Case Law Companies Act Petitioner Smt Jatan Golcha Vs Respondent MS Golcha Properties Private Ltd

Case Law Companies Act

Petitioner: Smt Jatan Golcha Vs

Respondent M/S Golcha Properties Private Ltd

 

DATE OF JUDGMENT:- 16/12/1970

 

BENCH:

GROVER, A.N.

BENCH:

GROVER, A.N.

SHAH, J.C.

HEGDE, K.S.

 

CITATION:

1971 AIR  374 1971 SCR  (3) 247  1970 SCC  (3) 573

 

ACT:

Indian Companies Act (1 of 1956), ss. 457(1), 483  Company Judge’s order-No  notice to person holding  rights  in the property-Whether  he has right to appeal. Companies  (Court) Rules, 1959 (Rajasthan High Court), rr. 103, 139-Scope of.

 

HEADNOTE:

The respondent-company holding  leasehold  rights  in the appellant  land went  into  liquidation. Accepting the. official  liquidator’s report the company  Judge  (Rajasthan High Court) without hearing anyone or issuing notice to the appellant  ordered  auction of the lease hold right  of the respondent company. The appellant sent a  letter to the Official  Liquidator  revoking the licence  granted  to the Company  and calling upon him to, deliver possession of the land. The Official Liquidator claimed that the company was entitled to a further period of lease under the  agreement. Notice was issued in respect of the proposed auction  sale.

The appellant filed an appeal before the High Court. The High Court held that since the appellant had  not  appeared Before  the company Judge, she was not entitled to maintain the  appeal,  and  further  that  the  only remedy  of the appellant was by way of a suit after obtaining leave of the Company Judge under s. 446 of the Indian Companies Act. In appeal to this Court,

HELD  : The High Court was in error in not entertaining and deciding  the appeal preferred by the appellant who was the owner  of the land in which lease hold rights said  to have been created by her in favour of the company in liquidation were sought to be sold.

An  appeal lies under s. 483 of the Act from any order made or decision given in the matter of winding up of a company by the Court and it lies to the same, court to which, in the same  manner  in which, and subject to the  same  conditions under  which appeals lie from any order or decision  of the Court in cases within its ordinary jurisdiction.  Therefore an  appeal  was corn tent against the order of the  company Judge. [249 D]

It  is implicit in Rule 103 of the Company Court Rules that if  the directions  which have to be  given  by  the Court would affect any person prejudicially he must be served with a notice of the summons under the  general  rule  of natural justice and that no order should be made  affecting

the rights of a party without affording a proper opportunity to it to represent its case. .[250 A] Further,  the  Official Liquidator as well as  the,  learned company Judge were bound by the rules of natural justice  to issue  a notice to the appellant and hear her before  making the  order appealed against.  If there was default on  their part  in not following the correct procedure  the  appellant could  not  be deprived of her right to get  her  grievance redressed by filing an appeal. [250 C] 248

 

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1104 of 1970. Appeal by special leave from the judgment and order  dated April  9, 1970, of the Rajasthan High Court in D.  B.  Civil Special Appeal No. 126 of 1970.

M. C. Chagla,  F.  S. Nariman, P. N. Tiwari and  O.  C. Malther, for the appellant. M. C. Setalvad and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Grover, J. This  is  an appeal  from a  judgment  of the

Rajasthan  High Court holding that the appellant  was not entitled to file an appeal against the order of the  Company Judge  directing  sale of lease hold rights  of the Golcha Properties  (P) Ltd. (in liquidation) in the land  belonging to the appellant.

The facts briefly are that on November 5, 1960 an  agreement was  entered into between the appellant and  the  respondent company allowing Golcha Properties (P) Ltd. to construct  a cinema threatre within three years from the issue of the ‘No Objection Certificate’ on land measuring 42,900 sq. feet  at Bhagwandas  Road,  Jaipur belonging to the  appellant. The Company deposited a sum of Rs. 5 lakhs by way of  security.

In  October 1963 No Objection Certificate is stated to have been issued for construction of a cinema theatre.  In 1966 a petition  for  winding up of the company was  filed  in the Rajasthan High Court.  On May 10, 1968 an order for  winding up  of the company was made and a liquidator was  appointed’ On  July 11, 1969 the Official Liquidator made a  report  to the  Company-Judge for sale of the lease-hold rights of the company  in  the  land belonging to the appellant  and the structures  standing on it.  It appears that the  Official, Liquidator made  a  report  under  S. 457  of the  Indian Companies Act 1956 to obtain the necessary orders for sale.

