1968 (6) TMI 24 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the appeal by a creditor who did not appear in the proceeding for sanction of sale.
2. Whether the appellant, as a creditor, was entitled to challenge the order sanctioning the sale.
3. Whether the appellant could maintain the appeal with leave of the court.

Issue-wise Detailed Analysis:

1. Maintainability of the appeal by a creditor who did not appear in the proceeding for sanction of sale:
The primary issue was whether a creditor, who did not appear before the company judge during the sanction of the sale of a company's assets, could maintain an appeal against the order sanctioning the sale. The court emphasized that the right of appeal is a statutory right and not inherent. According to section 483 of the Companies Act, 1956, an appeal lies against any order made in the matter of winding-up of a company. However, the section does not explicitly state who can appeal. The court referred to the general principle that an appeal can only be maintained by a party to the proceeding or with the leave of the court. The appellant in this case was not a party to the proceeding for sanction of the sale and did not appear before the company judge, thus failing to qualify to maintain the appeal as of right.

2. Whether the appellant, as a creditor, was entitled to challenge the order sanctioning the sale:
The appellant argued that being a creditor, he was aggrieved by the sale at an inadequate price and hence entitled to challenge the order. However, the court held that merely being a creditor does not entitle one to appeal unless they are a party to the specific proceeding. The appellant was a party to the winding-up petition but not to the proceeding for sanction of the sale. Each proceeding in the winding-up process is independent, and being a party to one does not automatically make one a party to another. The appellant did not participate in the proceeding for sanction of the sale, thus he was not entitled to challenge the order.

3. Whether the appellant could maintain the appeal with leave of the court:
The court considered whether the appellant could maintain the appeal with leave of the court. The appellant applied for leave to appeal only after the objection to his maintainability was raised during the hearing. The court noted that the appellant had ample opportunity to appear before the company judge but failed to do so. The appellant was aware of the sale proceedings and could have availed himself of the provisions under section 457(3) of the Companies Act or Rule 230 of the Companies (Court) Rules, 1959, to make himself a party to the proceeding. The appellant's failure to take timely action and the absence of any satisfactory explanation for this failure led the court to reject the application for leave to appeal. The court also highlighted that the grounds raised in the appeal were not mentioned in the letters addressed by the appellant to the official liquidator and the company judge, indicating a lack of diligence.

Conclusion:
The court concluded that the appellant was not entitled to maintain the appeal as he was not a party to the proceeding for sanction of the sale. Furthermore, the application for leave to appeal was rejected due to the appellant's inaction and lack of diligence. Consequently, the appeal was dismissed with costs, and the ad-interim relief granted earlier was vacated.