Provisional liquidator appointment without notice may stand when special reasons are recorded to protect depositors and assets.

Section 450(2) of the Companies Act, 1956 permits dispensation of notice before appointing a provisional liquidator only where special reasons are recorded in writing. The text explains that such dispensation was upheld because the company had already been put on notice in regulatory proceedings, had failed to reply in time, and the record showed persistent default, inability to pay debts, and regulatory restrictions. The recorded reasons showed application of mind to the need to protect and preserve assets in the larger public interest and for the benefit of depositors. On that basis, the appointment was treated as consistent with natural justice, and the objection based on non-supply of material was not accepted.

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Issues: Whether the order appointing the provisional liquidator without notice to the company was valid under section 450(2) of the Companies Act, 1956, and whether the order was vitiated for breach of natural justice or non-recording of special reasons.

Analysis: Section 450(2) mandates notice and opportunity before appointment of a provisional liquidator, but permits dispensation where special reasons are recorded in writing. The company had been put on notice in the regulatory proceedings, had failed to submit a timely reply, and the record showed persistent default, inability to pay debts, restriction orders by the Reserve Bank, and steps taken against the company in the interest of depositors. The Company Judge recorded reasons showing application of mind to the totality of circumstances, including the need to protect and preserve the assets of the company in larger public interest and for the benefit of the majority of depositors. In those circumstances, the dispensation of notice could not be said to be arbitrary or contrary to the requirements of natural justice. The challenge based on non-supply of materials and alleged delay was also not accepted, since the regulatory action was taken on confidential supervisory material and the company had been afforded an opportunity in the earlier show-cause process.

Conclusion: The appointment of the provisional liquidator without notice was held valid, and the objection based on violation of natural justice failed.

Final Conclusion: The appeal was held not to merit interference because the impugned order was passed on recorded special reasons and in protection of the depositors' interests.

Ratio Decidendi: A court may dispense with notice before appointing a provisional liquidator if special reasons are recorded in writing on the basis of the totality of circumstances, especially where immediate intervention is required to protect public and depositors' interests.

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