TaxTMI 
TaxTMI 
1963 (1) TMI 40
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....t. The appellants claiming that they had advanced loans to the company under two registered deeds of mortgage and alleging that there had been default in the part of the company in performing its obligations as to payment interest, etc., under the said deeds instituted a mortgage suit in the Court of Calcutta for the usual reliefs under Order 34, Civil Procedure. Pending the disposal of the suit they moved the court for the appointment of a receiver, and the second appellant and the managing director of the company were appointed joint receivers and they took possession of the assets of the company. By reason of this circumstance, when the order for winding up was passed in August, 1955, though the official receiver was appointed as official liquidator, still he was directed not to interfere with the possession of the joint receivers. Subsequently by a further order dated September 8, 1955, two independent persons who are respondents Nos. 2 and 3 before us were appointed as joint receivers in the suit and they were also direct was function as joint liquidators in the winding up proceedings. The joint liquidators applied for directions to the court as regards the sale of the asset....
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....te of confirmation by the court. The sale was held as advertised. There were in all 36 bids for lot No. 1 which consisted of the business and properties of the company starting with a bid for Rs. 1,50,000 from 3 bidders including the first appellant who him self personally bid for Rs. 3,00,000. Thereafter, there was keen competition between one Nandlal Agarwalla and the 'appellant firm of Bansidhar Shankarlal and after successive bids by these two the highest bid reached was that by Nandlal Agarwalla who bid for Rs. 3,37,000, the penultimate bid of the appellant-firm being Rs. 3,35,000. No further bids were offered and thereupon the joint liquidator accepted the bid of Nandlal and he was directed to pay immediately Rs. 84,250 this being 25% of his bid money. This bidder, however, stated that he had not brought the cash and then the recevers offered to take instead a cheque from his solicitiors, if he so desired, but this also the bidder declined and thereafter Nandlal Agarwalla left the place giving the impression on those there including the joint liquidators that he had gone to bring the money. The liquidators waited for about 20 minutes but as he did not turn up they again put ....
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....sidhar Shankarlal, there will be no further orders in this application and Bansidhar Shankarlal will be entitled to possession of the factory and its assets on a sum of Rs. 16,000 being deposited with their solicitors." There were a few more directions made by the court to which however it is unnecessary to refer. The appeal was allowed and the order confirming the sale was set aside and the liquidators were directed to resell the property after due advertisement. It is from this decision of the Division Bench that this appeal has been preferred by special leave. Learned counsel for the appellants urged before us the following points : (1)The sale by auction by the joint liquidators effected after obtaining the sanction of the court on December 20,1955, under section 179(c) of the Indian Companies Act, 1913, was merely an act performed by them in the course of their administration of the assets of the company, and the action of the judge in confirming such sale also partook of the nature of an administrative act, and not being a judicial order no appeal lay against it. (2)Even if the order of the company judge was a judicial order, still it was not a judgment within clause 15 ....
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....rt, "makes provision for eliminating the need for the sanction of the court required for action by the official liquidator under section 179, as such a power was not exercised in this case this section may be left out of account. Section 183 of the Act makes provision for the exercise of control by the court over the liquidator and sub-section (3) enables the official liquidator to apply to the court for directions in relation to any particular matte arising in the winding up. Section 184 of the Act requires the court n cause the assets of the company to be collected and applied in discharge of its liabilities. On the basis of these provisions, we shall proceed to consider whether the confirmation of the sale was merely an order in the course of administration and not a judicial order. The sale by the liquidator was, of course effected in the course of the realisation of the assets of the company and for the purpose of the amount realised being applied towards the discharge of the liabilities and the surplus to be distributed in the manner provided by the Act. It would also be correct to say that when a liquidator effects a sale he is not discharging any judicial function. Still i....
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....d from a purely subjective, consideration, it would be a judicial decision. It has sometimes been said that the essence of a judicial proceeding or of a judicial order is that there should be two parties and a lis between them which is the subject of adjudication, as a result of that order or a decision on an issue between a proposal and an opposition. No doubt, it would not be possible to describe an order passed deciding a Us before the authority, that it is not a judicial order but it does not follow that the absence of a lis necessarily negatives the order being judicial. Even viewed from this narrow standpoint it is possible to hold that there was a lis before the company judge which he decided by passing the order. On the one hand were the claims of the highest bidder who pat forward the contention that he had satisfied the requirements laid down for the acceptance of his bid and was consequently entitled to have the sale in his favour confirmed, particularly so as he was supported in that behalf by the official liquidators. On the other hand there was the first respondent and not to speak of him, the large body of unsecured creditors whose interests, even if they were not re....
