Case Law Companies Act Satish Churan Law Vs H K Ganguly

PETITIONER:
SATISH CHURAN LAW

Vs.

RESPONDENT:
H. K. GANGULY

DATE OF JUDGMENT:
05/12/1961

BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
SINHA, BHUVNESHWAR P.(CJ)
KAPUR, J.L.
HIDAYATULLAH, M.
MUDHOLKAR, J.R.

CITATION:
1962 AIR 806 1962 SCR Supl. (1) 943
ACT:
Company Law-Winding up-Examination of ex-
Director-Application of Liquidator accompanied by
signed statement-Ex parte order-Modification or
vacating of-Right to inspect statement filed by
Liquidator-Whether statement confidential-
Companies Act, 1956 (1 of 1956), s. 477-Companies
(Court) Rules, 1959, rr. 243, 244 and 249.

 

HEADNOTE:
A company was ordered by the High Court of
Calcutta to be wound up. The Official Liquidator
submitted an application accompanied by a signed
statement for an order that the appellant, an ex-
director of the company, be examined concerning
the affairs of the company under s. 477 Companies
Act, 1956, and that he be ordered to produce
certain records. The application was granted ex-
parte. The appellant applied for an order vacating
or modifying of the order and for supplying copies
of or facility for inspection of all documents
including the signed statement of the Liquidator.
The Company Judge rejected the application holding
that the ex-parte order was final and he had no
power to review it and that the appellant was not
entitled to a copy of or to inspect the signed
statement of the liquidator. On appeal Court held
that the application to modify or vacate the order
was maintainable, but in the circumstances of the
case the Court held that the order was “desirable
and necessary” and that the appellant was not
entitled to an inspection of the signed statement
of the liquidator.
^
Held, that the ex-parte order was not final
and it was open to the Company Judge to modify or
vacate it on the ground that it had been obtained
without placing all the requisite materials before
the court or by mis-statement of
944
facts or on other adequate grounds. The primary
test for making the order was whether it was just
and beneficial to the business of the company ;
the power conferred on the court was very wide and
the court had to guard itself against being made
an instrument of vexation or oppression. In the
present case none of the circumstances justifying
interference with the ex-parte order were made
out. The order was not sought for any collateral
purpose, a purpose other than the effective
progress of the winding up in the interest of the
company. The appellant was prima facie a person
who was likely to give information useful about
the affairs of the company in winding up.
In re North Australian Territory Company,
(1890) 45 Ch. D. In re. Metropolitan Bank, (1880)
15 Ch. D. 139, In re. Mavile House, Limited.,
(1939) 1 Ch. D. 32 and In re. Gold Company Ltd.,
(1879) 12 Ch. D. 77, referred to.
Held, further, that the appellant had no
right to inspect the signed statement made by the
liquidator on which the order of the court
proceeded. The statement of the Liquidator did not
form part of the file of the proceedings of
liquidation. It merely enabled the court to be
satisfied that the appellant should be examined in
the interest of the company. The rules permitted
the making of such an order ex parte. The
examination was confidential.
In re Gold Company Ltd., (1879) 12 Ch. D.77,
referred to.

 

JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 521 of 1961.
Appeal by special leave from the judgment and
order dated April 17, 1961 of the Calcutta High
Court in Appeal from Original Order No. 132 of
1960.
M. C. Setalvad, Attorney-General of India, M.
K. Banerji and S. N. Mukherji, for the appellant.
S. Mukherjee and P. K. Bose, for the
respondent.
1961. December, 5. The Judgment of the Court
was delivered by
SHAH. J.-Ballygunge Real Property and
Building Society Ltd.-hereinafter called the
Company-was on January 8, 1958, ordered by the
High Court of Judicature at Calcutta to be wound
up. On January 18, 1960, the Official Liquidator
submitted
945
an application accompanied by a signed statement
for an order that the appellant be examined under
s. 477 of the Indian Companies Act, 1956. This
application was granted ex-parte by Mr. Justice
G.K. Mitter on January 18, 1960, and the appellant
was served with the order to attend the Court on
March 22, 1960, for the purpose of being examined
concerning the affairs of the company, and to
bring with him and produce at the said time and
place the following books and papers, mentioned in
Schedule B to the order, viz.,
(a) Ballygunge Estate (Private) Ltd.-Cash
Books, General Ledger, Journal, Minutes Books
from 1939 to 1948, Property Register.
(b) Ballygunge Building Society Private Ltd.-
Cash Books, General Ledger, Journal, Minute
Books, Property Register.
(c) Ballygunge Real Property & Building
Society Ltd. (In liquidation)-General Ledger
for 1949,
and “all such other books, papers, deeds, writings
and other documents in his custody or power in any
way relating to the affairs of the Company”. This
order was published in public newspapers. The
solicitors of the appellant by letters dated
February 29, 1960, and March 10, 1960, called upon
the Official Liquidator to furnish them with
copies of the petition and the report on the basis
of which the order was made. The Official
Liquidator having informed the solicitors of the
appellant that the latter were not entitled to a
copy of the report of the official liquidator, the
appellant applied by a judge’s summons for an
“order recalling vacating, setting aside or
modifying” the order dated January 18, 1960, and
for a direction to the official liquidator
requiring him to supply copies of the report of
the official liquidator and of the other documents
relating to the application and alternatively for
an order granting leave to inspect the court
records and
946
proceedings of the application and to take copies
thereof. The appellant contended that the order
made by Mr. Justice Mitter on January 18, 1960,
was obtained by suppression of material facts and
that, in any event, the order made without notice
to the appellant was vexatious and oppressive and
amounted to an abuse of the process of Court. He
submitted that he was a Director of the Company
between the years 1939 to 1953 and had attended
meetings of the Board of Directors of the Company
and without reference to the records of the
meetings of the Board and particularly without
reference to the Minute Books, it was not possible
for him to recollect any details as to
transactions which might have taken place in the
Board’s meetings. He stated that he was not
concerned with the administration, management or
the day to day working of the Company, except to
the extent of taking part in the Board’s meetings,
that he never had in his custody the books
referred to in the order and that the official
liquidator had never asked for or enquired of him
about any documents, that he was not aware of the
matters on which information was required by the
official liquidator and unless those matters were
made known to him, it was not possible for him, to
answer questions or to give information required
of him, that to enable him to answer questions or
supply information, it was necessary for him to
know the nature of the enquiry and the charges and
to inspect the records and documents of the
Company and without the assistance of such records
and documents his proposed examination would be
highly oppressive and harsh and was likely to
prove futile.
The official liquidator submitted that all
the available papers in the books with the
liquidator will be made available at the time of
the examination of the appellant but he-the
official liquidator-was not bound to give
information in advance about the nature of the
enquiry; to do so, he contended, would defeat the
purpose of the enquiry. He also submitted that the
appellant had no right
947
claim inspection or to obtain copies of the
statement which accompanied the judge’s summons
dated January 18, 1960.
Mr. Justice Law rejected the application
filed by the appellant, holding that the order
dated January 18, 1960, was final and that he had
no power to review, modify, alter or vary the
same, that the order merely summoning for
examination under s. 477 of the Companies Act did
not affect a party’s rights, there being no
charge, no complaint and no allegation against
him. The learned Judge observed that it was not
necessary for the Court in the first instance to
determine that the person called upon to furnish
information actually possessed that information :
