1954 (9) TMI 13 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the appeal.
2. Interpretation of Section 202 of the Indian Companies Act.
3. Applicability of Section 45N of the Banking Companies (Amendment) Act, 1953.
4. Interpretation of Section 45H of the Banking Companies (Amendment) Act, 1953.
5. Procedural aspects and the stage of evidence in misfeasance proceedings under Section 235 of the Indian Companies Act.

Detailed Analysis:

1. Maintainability of the Appeal:

The respondents raised a preliminary objection to the maintainability of the appeal, arguing that the order did not determine the rights of the parties and thus was not a "judgment" within the meaning of clause 15 of the Letters Patent. The court held that the order by Bachawat J. did not determine any right or liability between the parties, as it was merely a procedural direction on the question of onus. Therefore, it was not a "decision which affects the merits of the question between the parties" and was not appealable under clause 15 of the Letters Patent.

2. Interpretation of Section 202 of the Indian Companies Act:

The appellants argued that the appeal was maintainable under Section 202 of the Indian Companies Act, which allows appeals from any order or decision made in the matter of winding up of a company. The court interpreted this section to mean that the right of appeal under Section 202 is co-extensive with the right of appeal under clause 15 of the Letters Patent. Hence, the order must be a "judgment" within the meaning of clause 15 to be appealable. The court cited previous decisions, including Levy Brothers and Knowles Ltd. v. Subodh Kumar Dey and Madan Gopal v. Sachindra, to support this interpretation.

3. Applicability of Section 45N of the Banking Companies (Amendment) Act, 1953:

The appellants also argued that the appeal was maintainable under Section 45N of the Banking Companies (Amendment) Act, 1953, which allows appeals from any order or decision of the High Court in a civil proceeding under this Act when the amount or value of the subject matter exceeds Rs. 5,000. The court held that the proceedings in question were under Section 235 of the Indian Companies Act and not a "civil proceeding" under the Banking Companies Act. Therefore, Section 45N did not apply to the order appealed from.

4. Interpretation of Section 45H of the Banking Companies (Amendment) Act, 1953:

The appellants contended that under Section 45H, once a prima facie case is made out by the liquidator, the onus shifts to the respondents to prove they are not guilty of misfeasance. The court clarified that "making out" a prima facie case means establishing it by legally admissible evidence, not merely disclosing it through allegations in the application. The court also noted that the liquidator had submitted to the order for trial on evidence and had filed supplementary affidavits, thereby taking upon himself the duty of proving the allegations by evidence.

5. Procedural Aspects and Stage of Evidence:

The court discussed the procedural history, noting that S.R. Das Gupta J. had directed the matter to be set down for trial on evidence, and the liquidator had complied by filing supplementary affidavits. The court held that the liquidator could not now claim that he was not bound to prove his allegations by evidence under Section 45H, as he had already submitted to the order for trial on evidence. The court emphasized that Section 45H modifies the rule about the onus of proof but does not enact any provision about the rights or liabilities of the parties.

Conclusion:

The court concluded that the order by Bachawat J. was not appealable under Section 202 of the Indian Companies Act or Section 45N of the Banking Companies (Amendment) Act, 1953. The appeal was dismissed with costs, and the costs of the liquidator were to come out of the assets of the company. The court also certified the case for two counsel.