Notice requirement under Section 175: appointing a provisional liquidator requires recorded reasons to dispense notice and clear, particularised necessity.

Section 175(2)'s notice requirement is mandatory: a provisional liquidator cannot be appointed without giving notice to the company unless reasons for dispensing with notice are recorded. Appointment of a provisional liquidator demands clear, particularised evidence that lesser remedies would be inadequate and that appointment is necessary to prevent tampering or misappropriation; vague allegations, lack of particulars, delay in producing evidence, or prior unsuccessful litigation undermine the necessity finding. Consequently, orders appointing provisional liquidators made without recorded reasons for dispensing notice or without satisfying the necessity standard should be set aside.

---

---

Issues: Whether the order of the Single Judge appointing a provisional liquidator under section 175 of the Indian Companies Act was valid and, separately, whether appointment of a provisional liquidator was justified on the material produced.

Analysis: The Court examined the mandatory wording of section 175(2) of the Indian Companies Act and concluded that, unless reasons are recorded for dispensing with notice, notice to the company must be given before a provisional liquidator is appointed. The Court further analysed the material placed before the Single Judge and applied established principles governing appointment of provisional liquidators, including the need for such an appointment only where it is absolutely necessary to prevent tampering with accounts or misappropriation of assets and where lesser remedies or directions would not suffice. The Court found the petitioner's allegations of possible tampering and misappropriation to be vague, unsupported by particulars, and inconsistent with the petitioner's conduct in permitting a long delay before producing affidavits and documents; prior litigation had similarly failed to sustain such allegations and a receiver had not been appointed in earlier proceedings. The Court accordingly held that the Single Judge erred both in failing to comply with the notice requirement in section 175(2) and in concluding on the available material that appointment of a provisional liquidator was necessary.

Conclusion: The Single Judge's order appointing a provisional liquidator is set aside; the appeal is allowed in favour of the appellant.

Ratio Decidendi: Section 175(2) requires notice to the company before a provisional liquidator may be appointed unless reasons for dispensing with notice are recorded, and a provisional liquidator should be appointed only where necessity is shown by clear, particularised evidence that lesser measures would be inadequate.

---