2001 (9) TMI 1050 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the appeal under Section 483 of the Companies Act, 1956.
2. Relevance and necessity of inspection and production of documents requested by the appellant.
3. Legal implications of the respondent-company's refusal to provide inspection of documents.
4. The impact of the respondent-company's financial difficulties and its correspondence on the case.
5. The legal interpretation of the deed of guarantee and its enforceability.

Issue-Wise Detailed Analysis:

1. Maintainability of the Appeal under Section 483 of the Companies Act, 1956:
The respondent-company raised a preliminary objection regarding the maintainability of the appeal under Section 483, arguing that the impugned order was procedural and did not affect the rights or liabilities of the parties. The court, however, held that Section 483 allows appeals from any order made in the matter of winding up of a company, which includes orders passed before the admission of the winding-up petition. The court emphasized that the moment a winding-up petition is instituted, it becomes a matter of winding up. The court also referenced the Supreme Court's decisions in Shankarlal Aggarwala and Central Bank of India Ltd., concluding that the impugned order affected the rights of the appellant and was not merely procedural. Therefore, the appeal was deemed maintainable.

2. Relevance and Necessity of Inspection and Production of Documents Requested by the Appellant:
The appellant sought inspection and production of specific documents, arguing their relevance to the winding-up petition. The court noted that the respondent-company had admitted to obtaining inspection of the appellant's documents regarding the supply of goods to LGV. The court found that the documents requested by the appellant were relevant to the controversy, as they could help tally the goods covered by the invoices raised by the appellant on LGV with those raised by LGV on the respondent-company. The court also highlighted that the deed of undertaking required the respondent-company to pay the appellant without protest or demur if it had not paid LGV, making the documents showing payment to LGV relevant.

3. Legal Implications of the Respondent-Company's Refusal to Provide Inspection of Documents:
The court observed that the respondent-company's refusal to provide inspection of the documents was based on the argument that the appellant had not proved certain preliminary facts. The court found this reasoning flawed, as the documents were necessary to establish those very facts. The court concluded that the refusal to provide inspection affected the appellant's rights and could lead to the dismissal of the winding-up petition. Therefore, the court directed the respondent-company to provide inspection of the relevant documents.

4. The Impact of the Respondent-Company's Financial Difficulties and Its Correspondence on the Case:
The court considered the correspondence between the parties, particularly the respondent-company's initial reply requesting more time due to financial difficulties. The court noted that this conduct could estop the respondent-company from refusing to make the payment. The court found that the respondent-company's financial difficulties and its correspondence were relevant to the case, as they impacted the enforceability of the deed of guarantee and the appellant's claims.

5. The Legal Interpretation of the Deed of Guarantee and Its Enforceability:
The court examined the deed of guarantee, which required the respondent-company to pay the appellant without any protest or demur if it failed to pay LGV. The court found that the respondent-company's argument that it had made payments to LGV needed to be substantiated with relevant documents. The court concluded that the documents requested by the appellant were necessary to determine whether the respondent-company had fulfilled its obligations under the deed of guarantee.

Conclusion:
The court allowed the appeal, setting aside the order of the learned Company Judge and directing the respondent-company to provide inspection of the relevant documents by a specified date. The court emphasized that the observations made were limited to the relevance of the documents and did not affect the final decision on the merits of the winding-up petition. The appeal was allowed to the extent of directing the respondent-company to provide inspection of the documents, with no order as to costs.