if the Court has reasons to think, or if even an
allegation is made that a certain person is in
possession of information which would be of use in
the course of winding up, the Court can call upon
him to appear in Court and examine him, and that
rr. 243 (1) and 243 (2) of Companies (Court) Rules
laid down the same procedure as was laid down in
In re Gold Company (1879 12 Ch. D. 77 at page 82)
and different from the procedure which was laid by
r. 195 of the Indian Companies Act, 1913. In the
view of the learned Judge the statement of the
official liquidator on which the order dated
January 18, 1960, was made not being on oath or
affirmation was not “legal evidence” and did not
form part of the proceedings of the Court and the
appellant could not demand facility for inspection
of the statement or copy thereof.
Against the order of Mr. Justice Law an
appeal was preferred to a Division Bench of the
High Court. The High Court held that the order
having been initially pass ex parte an application
for discharging or modifying the order was in law
maintainable at the instance of the appellant but
the order in so far as it directed the appellant
who was a director of the Company to appear before
the
948
Court to be examined touching upon the affairs of
the Company was, in the circumstances of the case,
“desirable and necessary”, and that the statement
of the official liquidator on which the order
dated January 18, 1960, was issued not being an
affidavit was not required by the Companies
(Court) Rules 1959 to be kept on the file of the
liquidation proceedings : the statement was a
confidential document and was-save by order of the
Court-not open to inspection of any person other
than the liquidator. The learned judges modified
the order in so far as it directed production of
the books of account relating to the Ballygunge
Estate (Private) Ltd. and the Ballygunge Building
Society Private Ltd., because those companies were
not parties to the liquidation proceedings.
Against the order of the High Court this
appeal with special leave has been preferred to
this Court.
Three questions fall to be determined :
(1) Whether an ex parte order directing
the examination of a person under s. 477 of
the Indian Companies Act, 1956 is liable to
be modified, or vacated on the application of
the persons affected thereby ;
(2) Whether there is any ground for
discharging or modifying the order dated
January 18, 1960 ; and
(3) Whether the appellant is entitled
before his examination to inspect the
statement submitted by the official
liquidator in support of the application for
the order dated January 18, 1960, or to be
furnished with a copy thereof.
Section 477 of the Indian Companies Act, 1956,
provides :
“477 (1) The Court may, at any time after the
appointment of a provisional liquidator or
the making of a winding up order summon
949
before it any officer of the company or
person known or suspected to have in his
possession any property or books or papers of
the company, or known or suspected to be
indebted to the company, or any person whom
the Court deems capable of giving information
concerning the promotion, formation, trade,
dealings, property, books or papers, or
affairs of the company.
(2) The Court may examine any officer or
person so summoned on oath concerning the
matters aforesaid, either by word of mouth or
on written interrogatories; and may, in the
former case, reduce his answers to writing
and require him to sign them.
(3) The Court may require any officer or
person so summoned to produce any books and
papers in his custody or power relating to
the company; but, where he claims any lien on
books or papers, produced by him, the
production shall be without prejudice to that
lien, and the Court shall have jurisdiction
in the winding up to determine all questions
relating to that lien.
(4) If any officer or person so summoned,
after being paid or tendered a reasonable sum
for his expenses, fails to appear before the
Court at the time appointed, not having a
lawful impediment (made known to the Court at
the time of its sitting and allowed by it),
the Court may cause him to be apprehended and
brought before the Court for examination.
(5) If, on his examination, any officer or
person so summoned admits that he is indebted
to the company, the Court may order him to
pay to the provisional liquidator or, as the
case may be, the liquidator at such time and
in such manner as to the Court may seem just
the amount in which he is indebted, or any
950
part thereof, either in full discharge of the
whole amount or not, as the Court thinks fit,
with or without costs of the examination.
(6) If, on his examination, any such officer
or person admits that he has in his
possession any property belonging to the
company, the Court may order him to deliver
to the provisional liquidator or, as the case
may be, the liquidator, that property or any
part thereof, at such time, in such manner
and on such terms as to the Court may seem
just.
(7) Orders made under sub-sections (5) and
(6) shall be executed in the same manner as
decrees for the payment of money or for
delivery of property under the Code of Civil
Procedure, 1908 respectively.
(8) Any person making any payment or delivery
