Case Note & Summary
The plaintiff, Gowribidanur Sahakara Sakkare Karkhane Ltd., a co-operative society under liquidation, filed a suit for recovery of money against Indian Bank and Siruguppa Sugar and Chemical Ltd. The plaintiff owned a sugar factory and distillery which was put to liquidation in 1984. The liquidator notified the sale of the factory and distillery in 1987. The second defendant purchased the assets, and as part of the sale, the plaintiff had a fixed deposit of Rs. 1,00,000 with the first defendant bank. The bank, despite notice of liquidation, paid the fixed deposit amount to the company's director after the liquidation. The liquidator sought recovery of this amount from the bank. The trial court dismissed the suit. On appeal, the High Court held that the payment made by the bank after liquidation was void and not binding on the liquidator. The court found that the bank had notice of the liquidation and the liquidator's appointment, yet paid the amount to the company. The discharge voucher signed by the director after liquidation was held to be ineffective. The court also held that the suit was within limitation as the liquidator's cause of action arose from the date of knowledge of the wrongful payment. The appeal was allowed, and the bank was directed to pay the amount with interest.
Headnote
A) Co-operative Societies - Liquidation - Payment after liquidation - Section 45 of Karnataka Co-operative Societies Act, 1959 - Bank paid fixed deposit amount to company after it was under liquidation, despite notice of liquidation - Held that payment to company after liquidation is void and bank must pay again to liquidator (Paras 10-15). B) Limitation - Suit by liquidator - Article 113 of Limitation Act, 1963 - Suit filed within three years from date of knowledge of wrongful payment - Held that limitation runs from date of knowledge, not from date of payment (Paras 16-20). C) Contract - Discharge voucher - Effect after liquidation - Discharge voucher signed by company director after liquidation is not binding on liquidator - Held that such discharge is void and does not extinguish liability (Paras 12-14).
Issue of Consideration
Whether the bank is liable to pay the fixed deposit amount to the liquidator when the payment was made to the company after it was under liquidation, and whether the suit is barred by limitation.
Final Decision
Appeal allowed. Judgment and decree of the trial court set aside. Suit decreed in favor of the plaintiff. The first defendant bank is directed to pay Rs. 1,00,000 with interest at 6% per annum from the date of suit till realization. Costs awarded.
Law Points
- Liability of bank for payment made after liquidation
- Effect of discharge voucher signed after winding up
- Applicability of Section 45 of Karnataka Co-operative Societies Act
- 1959
- Limitation for suit by liquidator
- Principle of unjust enrichment
