Law:

Section:

(a) Companies Act (VII of 1913),S. 185"--In his hands"---­"to which the company is prima facie entitled"---Meaning---­Discretion of Court---Scope. It is one of the conditions for the application of section 185 that money or property in respect of which order is sought should be in the hands of the person against whom the order is to be made. Of course, this does not mean that by his own improper act the person concerned can take his case out of the scope of section 185. If he improperly misappropriates it or wastes it, an order may still be passed against him. The proper interpreta­tion of the words `in his bands' is that the property in dispute is either in fact in his bands or the circumstances are such that the Court will regard it as still in his hands. Of his own default he will not be allowed to take advantage. The Court will, in the particular circumstances of each case, decide whether the property in dispute can still be said to be in the hands of the party against whom the order is to be passed. The Court need not, when exercising jurisdiction under section 185, enter into an elaborate consideration of facts. If, looking at the facts broadly a case is made out for the liquidator, the Court may make an order leaving the party concerned to establish its right in ordinary proceedings. The initial onus, however, would be on the Official Liquidator to make out a case. Prima facie does not suggest that the section is only appli­cable where there is no doubt about the company being entitled to the money. A prima facie case only means one which if not overthrown by rebutting evidence will be regarded as sufficient proof. The section, however, gives a discretionary jurisdiction and the Court will not allow it to be used as an instrument of harassment or as a substitute for an ordinary civil proceeding. The exercise of discretion would depend upon the particular circumstances of each case. (b) Companies Act (VII of 1913), Ss. 185, 2,27-Application under S. 185 may 6e regarded as one under S. 227 if other party not likely to be prejudiced thereby. (c) Companies Act (VII of 1973), S. 227---Principles to be kept in mind while validating transactions-Benefit of…

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