni Coal Concern are personally liable in any event. It may be mentioned here that the decree obtained by the Baraboni Coal Concern and others against the proprietors of C.M. and Co., which was attached in the earlier execution case, no longer subsists. It has on appeal been set aside by this Court, and an appeal against the decree of this Court is pending before the Privy Council. The attachment is therefore notional, and will be of no value unless the decree of the trial Court is restored with or without modification by the Privy Council. Let us now consider the points raised by Sir Manmatha Nath Mukharji on behalf of the appellants in the order in which they have been stated.

The first question to be considered is whether it is open to the appellants to take up the position that under the terms of the decree under execution they are not liable to account for the assets of the Economic Coal Co. which came into their hands and that they are not personally liable to satisfy the decree even to the extent of assets not accounted for. In other words, the question is whether the only remedy of the decree-holder-respondent is to attach such actual assets of the Economic Coal Co. as may be found in the hands of the appellants. We have already stated that it was admitted before Agarwala and Yarma, JJ., that the Baraboni Coal Concern were persoally ''liable in case they failed to account for the assets of the Economic Coal Co. The learned advocate for the appellants, however, con. tended that this was a wrong admission by the advocate who then appeared for his clients, that being an admission on a point of law, only his clients were not bound by it, and that he was entitled to question it before us. Now, it is true that an admission by an advocate on a point of law is not binding upon a party, but if on the basis of such an admission a decree has been passed, the decree is binding upon the party unless it is set aside under the procedure prescribed by law. In other words, even though an admission may not be binding, a decision on the basis of that admission will bind the party. Sir Manmatha Nath Mukharji, however, contended that the order of -remand did not finally determine the question of the liability to account and did not finally decide that on failure to account for the assets, the appellant Company would be personally liable for the decree under execution. He placed before us a number ,of authorities, some of which are at first sight not reconcilable, We do not propose to examine them in detail, but consider it sufficient to refer to a decision of this Court, Brijraj Krishna v. Chathu Singh A.I.R (1923) . Pat. 226 in which it was held that when one Bench set aside the decision of the lower Court and remanded the case after laying down the law to be followed, the decision of the Bench on the point of law is final and another Bench, a Court of co-ordinate jurisdiction, cannot go behind it in appeal against the decision passed after remand. The authorities on the whole establish the proposition that if a Bench remands a case to the lower Court either under Order 41, Rule 23 or under Order 41, Rule 25 or under the inherent powers of the Court (the remand in this case comes neither under Rule 23 nor under Rule 25), the matters finally disposed of by the order of remand cannot, any of them, be reopened when the case comes back from the lower Court, but if at the time of remand no final decision is given on a point though some observations only are made in respect of it, it is open to another Bench when finally determining the case to come to its own conclusions on it. Applying this principle, the appellants are, in our opinion, precluded from raising the question now.

We have said before that the lower Court had allowed the objection of the Baraboni Coal Concern, holding that the decree attached not being a part of the assets of the Economic Coal Co. was not liable to be attached. The issue therefore before the Bench which at first heard the appeal of the decree-holder was whether that decree was attachable. On the admission of the legal position the Court decided that the personal properties of the Baraboni Coal Concern were liable to attachment in case the company failed duly to account for the assets of the Economic Coal Company which came into their hands. But as the lower Court had not determined this point, the case was remanded only for investigating and deciding it. The liability of the Baraboni Coal Concern personally to satisfy the decree of Ramchandra Marwari, if they failed to account for the assets of the Economic Coal Co., was, in our opinion, finally determined by the former Bench, and the question cannot be reopened before us.

The appellants in substance ask us to hold that the order of remand was wrong, inasmuch as it was passed under misappreciation of the legal position, plainly, we cannot do so. Assuming however that it is open to us to enter into this question, the result will be exactly the same. The admission made by the advocate of the Baraboni Coal Concern before Agarwala and Varma, JJ. as regards the legal position--in respect of the liability of the company--was correct.

Sir M.N. Mukharji argued that the liability of the personal properties of a judgment-debtor for a decree passed against him as a representative of a deceased person, in case he fails to account for the assets of the deceased which came into his hands, is a creation of Section 52, Civil P.C. and that the Section being in terms inapplicable to this case, the Baraboni Coal Concern is not liable to satisfy the decree on that footing. This contention cannot, in our opinion, be accepted. Section 52(2) of the Code simply enacts a rule of procedure in accordance with natural justice; and even in the absence of that Section (and of any provision of law to the contrary) Courts would have been justified in applying the principle embodied in it as a rule of justice, equity and good conscience. If a debtor dies and his properties are taken by his legal representatives, they are bound to pay his debts to the extent of the assets they have taken, unless it can be said that the debts are extinguished by the death.

