1964 (5) TMI 24 - HC - Companies Law

Court denies application to set aside order, emphasizes compliance with Companies Court Rules, upholds natural justice principles.

The court dismissed the application to recall or set aside the order dated March 4, 1964, with costs. It emphasized compliance with Rule 137(2) of the ... Winding up – Power to order public examination of promoters directors, etc. Issues Involved:1. Application to recall or set aside the order dated March 4, 1964.2. Grounds for review of the order.3. Interpretation of statutory provisions and rules under the Companies Act, 1956.4. Procedural requirements for public examination under section 478(1) of the Companies Act, 1956.5. Compliance with Rule 137(2) of the Companies (Court) Rules, 1959.6. Jurisdiction and inherent powers of the court.7. Principles of natural justice.Issue-wise Detailed Analysis:1. Application to Recall or Set Aside the Order Dated March 4, 1964:The official liquidator sought to recall or set aside the order made by the court on March 4, 1964, which discharged the ex parte order for public examination of the respondents dated June 18, 1963. The application also sought a rehearing of the respondent's application which led to the March 4, 1964, order and a stay of its operation.2. Grounds for Review of the Order:The grounds for review included:- Statutory provisions, rules, and authorities were not placed before the court.- The order would lead to serious complications and cause great hardship to the liquidator.- No appeal lies from the said order, leaving the applicant without a remedy.- The order would set a precedent requiring notice for public examinations, frustrating their purpose.3. Interpretation of Statutory Provisions and Rules under the Companies Act, 1956:The official liquidator argued that under section 478(1) of the Companies Act, 1956, and the Rules framed thereunder, there was no provision for giving notice before making an order for public examination. The respondents contended that Rule 138 corresponds to Rule 61 of the English Companies Rules, which allows for ex parte applications but also permits parties to attend the judge in chambers.4. Procedural Requirements for Public Examination under Section 478(1) of the Companies Act, 1956:The court examined whether the order for public examination could be made ex parte. The official liquidator cited English precedents where such orders were made ex parte. However, the court noted that the Companies (Court) Rules, 1959, specifically Rule 137(2), required notice to be given on the notice board of the court, indicating a departure from the previous practice of ex parte applications.5. Compliance with Rule 137(2) of the Companies (Court) Rules, 1959:Rule 137(2) mandates that the Registrar fix a date for the consideration of the report by the judge and notify the date on the notice board of the court and to the official liquidator. The court emphasized that this rule must be strictly complied with, and failure to do so would invalidate the consideration of the report.6. Jurisdiction and Inherent Powers of the Court:The court has the jurisdiction to recall an order that has not yet been perfected. However, it should not exercise its inherent powers under section 151 of the Civil Procedure Code to grant a review if the legislature has expressly forbidden it. The application for review in this case was found to be misconceived, and the court decided not to recall the order made on March 4, 1964.7. Principles of Natural Justice:The respondents argued that the principles of natural justice require that a person should not be condemned unheard. The court agreed, stating that if a party is given notice of the date of consideration of the report, they must be allowed to be heard and file affidavits if they so desire. This ensures that proceedings are not conducted behind their backs and that they have the opportunity to participate.Conclusion:The court dismissed the application to recall or set aside the order dated March 4, 1964, with costs. It emphasized the importance of complying with Rule 137(2) of the Companies (Court) Rules, 1959, and upheld the principles of natural justice, ensuring that parties affected by an order for public examination have the right to be heard. The official liquidator's prayer for public examination of the respondents was not finally disposed of but required reconsideration in the presence of the respondents after filing of affidavits.