in pursuance of an order made under
subsection (5) or sub-section (6) shall by
such payment or delivery be, unless otherwise
directed by such order, discharged from all
liability whatsoever in respect of such debt
or property.”
Clauses (5), (6), (7) and (8) it may be noted,
were inserted by Act 65 of 1960. Section 463 of
the Companies Act authorises this Court to make
rules for all matters relating to winding up of
companies which by the Act are to be prescribed
and for other matters. This court has framed
Companies (Court) Rules, 1959, out of which rr.
243, 244 and 249, which are material, are as
follows :-
“243. Application for examination under
Section 477.-(1) An application for the
examination of a person under Section 477 may
be made ex parte provided that where the
application is made by any person other than
the Official Liquidator, notice of the
application shall be given to the Official
Liquidator.
951
(2) The summons shall be in Form 109
and, where the application is by the Official
Liquidator, shall be accompanied by a
statement signed by him setting forth the
facts on which the application is based.
Where the application is made by a person
other than the Official Liquidator, the
summons shall be supported by an affidavit of
the applicant setting forth the matters in
respect of which the examination is sought
and the grounds relied on in support of the
summons.”
“244. Directions at hearing of summons.-Upon
the hearing of the summons the Judge may, if
satisfied that there are grounds for making
the orders, make an order directing the issue
of summons against the person named in the
order for his examination and/or for the
production of documents. Unless the Judge
otherwise directs, the examination of such
person shall be held in Chambers. The order
shall be in Form No. 110.”
“249. Order for public examination under
section 478.-(1) where an order is made for
the examination of any person or persons
under Section 478, the examination shall be
held before the Judge; provided that in the
case of High Court, the Judge may direct that
the whole or any part of the examination of
any such person or persons, be held before
any of the officers mentioned in sub-section
(10) of the said Section as may be mentioned
in the order: Where the date of the
examination has not been fixed by the order,
the Official Liquidator shall take an
appointment from the Judge or officer before
whom the examination is to be held as to the
date of the examination. The order directing
a public examination shall be in Form No.
112.
952
(2) The Judge may, if he things fit,
either in the order for examination or by any
subsequent order, give directions to the
specific matters on which such person is to
be examined.”
By s. 477 the Court is authorised to summon before
it (1) any officer of the Company, (2) any person
known or suspected to have in his possession any
property or books or papers of the Company, and
(3) any person known or suspected to be indebted
to the company, or any person whom the Court deems
capable of giving information concerning the
promotion, formation, trade, dealings, property,
books or papers or affairs of the company. By r.
243 an application for an order for examination
may be made ex parte, and the Company Judge may,
if he is satisfied that the interest of the
company will be served by the examination of a
person-be he an officer of the company or other
person make the order. The primary test for making
the order is whether it is just and beneficial to
the business of the company, But the power
conferred by the section is very wide and the
Court must guard itself against being made an
instrument of vexation or oppression. The order
which is made ex-parte is not final; it is always
open to a person summoned to apply for vacating or
modifying the order on the ground that it has been
obtained without placing all the requisite
materials before the Court or by mis-statement of
facts or on other adequate grounds. Rule 9 of the
Companies (Court) Rules preserves to the Court its
inherent powers to give such directions or pass
such orders as may be necessary for the ends of
justice or to prevent abuse of the process of
Court, and a direction to vacate an order
previously made, is in a proper case within the
Court’s inherent jurisdiction.
The relevant provisions of the English
Companies Act, 1862 (25 & 26 Vict. c. 89), the
953
English Companies Act, 1929 (19 & 20 Geo V c.3)
and the English Companies Act, 1948 (11 & 12 Geo
VI c,88) on the question relating to examination
of officers of the company or other persons are
substantially the same as s. 477 of the Indians
Companies Act, 1956, and the principles laid down
by the superior Courts in England, which have been
assimilated in the practice of Company winding up
by the Courts in India are useful in determining
the nature of the proceeding. In re North
Australian Territory Company (1), Lord Justice
Cotton vacated an order in appeal where the order
for examination was not made in the interest of
the Company in liquidation, but was made with a
view to assist the interest of the company in
prosecuting an action which has been brought up by
the liquidator. In that case the liquidator filed
