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2004 DIGILAW 205 (CAL)

PARBATI DASGUPTA v. OFFICIAL LIQUIDATOR

2004-03-22

ALTAMAS KABIR, JYOTIRMAY BHATTACHARYA

body2004
A. KABIR, J. ( 1 ) THE appellant/petitioner claims to be a contributor and former Director of Solex Fasteners Pvt. Ltd. , now in liquidation. In such capacity the appellant filed an application under section 466 of the Companies Act, 1956 for permanent stay of an ex parte winding up order dated 30th January, 2002, and/or for recall of the order dated 14th August, 2001, admitting the winding up petition filed allegedly on behalf of the respondent No. 2, which was rejected by the Company Judge by his order dated 31st July, 2002. ( 2 ) THE main ground for the stay application was that the winding up petition had been affirmed by one Shri Ajoy Dalan, purportedly in his capacity as the constituted Attorney for the respondent No. 2, Lokenath Jeloka, who had not been heard of since 1989 and was legally presumed to be dead having regard to the provisions of section 108 of the Indian Evidence Act, 1872. It was the case of the appellant/petitioner that Shri Ajoy Dalan, being fully aware of the fact of Lokenath Jeloka's death, had fraudulently made use of the Power of Attorney executed in his favour by Lokenath Jeloka to file the winding up petition. ( 3 ) APART from the above, various other objections were also taken, but ultimately by an order dated 31st July, 2002, the learned Company Judge dismissed the application for recalling of the order dated 14th August, 2001, without deciding the question regarding the maintainability of the winding up petition itself at the instance of Shri Ajoy Dalan on the basis of the Power of Attorney executed in his favour by Lokenath Jeloka. ( 4 ) THIS appeal is directed against the said order of the learned Company Judge dated 31st July, 2002, dismissing the application for recall of the order dated 14th August, 2001, admitting the winding up petition and the subsequent order dated 30th January, 2002, directing winding up of the company. ( 5 ) APPEARING in support of the application for stay filed in the appeal Mr. ( 5 ) APPEARING in support of the application for stay filed in the appeal Mr. D. Shome, learned Advocate, submitted that once it had been brought to the notice of the learned Company Judge that Lokenath Jeloka had been missing and was unheard of since 1989, the learned Court ought to have taken note of the provisions of section 108 of the Indian Evidence Act, and should have called upon Shri Ajoy Dalan to establish that Lokenath Jeloka was alive at the time when the winding up petition was said to have been filed on his behalf. ( 6 ) MR. Shome submitted that the entire winding up proceeding, right from its inception, was a nullity, since the petitioning creditor, Lokenath Jeloka, was missing and was unheard of since 1989, which raised a mandatory presumption of his civil death under section 108 of the Indian Evidence Act, 1872. Mr. Shome submitted that leave had been obtained to file the winding up petition on 29th September, 2000, by completely suppressing the fact that Lokenath Jeloka was missing and unheard of since July, 1989. ( 7 ) MR. Shome urged that section 108 of the Evidence Act provides that if it is proved that a person has not been heard of for seven years by those who would naturally have had heard of him if he had been alive, the burden of proving that he is alive is on the person who affirms it. In other words, while under section 107 of the Evidence Act, the onus is on the person who affirms the death of some one, such onus is shifted to the person who affirms that such person is alive if it is proved that he has not been heard of for seven years by those who would naturally have had heard of him if he had been alive. ( 8 ) MR. Shome submitted that the onus of proof under sections 107 and 108 of the Evidence Act, is a shifting onus and in the instant case since the appellant/petitioner had contended that Lokenath Jeloka had been unheard of since 1989, the onus of proving that he was alive had shifted to Shri Ajoy Dalan who had failed to discharge such onus. ( 9 ) MR. ( 9 ) MR. Shome urged that without deciding the said question the learned Company Judge had dismissed that appellant/petitioner's application for permanent stay of the winding up order dated 30th January, 2002. ( 10 ) IN support of his aforesaid submission Mr. Shome firstly referred to a Single Bench decision of this Court in the case of Chandi Charan Naskar v. Bhagyadhar Mondal and Ors. , reported in AIR 1976 Calcutta, Page 356, wherein it was held that the presumption under section 108 relates to the factum of death and not to the day of death of the person untraced. The presumption starts from the date when the dispute arises, that is when