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....th Sen [1918] ILR. 55 Cal. 262 ; AIR, 1928 Cal. 295. It was there held than an order] made in the winding up of a company by a single judge of a High Court in order to be appealable under section 202 must satisfy the requirements of clause 15 of the Letters Patent, viz., that it must be "a judgment" within the meaning of that clause C. C. Ghose J. rejected the construction that the words "same manner and subject to the same conditions" occurring in section 202 were merely a reference to the procedure to be observed as regards the manner of filing an appeal or the forum to which the appeal lay and not the substantive right to prefer an appeal. Buckland J., who agreed with Ghose J., considered that though the word "manner" might refer to the procedure for filing an appeal, the word "conditions" could not be given any such limited meaning but would import a reference to the limitation on the right to appeal itself as laid down in clause 15 of the Letters Patent where the order appealed from was that of a judge of the High Court!, It must be mentioned that in the appeal now before us the objection that no appeal lay from the order of Mukharji J. was raised before the Bench, but the lea....
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....s within the Code. There was no doubt either that most of the orders or decisions in winding up would not be comprehended within the class of appealable orders specified in section 104 or Order 43, rule 1. If therefore the contention of the respondent were accepted it would mean that in the case of orders passed by the District Courts appeals would lie only against what would be decrees under the Code as well as appealable orders under section 104 and Order 43, rule I, and very few of the orders passed in the courts of the winding up would fall within these categories. On the other hand the expression "judgment" used in clause 15 is wider. The learned judge pointed out that the position would therefore be that a decision rendered or an order passed by a District Court would not be appealable because the conditions laic down by the Civil Procedure Code were not satisfied, yet an exactly identica order or decision by the judge of a High Court would be appealable because it might constitute a judgment within clause 15. The learned judge therefore rejected a construction which would have meant that the same orders passed by District Courts and by a single judge of a High Court would be....
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....re Code which would govern the orders passed by District Courts, it would be seen that apart from "decrees" which are appealable by reason of section 96 of the Code, " orders " are appealable in accordance with section 104. That section after enumerating certain orders which are made appealable, contains a residuary clause (i) conferring a right of appeal in respect of "any order made under rules from which an appeal is expressly allowed by rules"- and the rule referred to is Order 43, rule 1. Now under section 122 of the Code each of the High Courts is vested with power "to make rules, to annul alter or add to all or any of the rules in the First Schedule". In exercise of this power the High Courts have in respect of the civil courts subject to their appellate jurisdiction made alterations and additions in the rules including those in Order 43, rule 1, either extending or restricting the right of appeal conferred by the Code as originally enacted. The question that arises on this state of circumstances is whether the legislature, when it enacted section 202 of the Companies Act, intended that the right of appeal should vary from State to State depending on the particular rule in f....
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....he Companies Act (vide section 3(1) of the Act) would lead to anomalous results as judgments or decisions rendered in different types of cases, though all of them are in the exercise of "ordinary jurisdiction", are subject to different conditions as regards appealability. We thus agree with Chagla C.J. that the second part of the section which refers to "the manner" and " the conditions subject to which appeals may be had " merely regulates the procedure to be followed in the presentation of the appeals and of hearing them, the period of limitation within which the appeal is to be presented and the forum to which appeal would lie and does not restrict or impair the substantive right of appeal which has been conferred by the opening words of the section. We also agree with the learned judges of the Bombay High Court\that the words "order or decision "occurring in the first part of section 202, though wide, would exclude merely procedural orders or those which do not affect the rights or liabilities of parties. Learned counsel for the appellant did not suggest that if this test were applied the order of the learned company judge would be an order or decision merely of a procedural ch....
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....ssed in the exercise of his discretion could be interfered with only if any relevant facts were disregard ed or if the order was arbitrary or capricious or if the appellate court considered that there has been a miscarriage of justice and his submission was that on the facts of this case no such infirmities attached to the order confirming the sale. Before considering the objection in this form it would be proper to examine whether the liquidators were within their power in proceeding with the sale after Nandlal Agarwalla failed to turn up after an appreciable interval. The power of the liquidators in this behalf was, according to the learned counsel for the appellant, derived from clause 5 of the conditions of sale which reads : " 5. Immediately on acceptance of the bid by the joint receivers and liquidators subject to clause 1 hereof, such bidder shall deposit 25 per cent, of the amount of such bid with the joint receivers and liquidators in/ cash, in default whereof the joint receivers and liquidators will be at liberty to put up the property again for sale.", We might add that this is the only clause under which, on a sate becoming abortive, the liquidators were empowered to....
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....ed auction was not noticed by the learned judges in appeal. We consider that this is not ft very relevant circumstance for a decision of the question either as regards the power of the liquidators to hold the fresh sale without advertisement or whether the sale at the resumed auction had been at an undervalue. It is possibly profitless to speculate how or why it happened that persons who half an hour earlier had been willing to bid for much larger figures suddenly permitted the appellant to become the purchaser for Rs. 2.25,000 It may be mentioned that at the resumed bidding there were only six bidders of whom three had not bid at the earlier auction at all, though apparently they were present-Shantilal Bansidhar, Power & Machinery Construction Co. and Relay Corporation. Besides these three there were only two others. Mahabir Prasad who had earlier bid for Rs. 2.10,000 and now con tented himself with a bid for Rs. 1,90,000 and S. K. Chakrabarti who though originally thought that the property was worth having for Rs. 2,98,000 now refused to go beyond Rs. 2,00 000. These facts show that if those others who had gathered there at the beginning of the auction but who left the place unde....