1980 (2) TMI 181 - HC - Companies Law

Issues Involved:
1. Jurisdiction of the Registrar under the Companies Act, 1956.
2. Validity of the impugned letter dated October 7, 1978.
3. Compliance with the principles of natural justice.
4. Review jurisdiction of the Registrar.
5. Legal rights of the petitioner based on the communication dated April 26, 1978.
6. Validity of ex post facto hearing or de novo hearing.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Registrar under the Companies Act, 1956:
The petitioner questioned the jurisdiction of the Registrar, acting under the Companies Act, 1956, to issue the impugned letter dated October 7, 1978, cancel his previous order recording satisfaction of the charge created in favor of the bank, and reopen the question of satisfaction of the charge. The petitioner contended that the Registrar, being a creature of the Act, could not exercise review jurisdiction as no such power had been conferred on him by the Act.

2. Validity of the Impugned Letter Dated October 7, 1978:
The impugned letter dated October 7, 1978, which canceled the order recording satisfaction of the charge and initiated a review proceeding to adjudge afresh whether the charge was satisfied, was challenged as violative of the audi alteram partem rule. The petitioner claimed that the Registrar's order was invalid due to the lack of prior notice and opportunity to be heard.

3. Compliance with the Principles of Natural Justice:
The petitioner argued that the order of cancellation was bad as no previous hearing was afforded to the petitioner, making it violative of the principles of natural justice. The principles of natural justice, engrafted in section 138(2) of the Act, required the Registrar to give prior notice and opportunity to show cause before making any order affecting the rights of the parties. The court held that the Registrar, being a quasi-judicial authority, was bound to observe the principles of natural justice.

4. Review Jurisdiction of the Registrar:
The petitioner contended that the attempt to reopen the case was an endeavor to review the earlier order, which was not permissible in the absence of a provision for review in the Act. The court held that the Registrar's action was not a review proceeding but an attempt to rectify the invalidity in the first proceeding by providing a full and fair de novo hearing.

5. Legal Rights of the Petitioner Based on the Communication Dated April 26, 1978:
The petitioner claimed that the communication dated April 26, 1978, created a legal right in its favor, stating that the charge stood satisfied and no charge was outstanding against the petitioner as per the records. The court examined whether the petitioner had acquired any legal right by virtue of this communication and concluded that the communication was made in violation of the principles of natural justice, making it invalid.

6. Validity of Ex Post Facto Hearing or De Novo Hearing:
The court considered whether the invalidity of the initial proceeding could be cured by a full and fair de novo hearing. The court referred to various precedents and held that a breach of natural justice in the first instance could be rectified by a full and fair de novo hearing by the same authority. The court concluded that the Registrar was competent to proceed and dispose of the matter, and the impugned order of reopening the case was valid.

Conclusion:
The court dismissed the application, holding that the proceeding was valid and the Registrar was competent to dispose of the matter in accordance with law. The court emphasized that the principles of natural justice could be cured by a full and fair de novo hearing, and the Registrar's action was not a review but a rectification of the initial invalid proceeding. The court left other points urged by the parties open for determination by the Registrar.

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