1989 (12) TMI 273 - HC - Companies Law

Issues Involved:
1. Validity of ex parte summons under Section 478(1) of the Companies Act, 1956.
2. Examination of officers under Section 477 of the Companies Act.
3. Allegations of oppressive and vexatious examination.
4. Compliance with procedural rules for issuing summons.

Detailed Analysis:

1. Validity of Ex Parte Summons Under Section 478(1) of the Companies Act, 1956:

Ex parte judge's summons were issued to the non-petitioners for their public examination under Section 478(1) of the Companies Act, 1956. The non-petitioners contested the issuance of these summons, arguing that such summons should not have been issued ex parte and that the public examination would be oppressive as it might compel them to provide information that could be used against them in pending criminal prosecutions under Section 454 of the Act.

2. Examination of Officers Under Section 477 of the Companies Act:

The court has the power to summon any officer of the company or person suspected to have possession of the company's property or books, or who can provide information about the company's affairs under Section 477 of the Act. The non-petitioners, being officers of the company, fall under this category. The court emphasized that the examination under Section 477 is primarily to seek information to facilitate the winding-up proceedings. The examination is mandatory and is resorted to for the purpose of collecting materials to assist in the winding-up process.

3. Allegations of Oppressive and Vexatious Examination:

The non-petitioners argued that the examination under Section 477 was sought to gather information to aid the official liquidator in the criminal case under Section 454(5) of the Act, making the examination oppressive and vexatious. The court noted that while the examination might indirectly help in the criminal proceedings, it is primarily for assisting the winding-up process. The court referred to several cases, including Pravin Sankalchand Shah v. D.B. Dalai and Official Liquidator, Nagpur Glass Works Ltd. v. D.P. Ogale, to support the view that the examination is permissible if it aids the winding-up process and is not solely for prosecuting the non-petitioners.

4. Compliance with Procedural Rules for Issuing Summons:

The court acknowledged that the prescribed rules for issuing ex parte summons were not followed. However, it held that the private examination was necessary to facilitate the winding-up proceedings. The non-petitioners had already appeared, and the court directed them to make themselves available for private examination. The court noted that private examination by interrogatories would not serve the purpose in this case.

Conclusion:

The applications filed by non-petitioners Nos. 1, 2, and 6 for revocation of the judge's summons for private examination were dismissed. They were directed to appear for private examination on April 20, 1990. Non-petitioners Nos. 3 and 4 were exempted from appearing for private examination due to the replies they had filed with the official liquidator. Necessary expenses for the examination were to be provided by the counsel for the official liquidator.

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