1970 (12) TMI 60 - SC - Companies Law

Whether the appellant was not entitled to file an appeal against the order of the company judge directing sale of leasehold rights of the Golcha Properties (P.) Ltd. (in liquidation) in the land belonging to the appellant? Held that - The exercise of the power under section 457(1)(c) of the Act to sell the immovable and movable property of the company by public auction or private contract would certainly fall within the ambit of the rule 103 of the Companies (Court) Rules, 1959 which expressly provides for issuing of a notice of the summons to the petitioner on whose petition the order for winding up was made. It is implicit that if the directions which have to be given by the court would affect any person prejudicially he must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case. The High Court was thus clearly in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which leasehold rights said to have been created by her in favour of the company in liquidation were sought to be sold. Appeal allowed.

Summary

Issues:
- Entitlement to file an appeal against the order of the company judge directing sale of leasehold rights of a company in liquidation on land belonging to the appellant.
- Compliance with rules of natural justice by the official liquidator and the company judge.
- Interpretation of provisions under the Companies Act, 1956 regarding appeals in matters of winding up.

Analysis:
The Supreme Court judgment dealt with the issue of the appellant's entitlement to file an appeal against the order of the company judge directing the sale of leasehold rights of a company in liquidation on land belonging to the appellant. The appellant had not been given notice or an opportunity to be heard before the order was made. The High Court had held that the appellant was not entitled to maintain the appeal as per rule 139 of the Companies (Court) Rules, 1959. However, the Supreme Court emphasized that an appeal was competent under section 483 of the Companies Act, 1956, from any order made in the matter of winding up. The Court highlighted the importance of following the rules of natural justice, stating that the official liquidator and the company judge were bound to issue a notice to the appellant and hear her before making the order appealed against.

The judgment further discussed the role of the official liquidator under section 457(1)(c) of the Act, which allows for the sale of immovable and movable property of the company. Rule 103 of the Companies (Court) Rules, 1959, provides for the issuance of a notice of summons to the petitioner on whose petition the winding-up order was made, ensuring that any person prejudicially affected by the directions must be served with a notice. The Court emphasized that no order should be made affecting the rights of a party without affording them a proper opportunity to represent their case, in line with the principles of natural justice.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's order. The case was remanded to the High Court for disposal of the appeal in accordance with the law. The Court reiterated the importance of following the rules of natural justice and providing parties with the opportunity to be heard before making orders that directly affect their rights.