1960 (7) TMI 45 - HC - Companies Law

Summary

Issues Involved:
1. Whether the order made on 18th January, 1960, can be recalled, vacated, set aside, or modified by the court.
2. Whether the applicants are entitled to the inspection of the file of the proceedings of the liquidation and the statement of the liquidator.

Detailed Analysis:

Issue 1: Recall, Vacate, Set Aside, or Modify the Order of 18th January, 1960

The primary contention was whether the court had jurisdiction to alter, vacate, or recall the order dated 18th January, 1960. The applicants argued that an ex parte order affecting their rights should be subject to review, and they should be given an opportunity to object to it. They further contended that Rule 243(1) of the Companies (Court) Rules, 1959, which allows the official liquidator to apply ex parte, was ultra vires Article 14 of the Constitution of India, as it provided unfettered discretion.

The court held that, as a general rule, no court, judge, or master has the power to re-hear, review, alter, or vary any judgment or order after it has been entered or drawn up, except by way of appeal. The objective is to bring litigation to finality. This principle is consistent with previous judgments (Sarupchand Hukumchand v. Madhoram Raghumall AIR 1925 Cal 83 and In the matter of the Steel Construction Co. Ltd. [1933] 39 CWN 1159).

The court noted that the order of 18th January, 1960, did not adversely affect the rights of the applicants as it merely summoned them for examination under Section 477 of the Companies Act concerning the affairs of the company. There were no charges or allegations against the applicants, who were only required to furnish information. Rule 243(1) of the Company Rules allowed the official liquidator to move ex parte, and the court had exercised its discretion accordingly.

The court declined to express a view on whether Rule 243(1) was ultra vires Article 14, deeming it a matter for the court of appeal. Ultimately, the court held that it had no jurisdiction to vary, alter, or set aside the completed order.

Issue 2: Entitlement to Inspection of Liquidation File and Liquidator's Statement

The applicants contended that they were entitled to inspect the file of the proceedings of the liquidation and the liquidator's statement under Rule 360(1) of the Company Rules. They argued that they needed to inspect these documents to exercise their right to set aside the ex parte order, as they must know the basis of the complaint to challenge the order effectively.

The court found no substance in this argument, noting that the applicants were not parties to the application under Section 477 of the Companies Act and their rights were not affected by the order. Rule 243(1) allowed the official liquidator to apply ex parte with a statement of facts, and the purpose of Section 477 was to conduct preliminary and private inquiries to ascertain facts regarding the company.

The court cited the practice established in Gold Co., In re [1879] 12 Ch. D. 77, where the liquidator applied ex parte without legal evidence to keep proceedings secret from the person sought to be examined. The new Rules 243(1) and 243(2) adopted this practice, allowing the official liquidator to submit a signed statement instead of an affidavit to maintain confidentiality.

The court held that inspection under Rule 360(1) did not apply to the liquidator's statement, which was not legal evidence but confidential information for the court's consideration. Allowing inspection would defeat the purpose of Section 477, which aimed to gather information discreetly to assist in the winding-up process.

The court concluded that the applicants were not entitled to inspection as prayed. The other arguments raised by the counsel were deemed irrelevant given the court's findings.

Conclusion:

The applications were dismissed with costs. The court emphasized that applications for examination under Section 477 of the Companies Act, 1956, should follow the procedure laid down in Rule 243 of the Companies (Court) Rules, 1959. The applications of Pulin Krishna Roy, Satish Churn Law, Sudhir Chandra Nawn, and Sailendra Nath Sinha were all dismissed, with certification for counsel in each case.