Natural justice in company schemes permits interested shareholders to be heard at the ex parte directions stage.

Shareholders interested in a proposed scheme under section 391 could be allowed to file an affidavit and be heard at the ex parte summons-for-directions stage. Rule 67 of the Companies (Court) Rules, 1959 permits an ex parte summons subject to rule 68, while rule 63 requires service on the company or liquidator; however, an ex parte process does not by itself bar an interested party from placing its views before the Court. Fair procedure and natural justice supported hearing the shareholders, especially where the liquidator opposed the application and the shareholders sought to assist the Court. Their affidavit was taken on file.

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Issues: Whether shareholders interested in the proposed scheme could be permitted to file an affidavit and be heard at the ex parte stage of the summons for directions under section 391 of the Companies Act.

Analysis: Rule 67 of the Companies (Court) Rules, 1959 contemplates an ex parte summons for directions, subject to rule 68, and rule 63 provides for service on the company or its liquidator. The fact that a proceeding is moved ex parte does not, by itself, exclude an interested party from placing its view before the Court. The governing consideration is fairness in procedure and observance of natural justice. Where the liquidator is opposing the application and the shareholders seek to assist the Court, there is no valid reason to prevent them from making submissions, particularly when the summons itself is addressed to all concerned parties.

Conclusion: The shareholders were entitled to file their affidavit and be heard, and the affidavit was ordered to be taken on file.

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