with leave of the Court an action against another
company for setting aside an agreement of purchase
and obtained an order for affidavit of document,
but the Court refused to order production of
certain documents, or the examination of the
defendant company’s secretary on interrogatories,
on the ground that discovery was premature. The
liquidator then obtained an order under s. 115 of
the Companies Act, 1862 for the examination of the
secretary before an examiner. The Secretary
refused to answer certain questions relating to
the matters in issue in the action and the Court
held that the liquidator had shown no reason for
seeking discovery except to assist him in the
action and so to evade the order of the Judge
postponing discovery in the action and therefore
the witness was justified in refusing to answer
the question. Lord Justice Bowen in that case
observed that the power conferred by s. 115 is an
extra-ordinary power. “It is a power of an
inquisitorial kind which enables the Court to
direct to be examined-not merely
954
before itself, but before the examiner appointed
by the Court-some third person who is no party to
a litigation. That is an inquisitorial power,
which may work with great severity against third
persons, and it seems to me to be obvious that
such a section ought to be used with the greatest
care, so as not unnecessarily put in motion the
machinery of justice when it is not wanted or to
put it in motion at a stage when it is not clear
that it is wanted, and certainly not to put it is
motion if unnecessary mischief is going to be done
or hardship inflicted upon the third person who is
called upon to appear and give information.” In re
Metropolitan Bank (Heiron’s case)(1) a similar
situation arose. The liquidator who had brought an
action on behalf of the company against an officer
exhibited interrogatories which had been fully
answered by the defendant, and thereafter, the
liquidator sought an order from the Court to
examine the defendant under s. 115 of the
Companies Act, 1862. It was held that the
liquidator must satisfy the Court that it would be
just and beneficial for the purposes of the
winding up. The Court in that case held that the
action of the liquidator was vexatious. In In re
Mavile Hose, Limited, (2) an order which was
regarded as premature and oppressive in the
circumstances of the case was discharged by the
Court. The Court has therefore jurisdiction in
proper cases, i.e. where it is satisfied that the
order is vexatious, or oppressive, or where other
adequate grounds exist to discharge the same. In
our view, the High Court was right in holding that
in a proper case it would be open to the Company
Judge to vacate an ex-parte order obtained under
r. 243 of the Companies (Court) Rules.
The jurisdiction to vacate or modify an ex-
parte order under r. 243 being granted, the
question
955
which falls to be determined is whether the order
passed by Mr. Justice Mitter was oppressive or
vexatious or otherwise liable to be vacated or
modified for adequate grounds. In our view, there
is no ground for holding that the order is liable
to be vacated or modified. It was never even
suggested in the High Court that the order for
examination was per se oppressive or vexatious.
This is not a case in which the order is sought to
facilitate the progress of an action filed by the
official liquidator against the appellant, nor is
there reason to hold that the order is sought in
aid of some collateral purpose-a purpose other
than effective progress of the winding up in the
interest of the company. The appellant was for
many years a director of the company, and
therefore concerned with guiding the affairs of
the company. He was prima facie a person who would
be able to give information likely to promote the
purpose of the winding up. It appears also that
Mr. Justice Mitter was satisfied on the statement
filed by the official liquidator that the
appellant had the custody of certain important
books of the company. The plea of the appellant
that compelling him to submit to examination
without permitting him to have access to the books
before answering questions put to him is
oppressive has no substance. The affidavit filed
on behalf of the liquidator clearly states that
the relevant records of the company will be made
available to the appellant at the time of the
examination.
The High Court, in appeal, expressed the view
that on the merits there was no ground for
interference and it was satisfied that it was
“desirable and necessary” that the appellant as a
director should be examined. The appellant having
been a director of the company during the period
when it is alleged the affairs were mismanaged, is
likely to be aware of the management and in
possession of information conducive to effective
prosecution of the winding up and if the learned
956
Judge thought it fit to order that the appellant
be examined the order cannot be regarded as either
vexatious or oppressive or otherwise liable to be
set aside.
Counsel for the appellant submitted that the
order for examination must be made after
considering all the facts and circumstances of the
case and that there was nothing on the record to
