1998 (8) TMI 456 - HC - Companies Law

Summary

Issues Involved:
1. Exclusion of Chartered Accountants from handling tax cases of companies in liquidation.
2. Validity and implications of the Company Court's order regarding the engagement of advocates and Chartered Accountants.
3. Right of appeal under section 483 of the Companies Act, 1956.
4. Nature of the impugned order - whether administrative or judicial.
5. Necessity of modification in the impugned order to include Chartered Accountants.

Issue-wise Detailed Analysis:

1. Exclusion of Chartered Accountants from handling tax cases of companies in liquidation:
The appellants, Chartered Accountants, were aggrieved by the Company Court's order that excluded them from conducting tax cases for companies in liquidation. The Company Court had directed the Official Liquidator to entrust all tax matters to advocates included in the panel, thus sidelining the Chartered Accountants who were previously part of an approved panel.

2. Validity and implications of the Company Court's order regarding the engagement of advocates and Chartered Accountants:
The appellants argued that there was an existing panel of Chartered Accountants approved by the Company Court, and they were not given an opportunity to be heard before the impugned order was passed. The Official Liquidator had initially sought permission to engage both advocates for sales tax matters and Chartered Accountants for income-tax matters. However, the Company Court reviewed this and directed that all tax matters be handled by advocates, thus nullifying the efficacy of the Chartered Accountants' panel.

3. Right of appeal under section 483 of the Companies Act, 1956:
The counsel for the panel of advocates contended that the appeal was not maintainable as no leave had been obtained before filing the appeal. Section 483 provides a right of appeal against orders made in the matter of winding up of a company. The court noted that the absence of leave does not obliterate the substantive right of appeal, and since the Chartered Accountants were aggrieved parties excluded from handling tax matters, they were entitled to file the appeal.

4. Nature of the impugned order - whether administrative or judicial:
The counsel for the advocates argued that the impugned order was administrative and thus not appealable under section 483. The court examined the nature of the order and concluded that it was judicial, as it adjudicated the rights of the parties, had binding force, and followed procedural attributes typical of a court. Therefore, the order was appealable.

5. Necessity of modification in the impugned order to include Chartered Accountants:
The court acknowledged the need for flexibility in the impugned order. It recognized situations where the services of Chartered Accountants might be essential, such as auditing accounts or computing capital gains tax. The court suggested that the Official Liquidator should be allowed to engage Chartered Accountants when necessary, subject to the Company Court's approval, thus ensuring a balance between the panels of advocates and Chartered Accountants.

Conclusion:
The appeal was disposed of with modifications to the impugned order. The Official Liquidator was directed to entrust tax matters to advocates but could also engage Chartered Accountants when essential, subject to the Company Court's approval. This approach ensures a balanced and just handling of tax matters for companies in liquidation.