The liability of these assets of the deceased to be taken in satisfaction of his debts can be enforced by bringing a proper suit against the representatives who have taken them; and if between the death of the debtor and the execution of the decree these representatives have converted any of the assets of the deceased debtor to their own use, it would be a strange system of law and equity under which it could be held that they are not liable to satisfy the decree to the extent to which they are unable properly to account for the assets of the debtor. For, that would enable the representatives to take the assets and yet easily defeat the creditors, and thus, in effect, mean that if not realized in the lifetime of a debtor, his debts are not realizable from his properties after his death. We cannot conceive of any system of law which would allow the representatives of a deceased debtor to take his assets and nevertheless resist the execution of decrees to be satisfied out of those assets without duly accounting for them and thus leave the decree-holders to remain content with infructuous decrees.

This is how we arrive at the principle of procedure embodied in Section 52(2) as regards "enforcement of decree against legal representative" (to quote the marginal note to the Section). If a creditor has obtained a decree for the payment of money out of the property of the deceased, and proves in the execution proceedings that the debtor died leaving properties which came into the hands of his representatives, then it is for these, representatives to account for those properties, and if they fail to do so, they become, personally liable to the extent of the assets not accounted for. The personal liability of the representatives in such a casa seems to us to be implicit in the very decree passed against them for payment of money out of the property of the deceased. For, the only other view that need be considered on this point is that the question of personal liability must be gone into in the suit itself--a course which has little to recommend it and which is definitely negatived by Section 52(2) in oases of natural death.

In the present case the decree was passed against} the appellants on the finding they took over the entire assets and liabilities of the'' Economic Coal Company when the latter went into voluntary liquidation, and their liability was expressed in the form adopted in decrees against legal representatives of deceased persons. As regards the mode of execution of such a decree we are unable to see that in principle it differs from a decree passed against the legal representatives of a person who has died a natural death.

Sir M.N. Mukharji has cited two decisions in support of his contention that the'' principle of Section 52, Civil P.C. cannot be applied to oases which do not come within its terms. These are Chaube Madho Rao Vs. Chaube Gur Narain, and Sudhamoyee Basu and Another Vs. Bhujendra Nath Biswas and Others, . It seems to us that neither of the cases definitely lays down any such, proposition as is contended for. In the first; place they are not cases in which the decrees were passed against the legal representatives. In Chaube Madho Rao Vs. Chaube Gur Narain, there was a decree passed against a man who after the'' decree-holder''s application in execution for attachment of his properties moved the Collector, on the ground of his having become a sanyas, for the mutation of his son''s name in the revenue records. The attachment was granted by the Civil Court, and then the son objected to execution on the ground that as his father had taken sanyas, the properties no longer belonged to the father but had devolved upon him, and that execution could not proceed without his being made the heir of his father.

The objection was disallowed by the executing Court, and this order was upheld by the High Court. The learned Judges were addressed on Section 50, Civil P.C., and observed that the question before them was one of procedure and that

Section 60 uses the word ''dies'' apparently in its natural sense, as distinguished from a civil death (e. g. by taking sanyas) ''which is in some ways different from natural death''.

It may be noted however that the decree-holder did not admit that in fact his judgment-debtor had taken sanyas, and the learned Judges said that it was not proved in the case that the judgment-debtor had become a sanyas either before or after the attachment, or at all. It is clear therefore that their observations about civil death are merely obiter. It is true that the word "dies" in the Section may refer to natural death only, but with the utmost respect for the learned Judges, the principle underlying the Section would not seem to be inapplicable to the case of a man taking sanyas; otherwise, it will be impossible to execute a decree obtained against him before he took sanyas. The Hindu law is that if a man takes sanyas, he becomes civilly dead and incapable of continuing to hold any interest in his properties, which therefore devolve upon his heirs. What then would be the remedy in such a case open to a party who had already obtained a decree against him.

If he attempted to execute it against the sanyas, he could get little satisfaction since the latter has no longer any saleable interest in any property. The only course therefore open to the decree-holder would seem to be to proceed against the heirs of the sanyas, and the Court would have to apply the principle embodied in Section 50, Civil P.C. It certainly cannot be said that though civilly dead under the Hindu law, a sanyas is capable of holding property for the purposes of the execution of a decree properly passed against him.

