2007 (6) TMI 283 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the appeals.
2. Interpretation of the term "appeal" under rule 164 of the Companies (Court) Rules, 1959.
3. Applicability of sections 460(6) and 483 of the Companies Act.
4. Jurisdiction and powers of the company judge and official liquidator.
5. Precedents and judicial definitions of "appeal."

Detailed Analysis:

1. Maintainability of the Appeals:
The respondents raised a preliminary objection regarding the maintainability of the appeals, arguing that the orders passed by the company judge were in an appeal against the order of the official liquidator, and a further appeal to the High Court is barred by the amendment to section 100A of the Code of Civil Procedure, 1908, effective from July 1, 2002. The appellants contended that the order by the company judge was not in a judicial proceeding, thus the term "appeal" in rule 164 of the Companies (Court) Rules, 1959, was a misnomer.

2. Interpretation of the Term "Appeal" under Rule 164:
Rule 164 allows a creditor dissatisfied with the decision of the liquidator to appeal to the court. This rule was scrutinized to determine whether the proceedings before the company judge constituted an appeal. The court examined various definitions and judicial interpretations of the term "appeal," including those from Wharton's Law Lexicon, Nagendra Nath Dey v. Suresh Chandra Dey, and other precedents. The court concluded that an appeal involves a judicial examination of a decision by a higher court, and the term "appeal" in rule 164 is not a misnomer but a statutory right provided to creditors.

3. Applicability of Sections 460(6) and 483 of the Companies Act:
Section 460(6) allows any person aggrieved by an act or decision of the liquidator to apply to the court for confirmation, reversal, or modification of the decision. Section 483 provides for appeals from any order made or decision given in the matter of winding up of a company. The appellants argued that the proceedings under rule 164 were not appeals but applications for confirmation or reversal of the liquidator's decisions. However, the court held that these sections, along with rule 164, clearly provide for an appeal mechanism against the decisions of the liquidator.

4. Jurisdiction and Powers of the Company Judge and Official Liquidator:
The court examined the jurisdiction and powers conferred on the official liquidator and the company judge. It was noted that the official liquidator acts under the supervision and control of the court, and any decision made by the liquidator can be appealed to the court under rule 164. The court emphasized that the liquidator's decisions are subject to judicial review, and the company judge exercises appellate jurisdiction over the liquidator's decisions.

5. Precedents and Judicial Definitions of "Appeal":
The court referred to multiple precedents to define "appeal," including cases like Chautala Workers Co-operative Transport Society Ltd. v. State of Punjab, State of Gujarat v. Salimbhai Abdulgaffar Shaikh, and Shiv Shakti Co-operative Housing Society v. Swaraj Developers. The consistent judicial interpretation is that an appeal involves a re-hearing on law and facts by a superior court. The court also considered judgments like Union of India v. Official Liquidator and Smt. Ganga Bai v. Vijay Kumar, which reinforced that the right of appeal is statutory and not inherent.

Conclusion:
The court concluded that the proceedings under rule 164 are indeed appeals and not mere applications for confirmation or reversal of the liquidator's decisions. The appeals filed against the company judge's orders are barred by the amendment to section 100A of the Code of Civil Procedure, 1908. Consequently, the appeals were dismissed for lack of maintainability.