Statutory Appointment of Official Liquidator controls succession; court extension of outgoing term conflicted with statutory scheme and was set aside.

The issue concerns whether a court may extend the outgoing Official Liquidator/Receiver's term after expiry when a successor has been validly appointed. The analysis applies the statutory appointment scheme under the Provincial Insolvency Act and Companies Act and relevant procedural rules, holding that statutory power to appoint successors rests with the Government and the court's power to appoint additional liquidators does not authorise continuation of an incumbent beyond term expiry. A corrigendum did not confer general continuation. The Single Judge's discretionary extension was held unreasonable and contrary to the appointment scheme; the extension was set aside and the appellant allowed.

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Issues: Whether the learned Single Judge validly extended the term and allowed continued functioning of the outgoing Official Liquidator/Receiver (H. Puttaswamy) after expiry of his term, instead of permitting the duly appointed successor (M. Ramachandra Reddy) to assume office.

Analysis: The issue engages the statutory scheme governing appointment and functions of Official Receivers and Official Liquidators under Section 57 of the Provincial Insolvency Act, 1920 and Sections 448 and 524 of the Companies Act, 1956, and the applicable procedural Rules (Rule 9 of the Company Court Rules). Section 524 authorises the Court to appoint additional liquidators but does not permit continuation of an incumbent beyond the expiry of his term where a successor has been validly appointed. Section 57 of the Insolvency Act vests appointment power in the Government and is not a source for judicial extension of term. The corrigendum relied on related to limited matters and did not authorise general continuation. The successor, once appointed by notification, is obliged to perform the functions of the office and the outgoing incumbent lacks a subsisting right to continue service after term expiry. The exercise of discretion by the Single Judge to extend the outgoing incumbent's service in the circumstances was unreasonable because it conflicted with the statutory appointment scheme and the existence of a validly appointed successor.

Conclusion: The extension of H. Puttaswamy's term and his continued functioning after expiry of term was not legally tenable; the Single Judge's order is set aside and the appeal is allowed in favour of the appellant.

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