show that the facts and circumstances were
considered by Mr. Justice Mitter before he made
the order for examination. The appellant has
admitted in his affidavit that he was served with
a copy of the order, but he has not chosen to
produce it in the Court of First Instance, nor is
the order printed in the record prepared for the
use of the Court in this appeal. It was never
suggested before the High Court that the order was
made without considering the material facts and
circumstances. The Court has made the order in
exercise of the jurisdiction vested in it and in
the absence of any material to show that the order
was made for a collateral purpose or by the
misleading the Court, the appellant is not
entitled to have the order vacated. As pointed out
by the Master of the Rolls in In re Gold Company
Ltd., (1) “It must be remembered that both the
Chief Clerk and the Judge know a great deal more
of the proceedings in the winding-up than the
Court of Appeal can know, and there may be various
grounds for exercising the discretion, upon which
the Court of Appeal cannot possibly form any
opinion. We must recollect also that it is not
necessary to make out a prima facie case-the
probability of a case is enough. A fair suspicion
may be well worthy of further investigation, and
it may well be worth the expense and trouble of
examining witnesses to see whether it is well
founded. It is not necessary that the applicant
should establish his case before he applies to the
Judge: he may say to the Judge, “I have a strong
ground for suspecting that a certain transaction
was
957
fraudulent; if it is proved to be so we shall get
a large some of money; will you let me lay out a
small sum of money in order to examine a witness
or two, so as to ascertain the facts? In that case
the Court will exercise a discretion.” Mr. Justice
Mitter was the company Judge in charge of the
liquidation proceedings of the Company. Before him
a statement of the official liquidator was
produced: and in the light of the materials placed
before him, he passed the order which is now
sought to be modified. This Court cannot proceed
upon an assumption that the order for examination
of a person who has ceased to be a director prior
to the date of the winding up must necessarily be
regarded as oppressive or vexatious. A director of
a company, past or present, is ordinarily in a
position to give useful information about the
affairs of the Company in winding up. In the
circumstances, we think that the High Court was
right in holding that no case was made out for
modification of the ex parte order.
Two grounds were set up in support of the
plea that the appellant before he is examined is
entitled to inspect the statement of the official
liquidator: (a) that it is contrary to rules of
natural justice to disallow inspection of the
statement on which a judicial order imposing an
obligation upon a party is made, and (b) that the
rules of procedure prescribed under the Companies
(Court) Rules authorise the person summoned to
inspect the statement of the official liquidator
on which the order is made. Rule 243 expressly
contemplates that an application for examination
under s. 477 may be made ex parte. An application
by an official liquidator is required to be
supported by a statement signed by him, but the
rule does not contemplate any notice to the
parties likely to be affected by the issue of the
summons. The proceedings are intended to be
confidential. As observed in
958
In re Gold Company (1) by Sir George Jessel
M.R…. in these matters…the object being to
keep the proceedings secret from the person sought
to be affected, and the practice is, and as far as
I know always has been, that the liquidator,
instead of making an affidavit, simply makes a
written statement which he leaves with the Chief
Clerk, who thereupon issues an order, and the
written statement cannot, be got at by anybody
whereas an affidavit can.” This practice in our
judgement is consonant with right and justice.
That proceedings for examination of officers and
other persons are confidential is emphasised by
rr. 247 and 248. By cl.(2) of r. 247 no person is
entitled to take part in the examination under s.
477 except the official liquidator and his
advocate but the court may, if it thinks fit,
permit any creditor or contributory to attend the
examination subject to such conditions as it may
impose. Clause (3) provides that notes of the
examination may be permitted to be taken by a
witness or any person on his behalf on his giving
an undertaking that such notes shall be used only
for the purposes of re-examination of the witness.
It is also provided that on the conclusion of the
examination, the notes shall, unless otherwise
directed, be handed over to the Court for
destruction. Rule 248 provides inter alia, that
the notes shall not be open to the inspection of
any creditor, contributory or other person, except
the official liquidator, nor shall a copy thereof
or extract there from be supplied to any person
other than the official liquidator, save upon
orders of the Court. The proceedings for
examination under s. 477 being intended to be
commenced only in the interest of the Company and
for the purpose of collecting evidence for the
