1987 (11) TMI 307 - SC - Companies Law

Supreme Court affirms appeal under Companies Act, directs payment of remaining liability.

The Supreme Court upheld the appeal's maintainability under Section 483 of the Companies Act, 1956, allowing appeals from orders under Sections 397 and ... Whether the appeal lay to the Division Bench under section 483 of the Act which dealt with appeals from orders? Held that:- Uphold the direction of the Division Bench in so far as they computed the liability and direct the appellant to pay that sum to the respondent in settlement of the dues referred to hereinbefore. A sum of Rs. 1,36,038.06 was directed to be paid at the time of the admission of the appeal by the Division Bench of the High Court. If that money has been paid or realised by the respondent, the appellant would pay the balance amount of Rs. 6,81,299 67 and if the money is paid, the respondent will, by virtue of this order, be entitled to withdraw the same and give credit to the appellant for the same. The balance sum will be paid by March 15, 1988. In default of payment by that date, the amount will carry 18% interest. Issues Involved:1. Maintainability of the appeal under Section 483 of the Companies Act, 1956.2. Interpretation of the compromise agreement and computation of liabilities.Detailed Analysis:1. Maintainability of the Appeal under Section 483 of the Companies Act, 1956:The primary issue was whether an appeal lies to the Division Bench of the High Court under Section 483 of the Companies Act, 1956, from an order made under Sections 397 and 398 of the Act. Section 483 states: 'Appeals from any order made, or decision given, in the matter of winding up of a company by the court shall lie to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction.'The appellant's counsel argued that the initial application was under Sections 397 and 398, read with Section 403, and hence, the appeal should be considered under Section 483. The court referred to various precedents, including Shanta Genevieve Pomtnerat v. Sakal Papers P. Ltd., which held that an appeal under Sections 397 and 398, read with Section 403, would lie to the same court in the same manner as appeals from any order or decision of the court in cases within its ordinary jurisdiction. The court also cited Shankarlal Aggarwala v. S. L. Poddar and Golcha Investments P. Ltd. v. Shanti Chandra Bafna, affirming that the substantive right of appeal conferred by Section 483 is not restricted by procedural rules.The court concluded that an appeal lies to the Division Bench of the High Court under Section 483, irrespective of the absence of specific procedural rules in the Gauhati High Court. The court emphasized that the absence of procedural rules does not negate the litigant's right to appeal when the statute explicitly confers such a right.2. Interpretation of the Compromise Agreement and Computation of Liabilities:The second issue revolved around the interpretation of the compromise agreement and the computation of liabilities between the parties. The compromise agreement included several key clauses, notably:- Clause 2: 'The bank liability of the company in respect of Martycherra T.E. amounting to Rs. 2,20,000 (approx.) shall be shared equally, of which Rs. 1,10,000 shall be paid by Mrs. Arati Dutta on January 25, 1976.'- Clause 3: 'The entire liability of the company would be equally shared and for that purpose an independent auditor shall be appointed.'Due to disagreements, the parties could not agree on an auditor, and eventually, they agreed to settle the liabilities based on the balance-sheet as of December 31, 1973. The learned single judge computed the liabilities based on the balance-sheets submitted by the parties.The Division Bench of the High Court modified the computation, considering the bank liability of Martycherra T.E. at Rs. 2,20,000 as per the agreement, not Rs. 6,28,000 as per the balance-sheet. The total liability was computed at Rs. 16,34,675.46, and the appellant's share was determined to be Rs. 8,17,337.73. After deducting the amount already paid by the appellant, the remaining liability was Rs. 6,81,299.67.The appellant's counsel argued for further deductions, but the court upheld the Division Bench's computation, agreeing that the liability should be based on the agreed figures in the compromise and the balance-sheet as of December 31, 1973.The court directed the appellant to pay the remaining amount of Rs. 6,81,299.67 by March 15, 1988, with an interest of 18% in case of default. The appeal was disposed of accordingly, and the cross-petition filed by the respondent was also disposed of as it no longer survived.Conclusion:The Supreme Court upheld the maintainability of the appeal under Section 483 of the Companies Act, 1956, and affirmed the Division Bench's computation of liabilities based on the compromise agreement and the balance-sheet as of December 31, 1973. The appellant was directed to pay the remaining liability amount by the stipulated date, with interest applicable in case of default.