Mandatory notice before public examination: affected persons may be heard and challenge jurisdictional preconditions under the Companies Rules.

Rule 137(2) of the Companies (Court) Rules, 1959 was treated as mandatory, requiring notice of the date fixed for consideration of a liquidator's report to be given on the notice board and to the official liquidator. Persons likely to be affected were entitled to seek a hearing and file affidavits before any order for public examination was made, including the opportunity to challenge the jurisdictional basis for such examination. The court also held that an unperfected interlocutory order could be reconsidered, but recall or review would not be granted merely because the liquidator disagreed with it or faced inconvenience.

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Issues: (i) Whether the order directing consideration of the liquidator's report and hearing of the respondents could be recalled or set aside in exercise of inherent or review powers. (ii) Whether notice of the date of consideration of the report under the Companies (Court) Rules, 1959 was mandatory and whether the respondents were entitled to be heard before any order for public examination was made.

Issue (i): Whether the order directing consideration of the liquidator's report and hearing of the respondents could be recalled or set aside in exercise of inherent or review powers.

Analysis: The order sought to be recalled had not been perfected, so the Court retained jurisdiction to reconsider it. However, the power to recall was not to be exercised merely because the liquidator disagreed with the earlier order or feared inconvenience. The order did not finally dispose of the liquidator's request for public examination and preserved the right to pursue that request at the stage of consideration of the report.

Conclusion: The application for recall or review was not made out and the order was not liable to be set aside.

Issue (ii): Whether notice of the date of consideration of the report under the Companies (Court) Rules, 1959 was mandatory and whether the respondents were entitled to be heard before any order for public examination was made.

Analysis: Rule 137(2) required the Registrar to notify the date of consideration of the report on the notice board and to the official liquidator. The rule was treated as mandatory and as intended to bring the matter to the notice of persons likely to be affected. The Court held that such persons, when notified, were not to be reduced to silent observers and could seek to be heard and file affidavits. The ex parte character of earlier practice under the former rules did not override the present rule-based notice requirement. The respondents were also entitled, before being publicly examined on allegations of fraud, to challenge the jurisdictional prerequisites for such examination.

Conclusion: Notice under rule 137(2) was mandatory and the respondents were entitled to be heard before the matter proceeded further.

Final Conclusion: The liquidator's challenge failed because the order under attack did not occasion any legal prejudice warranting recall, and the procedural scheme required notice and an opportunity of hearing before public examination was considered.

Ratio Decidendi: Where the procedural rules require notice of consideration of a liquidator's report, the affected persons must be given an effective opportunity of hearing before any order for public examination is made, and an unperfected interlocutory order will not be recalled absent sufficient grounds.

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