Case No.:

AC-REV-97-1961

Court:

Court of Appeal

Issue No.:

1962

Principles

·  Civil procedure—Process-—Corporation in liquidation—May be served Civil Procedure—Default decree—Setting aside—Civil Justice Ordinance 1929. s. 69— “Any process” means the first process Civil procedure—Default decree—Re-opening—-Consent of decree-holder is reasonable cause to reopen

Held: A corporation in liquidation can be served with process.
Obiter dictum: (i) “Any process” in Civil Justice Ordinance 1929. 5. 69, means the first process.
(ii) Consent of the default decree. holder to have the case reopened is a “just and reasonable cause” to reopen.

Judgment

(COURT OF APPEAL) *

MOHAMED ALl AHMED v. LIQUIDATOR OF UNIVERSAL COTTON CO.

AC-REV-97-1961

Advocates: Salah Mustafa for plaintiff-applicant

Farouk Ahmed Ibrahim. for defendant-respondent

Babiker Awadalla J. August 7, 1962: —The facts of this case are briefly as follows, On January 15 1959, plaintiff-applicant obtained a default decree against defendants-respondent for the sum of £S.459.287m/ms and costs which sum was alleged to be owing to him under a contract made with defendant respondent on February 7, 2958. According to a note at the bottom of the original form of the said decree, a copy appears to have been delivered to defendants-respondent on February 10, 1959. On April 13, 1959, the decree-holder-applicant applied to the court for execution, and order for attachment of the debtors’ movables was passed on May ii, 1959. This order was on May 27, 2959, returned unexecuted for lack of movables. A note by the bailiff at the foot of the court’s order reads as follows: “The above-mentioned company owns no seizable movables and is now under liquidation.” On August 15 1959, advocate for decree-holder applied for a garnishee order against Abu Murein Co. of Kosti for attachment of monies due to the judgment-debtors, and this application was allowed on the same day. Copy of the order was sent to the company’s office and was also returned with a note indicating that the company was under liquidation. On January 29, 1961, advocate Zarroug applied on behalf of the liquidator of the judgment-debtors-respondent for setting aside the decree of January i 1959, on the ground that the liquidator only knew of it on December 24, 2960. For no apparent reason, this application was made to the Hon. Judge of the High Court instead of to the court, which passed the default decree, i.e., the District Court. This application was disposed of by Galal, Province Judge, on March 23, 1961. The advocate for decree-holder objected to the application on the ground that execution against defendants-respondent was then two years old but advocate Zarroug replied that under Civil Justice Ordinance, s. 69, reopening can take place at any time within 30 days from the date of “any process” for enforcing the decree. He further contended that the decree-holder was in fact a debtor of the company and not a creditor, and that it would be unfair to allow the decree to stand in the circumstances.

His Honor the Province Judge accepted these arguments and ordered the default decree to be set aside. In making this order, he gave as one of the reasons that the respondent company was not in existence at the time execution was allowed. The decree-holder is now applying for revision against this order.

Before us, plaintiff-applicant was represented by Salah Mustafa, and defendants-respondent by Farouk Ahmed Ibrahim.

Advocate Salah maintains that His Honour the Province Judge was wrong in allowing a reopening without proof by defendants-respondent either that summons was not served upon them or that they were prevented by any sufficient cause from appearing when the suit was called on for hearing. Cf. Civil Justice Ordinance, s. 69.

Advocate Farouk, on the other hand, argued that the court has an inherent power to set aside a decree even if no sufficient cause is shown within the meaning of Civil Justice Ordinance, s. 69. He cited as his authority for this Societe Pour Ia Vente des Produits Egyptiens V. Fad! El Seed Fadl, AC-REV-33-1957 (z S.L.J.R., 6, where Nur J., delivering the judgment of this court, said: “In my view the court has an inherent power to restore a suit dismissed for default, if there be a just and sufficient cause for restoring it, even if no sufficient cause is shown within the meaning of Civil Justice Ordinance, s. 69, for the defendant’s non- appearance.”

I do not at all think that the case cited on behalf of defendants- respondent is an authority for anything other than that the consent of the decree-holder to have the issue retried affords a just and reasonable cause for reopening a case in spite of the provisions of Civil Justice Ordinance, s. 69. 1 do not think this statement was meant to lay down a general rule that a court can make use of the provisions of Civil Justice Ordinance, s. 226, where a person has his remedy provided for in the Civil Justice Ordinance and has willfully neglected to avail himself thereof. I think that the failure by the judgment-debtor to bring his case within the provisions of Civil Justice Ordinance, S. 69, is absolutely fatal to his application to reopen. Again, I am unable to follow the argument in the court below by advocate Zarroug that the words “any process for enforcing the decree” in Civil Justice Ordinance, s. 69, mean that a judgment-debtor may apply at any time so long as he does so within 30 days from “any” process in the execution, however late the stage of that process might be in the execution. To my mind, the word “any” in this context refers only to the first process. Any other interpretation would mean that a judgment- debtor has, as many chances to apply for reopening as there are “processes” in the execution, which is obviously untenable. However, and assuming for the sake of argument that Civil Justice Ordinance, s. 69, affords a series of chances and not only one chance, the last process in the relevant execution was made in August 1959, which is much more than a year prior to the application to reopen.

I now come to the last point which appears to me to have had the strongest influence over the mind of the court in allowing a reopening, and this is that neither the official liquidator nor the company had any knowledge of the decree before December 2!, 196o, because, in the words of the Judge, the “company was not in existence when execution was started.” The respondent company embarked on a voluntary liquidation consequent to a resolution dated November 21, 1959, and appears to have been still in the process of liquidation at the time the application to reopen was made. His Honour the Province Judge seems to be confusing liquidation with dissolution. A company does not cease to exist because it is undergoing liquidation, It is true that the company ceases to carry on business but that does not mean that it ceases to exist for all intents and purposes. The matter is governed by the Companies Ordinance, S. 196, which reads as follows:

“When a company is wound up voluntarily, the company 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:

“Provided that the corporate state and corporate powers of the company shall, notwithstanding anything to the contrary in its articles, continue until it is dissolved.”

This application is therefore allowed’ with costs and the decision of His Honour the Province Judge, dated March 23, 1961, is hereby set aside.

M. A. Abu Rannat C.J. August 7, 1961: —I concur.

* Court: M. A. Abu Rannat C.J. and B. Awadalla J.