In the second case the facts were different, but the Allahabad case was cited in support of the view that the word "dies" in Section 50 has been used in its natural meaning and does not include civil death. The decision of the case proceeded on its own facts. A decree had been obtained against the daughters of the last male holder of a tenure for the rent that had accrued due since his death. Two of the daughters died and the surviving daughter surrendered her life interest. The decree-holder then wanted to proceed in execution against the reversioners as under a money decree, not under a rent decree. The learned Judges held that he could not do so, though it was open to him to bring the tenure to sale under the Bengal Tenancy Act: the daughter was no, party to the execution, and if she was personally liable, that liability was not shown to have passed to the reversioners. The Allahabad case was referred to without any discussion, but the point actually decided was that the personal liability of the daughter had not passed to her father''s reversioners. The decision is entirely inapplicable to a case like the present where a decree has been passed against the appellants themselves, but we may also observe-that unlike a sanyas the self-effacement of a Hindu female by surrender does not render her incapable of being proceeded against in execution for her personal liabilities.

The two cases cited by the learned advocate thus have no bearing on the question before us, viz. whether the appellants who have taken the assets of the late Economic Coal Co. can be allowed to defeat the decree passed against them on the ground that by the time the decree-holder proceeds in execution for the satisfaction of his decree, the assets of the late company--for whatever reason--are no longer with them. If it had been the appellant''s case that they had utilized the assets of the late company in the discharge of its debts or on other legitimate purposes and the present decree-holder had come late in the field, the position would of course have been quite different. In our opinion, it was rightly conceded before Agarwala and Varma, JJ. on behalf of the Baraboni Coal Concern that they would be "personally" liable if they failed to account for the assets; they'' could not have been allowed to take up the position that they were not going to give any account of what they had done with the assets of the late company but that if was for the decree-holder to go and find the assets of the late company and execute his decree against such assets as he might find out.

Sir M.N. Mukharji has also contended that the Baraboni Coal Concern are not the legal representatives of the Economic Coal Co., and that though they acquired the assets of the latter, they are not liable for anything beyond such liabilities of the company as may have been taken into consideration at the time of the amalgamation. The learned advocate has taken us into various Sections of the Companies Act, 1913, but in our opinion they do not help the appellants. Section 191 which applies to a winding up by the Court, only shows that a creditor will be excluded from the benefit of any distribution made before he proves his debt. Section 203 prescribes the circumstances in which a company may be wound up voluntarily, and Section 207 prescribes the consequences of a voluntary winding-up, such as the application of assets, the powers of the liquidator, and the conditions in which the Court may appoint a liquidator. Section 209 defines the rights of creditors in a voluntary winding-up and prescribes the issue of notice to them, thus making it possible for them to determine whether an application shall be made to the Court for the appointment of another or a joint liquidator. The next Section to which we have been referred is Section 213, corresponding to Section 208-C of the present Act, on the power of liquidator to accept shares, etc., as a consideration for sale of property of the company. It was pointed out that this Section substantially covers the amalgamation of companies. The Section on which Sir M.N. Mukharji laid great stress is Section 228 which runs thus:

In every winding-up (subject in the case of insolvent companies to the application in accordance with the provisions of this Act of the law of insolvency) all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, shall be admissible to proof against the company, a just estimate being made so far as possible, of the value of such debts or claims as may be subject to any contingency.

There is nothing in all this to support the main contention of Sir M.N. Mukharji that as the decree, holder did not come forward to make his claim in the winding-up proceedings, he cannot now call upon the appellants (the transferee company) to show what they have done with the assets of the transferor company. The respondent, Ramchandra Marwari, brought his suit in 1927 and obtained the decree under execution in 1929. The balance sheet as at 31st March 1926 shows Ramchandra Marwari as a creditor of the Economic Coal Co. He thus had a debt due to him from that company apart from the decree under execution which was obtained in a suit brought after the amalgamation. The learned advocate therefore argued that it was open to Ramchandra as a creditor of the Economic Coal Co. to object to the transfer of the assets of this company to the Baraboni Coal Concern by applying to the Court and that as he did not do so the arrangement is binding upon him. This proposition was supported by a passage from Stiebel''s Company Law, Vol. II (Edn. 3, p. 1154):

A creditor who lies by and omits to present a petition will not be able to go behind the scheme (of reconstruction or amalgamation) and will be bound by it.

