2005 (8) TMI 392 - HC - Companies Law

Summary

Issues:
Review of court order, violation of principles of natural justice, directions beyond scope of application, irregularities in Official Liquidator's office, need for inquiry and investigation.

Review of Court Order:
The Official Liquidator filed an application seeking a review of the court order and recalling of certain observations and directions made against him without being heard. The applicant argued that the observations made were in violation of the principles of natural justice as no opportunity was given to respond. The court found that the observations were prima facie in nature and no final conclusion had been drawn. The court had called for Inventory and Valuation Reports due to allegations of irregularities in the Official Liquidator's office.

Violation of Principles of Natural Justice:
The applicant contended that the observations made without hearing him were against the principles of natural justice. However, the court disagreed, stating that during previous hearings, issues regarding missing items and alleged inaction by the Official Liquidator had been raised. The court justified its observations based on reports provided by the Official Liquidator.

Directions Beyond Scope of Application:
The Official Liquidator argued that the directions issued were beyond the scope of the application and were not warranted. The court noted that there were indications of irregularities in the functioning of the Official Liquidator's office over the past months, leading to the observations made. The court directed the Central Government to conduct a proper inquiry and investigation into the matter.

Irregularities in Official Liquidator's Office:
The court highlighted that it had come across instances of massive irregularities in the functioning of the Official Liquidator's office, prompting the need for broader observations. The Official Liquidator was instructed to cooperate with any inquiry or investigation and provide necessary details to prove compliance with court directions.

Need for Inquiry and Investigation:
Emphasizing the importance of maintaining the integrity of the Official Liquidator's office, the court stressed the need for a thorough inquiry and investigation. The Official Liquidator was reminded of his responsibility for all actions related to the Company-in-liquidation and the necessity to address any raised concerns to maintain the court's confidence. The court rejected the application, urging the Official Liquidator to cooperate with the investigating agency.

In conclusion, the court rejected the application for a review of the order, emphasizing the need for cooperation in any future inquiry or investigation to address the irregularities in the Official Liquidator's office and ensure compliance with court directions.