the suit is filed. Mr. Shome submitted that in the instant case the presumption started from the day when the winding up petition was filed and it was for the holder of the Power of Attorney to establish that the principal, Lokenath jeloka, was alive on that date. ( 11 ) MR. Shome then referred to a Single Bench decision of the Allahabad High Court in the case of Mahendra Pratap Singh v. Padam Kumari Devi, reported in AIR 1993 Allahabad, Page 143, wherein while considering the validity of a Power of Attorney executed by a person whose mental condition and infirmity had rendered her incapable of deposing on the bona fides of the Power of Attorney executed by her, the learned Judge was of the view that the Power of Attorney may have been good while it lasted but the state of the health of the principal had rendered it worthless for the purpose of the suit. ( 12 ) REFERENCE was also made to a Bench decision of the Punjab High Court in the case of Amar Kaur v. Sadhu Singh and Ors. , reported in AIR 1961 Punjab, Page 57, wherein it was held that an appeal filed in the name of a person who was dead on the date of institution by a counsel purporting to act on a Power of Attorney given to him by the appellant's wife, could not be continued by permitting his legal representatives to be substituted in his place. It was held that such an appeal filed in the name of a dead person being a nullity cannot be revived either under Order 1 Rule 10 or sections 151 and 153 of the Code of Civil Procedure. It was held that such an appeal filed in the name of a dead person being a nullity cannot be revived either under Order 1 Rule 10 or sections 151 and 153 of the Code of Civil Procedure. ( 13 ) MR. Shome then referred to a decision of the Hon'ble Supreme Court in the case of R. V. E. Venkatachala Grounder v. Arulmigu Viswesaraswami, reported in AIR 2003 SC, Page 4548, in support of the proposition that there is an essential distinction between ?burden of proof? and ?onus of proof?. Burden of proof lies upon a person who has to prove the fact and which never shifts, but onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. Once the onus of proof is shifted from the plaintiff to the defendant it is for the defendant to discharge his onus and in the absence thereof the burden of proof lying on the plaintiff must be held to have been discharged. ( 14 ) THE next decision referred to by Mr. Shome is that of the Hon'ble Supreme Court in the case of N. Jayalakhsmi Ammal v. R. Gopala Pathar, reported in AIR 1995 SC Page 995, where a question similar to that in the instant case had arisen and the Hon'ble Supreme Court was called upon to consider the provisions of sections 107 and 108 of the Indian Evidence Act, 1872. Quoting from Sir John Woodroffe and Amir Ali's ?law of Evidence? the Hon'ble Supreme Court observed that section 107 deals with the presumption of continuation of life, whereas, section 108 deals with presumption of death. ( 15 ) MR. Shome concluded on the note that a petition for winding up could be filed by a Constituted Attorney who has to be authorised to institute such winding up proceeding and that the same could not be done on the basis of a General Power of Attorney as in the instant case. Mr. Shome urged that such proposition had been duly considered by a learned Single Judge of the Bombay High Court/panaji Bench in the case of Shantilal Khushaldas and Bros. Mr. Shome urged that such proposition had been duly considered by a learned Single Judge of the Bombay High Court/panaji Bench in the case of Shantilal Khushaldas and Bros. Pvt. Ltd. v. Smt. C. S. Shaw, reported in 77 Company Cases Page 253, wherein the learned single Judge while considering the matter held that under Rule 21 of the Companies (Court) Rules, 1959, an affidavit verifying a petition for winding up can be sworn by a duly authorised person on behalf of the petitioning party on obtaining leave from the Judge or Registrar of the Company Court but such constituted Attorney must be specifically authorised to file a company petition for winding up of a company. A mere authorisation to file suits or proceedings for recovery of an amount is not sufficient to empower him to institute proceedings under the Companies Act for winding up of a company. ( 16 ) MR. Shome submitted that the aforesaid provisions of law had been completely overlooked and/or disregarded by the learned Company Judge while dismissing the appellant/petitioner's application for permanent stay of the winding up proceedings on account of the legal infirmity inherent in the filing of the winding up petition. Mr. Shome urged that the winding up proceedings being a nullity, all the orders passed therein admitting the winding up petition and finally directing winding up of the company were liable to be set aside. ( 17 ) THE stay application and the contentions raised in connection therewith were hotly contested on behalf of the petitioning creditor. Supporting the orders passed by the learned Company Judge on the application for winding up filed on behalf of Lokenath Jeloka, as the petitioning creditor, Mr. S. N. Mukherjee submitted that the law relating to presumption of death as envisaged in section 108 of the Indian Evidence Act did not contemplate the fixation of a date of death but a presumption of death from the date when such a dispute is raised. If a person has not been heard of for seven years, there is presumption in law that he is dead, but at what time and within what period he died is not a matter of presumption but of evidence. Mr. If a person has not been heard of for seven years, there is presumption in law that he is dead, but at what time and within what period he died is not a matter of presumption but of evidence. Mr. Mukherjee submitted that it was, therefore, clear that the presumption regarding death could be drawn if a person had not been heard of for seven years by those who would naturally have had heard of him, if he had been alive, but there is no presumption whatever regarding the actual date of death. The presumption under section 108 of the Evidence Act could be raised to extend generally to the fact of death at the expiration of seven years and not to the date of death at any particular period. In this regard, reference was made to a single Bench decision of the Madras High Court in the case of N. Prem Ananthi v. Tahsildar Coimbatore, reported in AIR 1989 Madras, Page 248, wherein in a reference to section 108 of the Evidence Act it was observed that presumption of death could be made only if it is proved at that time when the presumption is sought to be raised that the person concerned had not been heard of for seven years by those who naturally have had heard of him if he would have been alive. ( 18 ) MR. Mukherjee referred to the decision of the Hon'ble Supreme Court in the case of N. Jayalakshmi Ammal (supra), also referred to by Mr. Shome, regarding the presumption of death and the fact that while there is presumption of death if a person is not heard of for seven years, the exact time of death is not a matter of presumption but of evidence and the onus of proving that the death took place at any particular time within the seven years lies upon the person who makes such a claim. There is, in fact, no presumption that the death took place at the close of seven years. Mr. There is, in fact, no presumption that the death took place at the close of seven years. Mr. Mukherjee submitted that the same legal proposition had also been indicated by the High Court of Himachal Pradesh in Smt. Mathur v. Smt. Rami, reported in AIR 1986 HP, Page 6, where it was reiterated that there is no presumption that a person who has not been heard of for a period of not less than seven years, died at the end of the first seven years or on any particular date. The burden of proving the date of death of a person is always upon the person who asserts that the person had died on a certain date because there is no presumption about the date of death. The only presumption under section 108 of the Evidence Act is that a person is dead if he has not been heard of for seven years and this presumption only arises when a question is raised in a Court as to whether a person is alive or dead. ( 19 ) CHANGING tack, Mr. Mukherjee urged that even if it is to be presumed that Lokenath Jeloka was not alive, such a presumption would arise as and when such a dispute was raised. In other words, according to Mr. Mukherjee there has to be an adjudication relating to the presumption of death and necessarily it would have to be presumed that the person died on the date of the order being made upon such adjudication. In such a case, Mr. Mukherjee submitted that it would always be open for the heirs of the person presumed to be dead to come forward and apply for substitution in the pending proceedings in place of the person adjudged to be dead. According to Mr. Mukherjee, it could not be contended, as has been sought to be done in the instant case, that the proceedings initiated prior to the adjudication of the presumption of death was a nullity which could render the entire proceedings invalid. ( 20 ) MR. Mukherjee drew inspiration for his aforesaid submission firstly from a decision of this Court in the case of Jyotirmoy Nag Chowdhury v. Biswanath Bose and Anr. , reported in 53 CWN Page 713, which involved a suit which had been brought by one Biswanath as Receiver of the estate of Tarini. ( 20 ) MR. Mukherjee drew inspiration for his aforesaid submission firstly from a decision of this Court in the case of Jyotirmoy Nag Chowdhury v. Biswanath Bose and Anr. , reported