But all this has no bearing whatsoever on the issue before us. The decree-holder does not question either the voluntary liquidation or the action of the liquidators in transferring the assets of the Economic Coal Co. to the Baraboni Coal Concern. We are now only concerned with the mode of execution of a decree passed against the appellants on the footing that they had taken over the entire assets and liabilities of the Economic Coal Co. This finding of the trial Court (see the judgment, lines 5 to 35 on p. 276 of part III of the paper-book)--to say nothing of the form of the decree--makes it unnecessary to consider what the position would have been if the amalgamation or reconstruction had been effected, as it could have been effected, In re South African Supply and Cold Storage Co. (1904) 2 Ch. 268 at page 286, cited by the learned advocate, without the entire liabilities of the transferor company passing to the appellants. As they took over all the assets and liabilities of the Economic Coal Co., they are, in our opinion, to all intents and purposes, representatives-in-interest of the latter company; and the lengthy arguments that were addressed to us on the Companies Act cannot get over the decree actually passed and now under execution, nor over the fact that the appellants took over the entire assets and liabilities of the defunct company. We can. not therefore decline to extend the principle of Section 52(2) to the appellants on the ground suggested, viz. that under the Companies Act the transferee company cannot be said to be the legal representative of the transferor company.

Sir Manmatha Nath Mukharji asked us to construe the decree as if it allowed realization only from such assets of the Economic Coal Co. as may be found in the possession of the appellants. Apart from the question that the decree has already been interpreted in the previous judgment] of this Court and held to be executable against the Baraboni Coal Concern personally to the extent to which the assets of the Economic Coal Co. remain unaccounted for we take the same view of the plain meaning of the decree. The contingent admission of personal liability on the previous occasion was no doubt made when the attach ability of the decree in suit No. 66 of 1930 only was in question. But the interpretation of the decree with reference to the applicability of the principle under, lying Section 52(2) must plainly govern the execution in respect also of the Calcutta decree attached later on by the respondent.

The next branch of the argument on behalf of the appellants is that the assets of the late company have been accounted for and we must now proceed to examine it. The Economic Goal Co. had four coal fields, viz. Babisole, Bana, Chinchuria and Ganeshpur. All these admittedly came into the possession of the Baraboni Coal Concern, Ltd. (After considering the facts and evidence their Lordships concluded.) We thus see that the appellants have not accounted for immovables worth about Rs. 5,50,000 and cash or stock of coal corresponding to Rs. 47,000 and not Rs. 80,000, as found by the lower Court which was with the Ganeshpur Colliery and came into the hands of the appellants at the amalgamation. These assets were much more than sufficient for satisfying the decree under execution, and the learned Subordinate Judge has rightly disallowed the objection of the appellants in the two execution cases, and the appeals fail. We are also of opinion that the decree under execution so far as it relates to costs is a personal decree against the appellants. This part of the decree runs: That the sum of Rs. 3864-10-6 be paid by defendants 1 and 2 to the plaintiff on account of the costs of this suit with interest thereon at 6 per sent, per annum from this date to the date of realization.

Defendant 2 was the Baraboni Coal Concern and the liability for these costs is unrestricted, unlike the liability for the substantive claim which was decreed at Rs. 88,961.4-3 limited to the assets of the Economic Coal Co. (defendant l) in the hands of defendant 2. We cannot therefore accept the appellants'' contention that the costs stand on the same footing as and should go with the other amount.

Coming to the civil revision application it is enough to say that the claim of Chandanmal Indra Kumar is unfounded. The decree attached, as we have already stated, was obtained by the Baraboni Coal Concern and others against the proprietors of C.M. & Co. in respect to an encroachment upon the Phularitand Coal Co.''s lands.

This last company was also amalgamated with the Baraboni Coal Concern and was later on brought to sale for arrears of cess and purchased by the claimant, Chandanmal Indra Kumar. His interest in Phularitand, however accrued after the period for which the damages were claimed against C.M. and Co. as is clear from the judgment in suit No. 66 of 1930 (Ex. B). Though the claimant, Chandanmal Indra Kumar, was among the plaintiffs in the suit he has thus no right or interest in the decree; and the civil revision application was in-fact not pressed.

The appeals must therefore be and are dismissed with costs and also the civil revision application. Hearing fee ten gold mohurs.