2008 (1) TMI 611 - HC - Companies Law

Winding up Powers of Liquidators to recall winding up orders - Held that - The official liquidator has no locus standi nor power to file such application to recall earlier order. The official liquidator cannot even file an appeal against the order earlier passed by this court appointing advocate commissioners as liquidators without leave of the court. On this ground alone this application is liable to be dismissed. In so far as contempt proceedings initiated against the official liquidator are concerned non-compliance with the orders of this court dated September 28 2007 is ex facie contempt of the court. But the official liquidator has appeared and expressed unconditional apology before this court. There fore he can be let off with a warning that in future he should strictly com ply with the orders of this court as and when directions are issued to file affidavits reports and/or to produce records. Application rejected.

Issues Involved:
1. Whether the official liquidator can file an application to recall the court's order appointing a committee of advocate commissioners as liquidators.
2. Whether any case is made out by the official liquidator to recall the order if the application is maintainable.

Detailed Analysis:

1. Maintainability of the Application by the Official Liquidator:
The official liquidator filed an application under sections 448, 449, and 450 of the Companies Act, 1956, seeking to recall the court's orders appointing advocate commissioners as liquidators. The court examined whether the official liquidator had the authority to file such an application without prior approval from the company court. It was noted that sections 448 to 453 of the Act deal with the appointment and role of official liquidators, who are appointed by the Central Government and attached to each High Court. Section 449 specifies that the official liquidator becomes the liquidator by virtue of his office upon a winding-up order. However, these provisions do not diminish the inherent powers of the company court, as saved by rule 9 of the Companies (Court) Rules, 1959.

The court emphasized that the official liquidator is accountable to the company court and must act in accordance with its directions. The court referenced section 457 of the Act, which outlines the powers of the liquidator, noting that the official liquidator does not have the power to file applications independently without the court's leave. Citing the Rajasthan High Court's decision in Official Liquidator v. Golcha Properties P. Ltd., the court reiterated that the official liquidator cannot file appeals or applications without the court's sanction. Consequently, the court concluded that the official liquidator had no locus standi to file the application to recall the order appointing advocate commissioners without prior permission from the company court.

2. Merits of the Application to Recall the Order:
Even if the application were maintainable, the court examined whether the official liquidator had made a case for recalling the order. The official liquidator argued that under the Companies Act, 1956, private persons or advocates cannot be appointed as liquidators, relying on sections 448 to 453 and rules 272 to 274 of the Companies (Court) Rules, 1959. The Assistant Solicitor General supported this contention, citing various cases.

In opposition, the advocate commissioners argued that the official liquidator had not shown progress in the winding-up process, prompting the court to appoint advocate commissioners for expeditious disposal of assets and settlement of claims. They contended that such appointments are permissible under law and supported by precedents, including decisions from the Supreme Court and other High Courts.

The court noted that the advocate commissioners had made significant progress in realizing and selling assets, and inviting claims from depositors. Given the substantial work already done by the advocate commissioners, the court found no merit in the official liquidator's application to recall the order. The court emphasized that the advocate commissioners were appointed to act independently and could not be made accountable to the official liquidator, who himself is subject to the court's directions.

Conclusion:
The court held that the official liquidator lacked the authority to file the application without the court's leave and dismissed the application on this ground. Regarding the contempt proceedings initiated against the official liquidator for non-compliance with court orders, the court noted the official liquidator's unconditional apology and closed the proceedings with a warning to ensure future compliance with court directives.

Result:
The application was rejected, and the contempt proceedings were closed, with no order as to costs.

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