effective prosecution of the liquidation are by
rules expressly to be commenced by order which may
on the application of the official liquidator be
made ex parte. The order does not purport to
decide any question in dispute between the Company
and the persons sought to be
959
examined. It only proceeds upon the satisfaction
of the Court that the person should be examined in
the interest of the Company, it appearing to the
Court just proper that he should be so examined.
There is nothing in the scheme of the Act which
indicates that an order passed for the examination
of a person under. s. 477 may be made only after
serving a notice upon such person: the Rules
expressly contemplate that the order may be made
ex parte. Rules of natural justice are therefore
not violated merely by the issue of an order
requiring a person or persons to appear before a
Court for his examination under s. 477.
Nor do the rules of procedure framed by this
Court for examination under s. 477 contemplate and
right of inspection of the statement of the
official liquidator. As we have already pointed
out, r. 243 contemplates an order ex parte and the
scheme of the Rule further emphasises the fact
that all these enquiries are intended as already
discussed to be confidential proceedings. The
person whose examination is sought to be held, has
therefore no right to inspect the statement made
by the liquidator on which the order of the Court
proceeds. Rule 360 of the Companies (Court) Rules
provides that every duly authorised officer of a
the Central Government, and, save as otherwise
provided by these Rules, every persons who has
been a director or officer of a company which is
being wound up, shall be entitled, free of charge,
at all reasonable times to inspect the file of
proceedings of the liquidation and to take copies
or extracts from any document therein, and, on
payment of the prescribed charges to be furnished
with such copies or extracts. The right to
inspection is given in respect of the file of the
proceedings of the liquidation. But the statement
made by the official liquidator under Rule 243
does not form part of the file of the proceedings
of the liquidation. The statement is not to be
made on oath: it has to be shown to the Company
960
Judge and the Judge has to apply his mind to the
contents thereof, but it does not, as pointed out
by Mr. Justice Law, form part of the liquidation
proceedings. In the Company (Court) Rules, there
is no rule specifying the documents which are to
be included in the file of the liquidation
proceedings. The order passed by the Court and the
summons issued thereon may be regarded as forming
part of the file of the proceeding of liquidation,
but having regard to the nature of the statement
made by the official liquidator on which this
Judge’s order is passed, it is not part of the
file of the proceedings of liquidation. The person
summoned even if he is an officer or director of
the company, is therefore not entitled to
inspection thereof relying upon Rule 360.
It was urged by counsel for the appellant
that the petition for an order under s.477 was
inexorably connected with the statement of the
official liquidator, and if the party affected by
the order was entitled to inspect the petition, he
was entitled to inspect the statement which formed
part of the petition. There is however, no warrant
for the view that the petition and the statement
form part of the same document. The petition has,
it is true, to be supported by a statement, but
the statement is independent of the petition.
It appears that the practice of the Calcutta
High Court, prior to the promulgation of the
Companies (Court) Rules, was different. Under r.
195 an application for examination of a person
under s 195 of the Indian Companies Act 1913,
could be made ex parte to the Judge but it had to
be by petition verified by the official liquidator
stating the facts upon which the application was
based. It was also provided that at the hearing,
the Judge may, if satisfied that a prima facie
case for examination had been made out, direct the
issue of a summons or summonses against the person
or persons named
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in the order for examination and/or for the
production of the documents. Manifestly, the order
could be obtained on a petition which was required
to be verified by the official liquidator and
there had to be a formal hearing and only if a
prima facie case for hearing had been made out the
order could be made. Under the Companies (Court)
Rules a different practice, which approaches the
practice prevailing in the English Courts has been
set up. The mere fact that under r. 195 of the
Calcutta High Court Rules under Act of 1913 the
appellant might have had a right of access to the
statement on which the order was founded will not
be an adequate ground for holding that the earlier
practice must continue to prevail. If the
appellant is not entitled to inspection of the
statement he would certainly, for the same reason,
not be entitled to a copy of that statement.
On the view taken, this appeal must fail and
is dismissed with costs.
Appeal dismissed.

 

 

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