in 53 CWN Page 713, which involved a suit which had been brought by one Biswanath as Receiver of the estate of Tarini. This Court observed that it had been asked to proceed on the assumption that Tarini was the plaintiff. However, it transpired that Tarini was never the plaintiff and as such the question of substituting Biswanath as an heir of Tarini in the suit was misconceived and the only appropriate course would be to allow Biswanath to continue the suit in his personal capacity as legal owner of the estate. ( 21 ) MR. Mukherjee also relied on the decision of the Hon'ble Supreme Court in the case of Karuppaswamy and Ors. , v. Sri Ramamurthy, reported in AIR 1993 SC, Page 2324, in which the Supreme Court was concerned with a situation where a suit was brought against a person without the plaintiff's knowledge that such person had died six weeks prior to the filing of the suit and the plaintiff became aware of the defendant's death only from the remarks on the returned summons. Immediately, thereafter, he filed an application under Order 22 Rule 4 of the Code of Civil Procedure for impleading the legal representative of the dead defendant. On the invoking of the proviso to section 21 (1) of the Limitation Act the Hon'ble Supreme Court held that since the plaintiff had taken prompt action and had acted in good faith the proviso to section 21 (1) could be invoked in his favour and the suit could be saved by impleading the legal representatives of the deceased defendant. ( 22 ) RELYING on the observation of the Hon'ble Supreme Court in the aforesaid case, Mr. Mukherjee submitted that even if the presumption of the date of death reverts back to the date of filing of the winding up petition, the validity thereof could always be saved by the substitution of the legal heirs of the person presumed to be dead and the proceedings as such could not be held to have been rendered a nullity as had been contended on behalf of the appellant/petitioner. ( 23 ) MR. ( 23 ) MR. Mukherjee submitted that the appeal had been filed on a misconceived premise of law and was liable to be dismissed with appropriate costs. ( 24 ) HAVING regard to the nature of the submissions made on behalf of the appellant/petitioner, at the very initial stage we are called upon to consider the very validity of the winding up petition itself and whether it had at all been validly filed on behalf of the petitioning creditor, Lokenath Jeloka, on the strength of the Power of Attorney executed in favour of Shri Ajoy Dalan, who had verified the petition on the strength of such Power of Attorney. ( 25 ) FROM the facts as disclosed it appears that the winding up petition which was admitted on 14th August, 2001, had been filed on 28th September, 2000, on behalf of Lokenath Jeloka by Shri Ajoy Kumar Dalan purportedly on the strength of a General Power of Attorney executed by Lokenath Jeloka. Leave was obtained under Rule 21 of the Companies (Court) Rules, 1959, to make and file the affidavit verifying the winding up petition by Shri Dalan as the Constituted Attorney of the petitioning creditor, Lokenath Jeloka. ( 26 ) ON 26th June, 2002, a Judge's Summons was taken out on behalf of the appellant/petitioner, inter alia, for recalling of the order dated 14th August, 2001, admitting the winding up petition and the order dated 30th January, 2002, directing the company to be wound up or for permanent stay of the order of winding up dated 30th January, 2002. ( 27 ) THE main ground taken in the application in support of the Judge's Summons was that the first statutory notice, alleged to have been written by the petitioning creditor himself, had been suppressed since he could not have written the letter as he was missing and not traceable since 1989 and no one who should have heard of him had he been alive, had heard of him as being alive since that time. As such there was a presumption of civil death against the petitioning creditor, Lokenath Jeloka. As such there was a presumption of civil death against the petitioning creditor, Lokenath Jeloka. ( 28 ) IT was also contended that the Vakalatnama purported to have been executed by Lokenath Jeloka had not been signed by him but had been executed by Shri Ajoy Kumar Dalan on the strength of a Power of Attorney which had not been filed with the records of the case. ( 29 ) HOWEVER, in the order dated 31st July, 2002, dismissing the appellant/petitioner's application under section 466 of the Companies Act, 1956, for recalling of the order dated 14th August, 2001, there is no reference to the aforesaid contention of the appellant/petitioner and it has been recorded that the aforesaid order had been challenged principally on the ground that notice of the company petition had not been served at the registered office of the company, which is also