Directory procedural rule for official liquidator sanction upheld; breach of notice requirement did not invalidate the court's approval.

Rule 139 of the Companies (Court) Rules, 1959, is treated as directory when used to regulate applications for court sanction under section 457(1) of the Companies Act, 1956, because the statute makes the court's sanction the essential requirement and does not make strict procedural compliance a jurisdictional condition. Non-issuance of notice to the petitioning creditor did not invalidate the sanction where the respondents were only debtors and were not persons prejudicially affected by the order. The sanction granted by the court therefore remained valid, and non-compliance with the rule could not defeat the petition's maintainability on that ground.

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Issues: Whether rule 139 of the Companies (Court) Rules, 1959, governing the manner of obtaining sanction for exercise of powers under section 457(1) of the Companies Act, 1956, is mandatory or merely directory, and whether non-compliance with that rule renders the sanction void so as to defeat the maintainability of the petition.

Analysis: The sanction of the court is the essential requirement under section 457(1) before the official liquidator exercises the enumerated powers. The rule-making power under section 643(1) distinguishes between matters for which rules must be made and matters for which rules may be made; the procedure relating to applications for sanction under section 457 falls within the latter category. On that basis, rule 139, insofar as it regulates such applications, is treated as a guide for the official liquidator and the court rather than as a condition precedent whose breach nullifies the proceeding. The sanction had in fact been granted by the court, and the omission to issue notice to the petitioning creditor did not confer any right on the respondents, who were only debtors, to challenge the validity of that sanction. The authorities relied upon did not alter this position on the facts, as they concerned persons prejudicially affected by the proposed order and not respondents in the position of debtors.

Conclusion: Rule 139 is directory in this context, the sanction granted by the court was valid, and the respondents could not object to the maintainability of the petition on the ground of non-compliance with that rule.

Final Conclusion: The preliminary objection failed and the sanction obtained by the official liquidator was upheld for purposes of the petition.

Ratio Decidendi: Where the Companies Act requires only the court's sanction for exercise of the official liquidator's powers, a procedural rule framed for obtaining that sanction is directory unless the statute makes strict compliance a condition of jurisdiction, and breach of notice requirements to a person not prejudicially affected does not invalidate the sanction against third-party respondents.

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