On  July 21, 1969 the Company Judge without hearing any one or  issuing notice to the appellant ordered that the  lease- hold  rights and the structures be auctioned as proposed  by the Official Liquidator On October 3,1969 the  appellant’s attorney  sent a letter to the Official Liquidator  stating that the licence granted to the company under, an. Agreement dated- November 5, 1960 stood revoked and called upon him to deliver possession  of the land and also  pay compensation amounting  to  Rs. 10, lakhs. On  February  9,  1970 the Official  Liquidator sent a reply claiming that the  company was  entitled to a lease for 20 years under  the  agreement. On March 14, 1970 a notice was issued in a newspaper  (Times of India) in respect of the proposed auction sale ,of lease- hold rights which was to take place on April 14, 1970. 249

According  to the appellant she enquired from  the  Official Liquidator  under  whose authority the, property  was  being sold to which no reply was sent by the Official Liquidator. On April 3, 1970 the appellant applied for a  certified copy of the order dated July 21,1969 after taking inspection of  the record in the High Court.  The certified copy was sent  on  April 24, 1970.  On the same date the appellant filed  an  appeal before the High Court.  The High Court- rejected that application summarily but  recorded  short order.

In  the order of the High Court reference has been  made  to Rule 139 of the Companies (Court) Rules 1959 and it has been pointed out that since the appellant had not appeared before the  Company  Judge  she was not entitled  to  maintain the appeal. It was conceded that no notice had ever been sent to  her either by the Official Liquidator  or the  Company Judge before the  order  appealed  against  relating to appellant’s  property was made. The High Court was  of the view  that the only remedy of the appellant was by way of  a suit after obtaining leave of the Company Judge under s. 446 of the Act.  Now an appeal lies under s. 483 of the Act from any order made or decision given in the matter of finding up of  a company by the court and it lies to the same court  to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or  deci- sion of the Court in cases within its ordinary jurisdiction. There can be no manner of doubt that an appeal was competent against the order made by the Company Judge on July 21, 1969 in  view  of  the terms of s. 483.  The only question is whether because the Official Liquidator failed to  discharge his  duties  properly  by  having a  notice  issued  to the appellant, whose rights were directly affected by the  order proposed to be made, the appellant was debarred from  filing the  appeal.   In our opinion apart from Rule 139  to which reference  has been  made by the High Court  the  Official Liquidator  as well as the learned Company Judge were  bound by  the rules of natural justice to issue a notice  to the appellant  and hear her before making the  order  appealed against. If  there  was  default  on their  part  in not following the correct  procedure  it is wholly incomprehensible how the appellant could be deprived of her right  to  get her grievance redressed by filing  an  appeal against the  order which had been made in her absence and without her knowledge.  It would be a travesty of justice if a  party is driven to file a suit which would  involve long and  cumbersome procedure  when  an  order  has  been made directly  affecting  that party and redress can be  had  by filing an  appeal which is permitted by law. It  is well settled that  a person who is not a party to the  suit may prefer an appeal with the leave of the appellate court and such  leave should be granted if he would  be  prejudicially affected by the judgment. 250

Rule 103 of the Companies (Court) Rules provide for taking out  summons for directions not only with reference  to the settlement  of the list of contributories and the  list  of creditors  but also the exercise by the Official  Liquidator of  all or any of the powers under s. 457(1) and  any  other matter requiting directions of the court.  The exercise  of the  power  under  s. 457 (1) (c) of the  Act  to  sell the immovable  and movable property of the Company  by  public auction or private contract would certainly fall Within the ambit of the Rule.  That Rule expressly provides for issuing of  a  notice  of the summons to  the  petitioner  on  whose petition the order for winding up was made.  It is  implicit that  if the directions which have to be given by the  court would  affect  any person prejudicially he: must  be  served with  a notice of the summons under the  general  rule  of natural  justice and that no order should be made  affecting the rights of a party without affording a proper opportunity to  it to represent its case. The  High  Court  was thus clearly in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land  in which lease hold rights said to have been created by her  in favour of the Company in liquidation were sought to be sold. The appeal is allowed and the order of the High Court is set aside. The case is remanded to the High Court for disposing of the appeal in accordance with law.  Costs shall abide the event.

Y.P.Appeal allowed. 251

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