a ground which had been taken in the application under section 466 of the Companies Act, 1956. ( 30 ) WHEN the aforesaid contention has now been raised on behalf of the appellant it necessary for us to consider the same as it questions the very foundation of the winding up petition and the orders passed thereupon. ( 31 ) ALTHOUGH section 107 of the Evidence Act, 1872 indicates that the burden of proving death is on the person who affirms it, the onus shifts once it is proved that a person has not been heard of for seven years by those who would naturally have heard of him of he had been alive. Once the appellant/petitioner raised the question and produced evidence in support thereof, the provisions of section 108 of the Evidence Act, were attracted. Section 108 of the Evidence Act reads as follows:-108. Burden of proving that person is alive who has not been heard of for seven years.- Provided that when the question is whether a man is alive or dead, and it is proved that he has not been heard of for seven years by those who would naturally have heard of him if he had been alive, the burden of proving that he is alive is shifted to the person who affirms it. ? ( 32 ) THE appellant/petitioner has asserted that Lokenath Jeloka had not been heard of since 1989 and has relied on some documents in support thereof. ? ( 32 ) THE appellant/petitioner has asserted that Lokenath Jeloka had not been heard of since 1989 and has relied on some documents in support thereof. ( 33 ) INSTEAD of refuting and/or disproving the case of the appellant/petitioner, Mr. Mukherjee, appearing for the petitioning creditor, tried to make out a case that the winding up petition had been properly filed and that even if the contention of the appellant/petitioner regarding the presumption of death under section 108 of the Evidence Act of Lokenath Jeloka is accepted it would not affect the validity of the said petition as his heirs could be substituted in the proceedings in his place. The logic behind Mr. Mukherjee's said contention is that if in an adjudication under section 108 of the Evidence Act a person is presumed to have died a civil death, there can be no presumption as to the date of death and the civil death would have to be presumed to have taken effect from the date of adjudication. An application for substitution of his heirs immediately after such adjudication would consequently be within the period of limitation without affecting the pending proceedings. ( 34 ) WE are afraid that we cannot convince ourselves to accept Mr. Mukherjee's submissions since the presumption of civil death would not commence from the date of the adjudication but would date back to the initiation of the proceedings. In our view, when a dispute is raised as to whether a person is alive or not from before the initiation of the proceedings, the onus to prove that such person was alive would date back to the initiation of the proceedings. In other words, it would be for Shri Ajoy Dalan to establish that his principal, Lokenath Jeloka, was alive at the time of filing of the winding up petition and that as Lokenath Jeloka's Constituted Attorney he was competent to initiate the proceeding. ( 35 ) THE decision in Karuppaswamy's case (supra) cited by Mr. Mukherjee has to be considered in the special facts of that case and cannot be applied to the facts of this case. ( 35 ) THE decision in Karuppaswamy's case (supra) cited by Mr. Mukherjee has to be considered in the special facts of that case and cannot be applied to the facts of this case. In this case, the entire proceedings were initiated and conducted by Shri Ajoy Dalan even to the point of executing the Vakalatnama and verifying the application and, as indicated above, no attempt was made by him at any point of time to prove that his principal was alive at the time of filing of the winding up petition. ( 36 ) THE appeal must, therefore, succeed on the preliminary question regarding the maintainability of the winding up petition alleged to have been filed on behalf of Lokenath Jeloka. In our view, Shri Ajoy Dalan has failed to prove that his principal, Lokenath Jeloka, was alive at the time of filing of the winging up petition and it has, therefore, to be presumed that Shri Dalan did not have any authority to execute the Vakalatnama and verify the petition on the strength of the Power of Attorney executed in his favour by Lokenath Jeloka. ( 37 ) THE appeal is accordingly allowed and the stay application is also disposed of by this order. The order of the learned Company Judge dated 31st July, 2002, is set aside, and the winding up order dated 30th January, 2002, is permanently stayed. All parties to act on a signed copy of the operative portion of this judgment on the usual undertakings. J. Bhattacharya, J.- I agree. Appeal allowed