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2008 (1) TMI 613 - HC - Companies LawWinding up - Powers of liquidator - Held that - 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. Insofar as contempt proceedings initiated against Official Liquidator are concerned non-compliance with the orders of this court dated 28-9-2007 is ex facie contempt of the Court. But the Official Liquidator has appeared and expressed unconditional apology before this court. Therefore he can be let off with a warning that in future he should strictly comply with the orders of this court as and when directions are issued to file affidavits reports and/or to produce records. In the result the application is rejected and contempt proceedings are closed directing Official Liquidator to be more diligent.
Issues Involved:
1. Recall of the winding-up orders dated 30-6-2006 and 28-9-2006. 2. Modification of the said orders to place Advocate Commissioners under the control of the Official Liquidator. 3. Maintainability of the Official Liquidator's application. 4. Authority of the Company Court to appoint Advocate Commissioners as liquidators. 5. Contempt proceedings against the Official Liquidator for non-compliance with court orders. Detailed Analysis: 1. Recall of the Winding-Up Orders: The Official Liquidator (OL) filed an application under sections 448, 449, and 450 of the Companies Act, 1956, seeking to recall the court's orders dated 30-6-2006 and 28-9-2006, which ordered the winding up of three companies and appointed Advocate Commissioners as liquidators. The OL argued that the appointment of private persons as liquidators is not permissible under the Companies Act, 1956. 2. Modification of Orders to Place Advocate Commissioners Under OL's Control: The OL sought modification of the orders to direct the Advocate Commissioners to function under the overall control and superintendence of the OL. The OL contended that sections 448 to 453 of the Companies Act, 1956, mandate that the OL alone should act as the liquidator and that any committee of Advocates or private persons can only assist the OL. 3. Maintainability of the OL's Application: The court examined whether the OL could file an application to recall the court's order without obtaining prior approval or permission from the Company Court. It was held that the OL, being an officer of the court, cannot file such an application independently and must act in accordance with the directions of the Company Court. The OL's failure to obtain leave from the Company Court before filing the application constituted a grave act of impropriety. 4. Authority of the Company Court to Appoint Advocate Commissioners as Liquidators: The court considered whether the Company Court has the power to appoint Advocate Commissioners as liquidators. The OL argued that the omission of section 414 of the Companies Act, 1913, in the Companies Act, 1956, implies that private persons cannot be appointed as liquidators. However, the court noted that sections 448 to 453 do not diminish the inherent powers of the Company Court, which are preserved by rule 9 of the Companies (Court) Rules, 1959. The court held that the appointment of Advocate Commissioners as liquidators is permissible and has been recognized by higher courts, including the Supreme Court. 5. Contempt Proceedings Against the OL: The court initiated suo motu contempt proceedings against the OL for failing to file an affidavit as directed. The OL's justification for not filing the affidavit was deemed unsustainable. The court noted that the OL's non-compliance with its orders constituted ex facie contempt. However, considering the OL's unconditional apology, the court decided to let the OL off with a warning to strictly comply with future court orders. Conclusion: The court concluded that the OL has no locus standi or power to file an application to recall the earlier orders appointing Advocate Commissioners as liquidators. The application was dismissed on this ground. The contempt proceedings against the OL were closed with a warning to be more diligent in the future. There was no order as to costs.
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