1953 (3) TMI 8 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the appeal regarding costs under clause 15 of the Letters Patent.
2. Validity of the retainer of solicitors after the company went into liquidation.
3. Proper representation of the first defendant company during the hearing.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal Regarding Costs:

The primary question raised was whether the appeal concerning the order of costs is maintainable under clause 15 of the Letters Patent. The appeal was against a decree that dismissed the suit and deprived the first defendant company of its costs. The court clarified that every decree under the Civil Procedure Code must constitute a judgment under clause 15, as it determines the rights or liabilities of the parties. The court referenced the definition of "decree" in the Civil Procedure Code, emphasizing that it conclusively determines the rights of the parties, including costs. Therefore, a decree dealing with costs constitutes a judgment, and an appeal against such a decree is maintainable.

The court cited several precedents to support this view, including *Ranchordas Vithaldas v. Bai Kasi*, where it was held that an appeal lies from an erroneous order for costs. The court also referenced *Khushal v. Punamchand* and *Laxmibai v. Radhabai*, which upheld the principle that an appeal is permissible under the Civil Procedure Code from a decree for costs. The court dismissed the contrary view presented in Sir Dinshah Mulla's Commentary on the Civil Procedure Code, noting that the Madras decision in *Saravana Mudaliar v. Rajagopala Chetty* had been overruled by *Kulasekara Naicker v. Jagadambal Ammal*.

2. Validity of the Retainer of Solicitors After Liquidation:

The court examined whether the retainer of the solicitors, engaged by the first defendant company, ended when the company went into liquidation. It was undisputed that the solicitors were properly engaged to defend the suit. The court needed to determine if the retainer ended without the company revoking it, merely due to liquidation. The court noted that while the authority of the directors ceases upon liquidation, the retainer given by the directors does not automatically end.

The court referenced Cordery's Law relating to Solicitors, which states that a retainer ceases on the company's dissolution, not liquidation. The Privy Council's decision in *Dawsons Bank Ltd. v. Nippon Menkwa Kabushaki Kaisha* was also cited, which clarified that liquidation does not invalidate the authority given to solicitors by the directors. The court concluded that the retainer continued unless explicitly withdrawn by the liquidator, which had not occurred in this case.

3. Proper Representation of the First Defendant Company:

The court addressed whether the first defendant company was properly represented during the hearing. The learned Judge had deprived the company of its costs, believing it was not properly represented as Mr. Bhagwati, counsel for the company, lacked instructions from the liquidator. The court clarified that it is concerned with whether a party is properly represented, not who gives instructions to the advocate. As the solicitors properly represented the company and the retainer continued, the company was properly represented.

The court also noted that costs incurred prior to the hearing date needed to be addressed, regardless of the representation on the hearing date. Since the retainer continued and counsel was properly briefed, the plaintiffs should have been made to pay the costs of the first defendant company.

Conclusion:

The court modified the decree, directing the plaintiffs to pay the costs of the suit to the first defendant company. Additionally, since the plaintiffs failed in the appeal, they were also ordered to pay the costs of the appeal to the appellants.