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TMI Blog1947 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision is now being challenged in this appeal. It was contended on behalf of the appellant that this Court had jurisdiction to order public examination of an ex-director of a company even in cases of voluntary liquidation and that the provisions of section 196 of the Indian Companies Act were not restricted only to cases where the company had been compulsorily wound up. Reliance was placed on the provisions of section 216 of the Act. The relevant portion of this section is in these terms : "The liquidator or any contributory or creditor may apply to the Court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls, staying of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court " It was argued that the Court could exercise all or any of the powers which it possesses if the company was being wound up by the Court, on an application made by a voluntary liquidator. For the construction sought to be placed on this section by the learned counsel a Bench decision of the Bombay High Court in the case of Newroji Pudumji v. Laxman Mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation of the company, or by any director or other officer of the company, in relation to the company since its formation, the Court may, after consideration of the application, direct that any person who has taken any part in the promotion or formation of the company, or has been a director, manager or other officer of the company shall attend before the Court on a day appointed by the Court for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to his conduct and dealings as director, manager or other officer thereof. (2)The official liquidator shall take part in the examination and for that purpose, may, if specially authorised by the Court in that behalf, employ such legal assistance as may be sanctioned by the Court." From the phraseology employed in the section it appears that it is a condition precedent for the exercise of jurisdiction conferred by the section on the Court that the official liquidator should have made an application to the Court stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company. The Court can direct public examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The language of section 216, therefore, cannot be construed in the manner in which it was construed by the Bombay decision. Section 216 enables a voluntary liquidator to apply to the Court to determine any question arising in the winding-up of a company, or to exercise, as respects the enforcing of calls, staying of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court. As I read the section in plain terms, by it powers have been given to the Court at the instance of a voluntary liquidator to enforce calls, stay proceedings or help him in any other matter, which can only mean matters similar to the enforcing of calls, etc . These words can only be read ejusdem generis with the enforcing of calls and the matters following it. The public examination of a promoter or director of a company cannot be said to be a matter similar to the enforcing of calls or staying of proceedings, etc . It is the exercise of ordinary functions of a Company Judge and not the exercise of his extraordinary functions that seem to have been contemplated in section 216 of the Act. In any case, section 216 of the Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as now expressly provided in sub-section (3) of section 182 of the English Act, then there is absolutely no reason for not construing section 177B(2) read with section 196(1) and (2) of the Indian Act on similar lines and for holding that on this point the law in India and England is the same. In Ex parte George Staplyton Barnes [1896] A.C. 146 , the House of Lords considered section 8, sub-section (3), of the Companies Act, 1890, which was a provision identical in terms with section 177B(2) of the Indian Act and similar to section 148 of the English Act of 1908 on which the Indian Act was founded. The House of Lords in that case ruled that a Court has no jurisdiction to direct any person to be publicly examined unless the official receiver has made a further report from which it appears that in his opinion a fraud has been committed by a person in the promotion or formation of the company, or by a director or other officer of the company in relation to the company since its formation. It was further observed that the power to direct a public examination of the persons mentioned in sub-section (3) did not apply to any one of them against whom a prima facie case of fraud has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by any director, or other officer of the company, in relation to the company since the formation thereof, and any other matters which in his opinion it is desirable to bring to the notice of the Court." "My Lords, the next sub-section, upon which the whole question turns begins with these words: 'The Court may, after consideration of any such report.' Now, the first question which arises is as to a point on which Mr. Ingle Joyce relies: he says he relies upon the literal meaning of the words. I confess, to my mind, reading those words as I have read them, it seems to me reasonably plain that the word 'such' there refers to the last preceding provision, and that what the draftsman was doing was this, after having provided for these general reports which have reference to the status and conduct of the company and its affairs he goes on to provide that where a specific report has been made with reference to some person who has committed a fraud, the Court is then invested with a new jurisdiction. 'The Court may, after consideration of any such report, direct that any person who has taken any part in the promotion or formation of the company, or has been a director or officer of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that sense incriminated by the official receiver, B can be summoned and made subject to all these consequences, although no preliminary charge of fraud has been made against him at all, the whole thing becomes irrational and unintelligible." The learned Lord towards the concluding portion of his judgment made the following further observations : "It seems to me that it follows as essential to the jurisdiction of the Court that there should be a preliminary finding, which is the foundation of that jurisdiction, namely, that fraud has been committed by the individual person who is pointed out by the report, and, in the absence of that finding, I am of opinion that the Court would have no jurisdiction." Lord Watson and Lord Herschell expressed similar opinions. This case very strongly supports the interpretation that I place on the provisions of sections 216, 196 and 177B of the Act. In In re John Tweedle Co., Ltd. [1910] 2 K.B. 697 , the Court of Appeal made similar observations on the provisions of section 148, of the Companies (Consolidation) Act, 1908, which I have already pointed out is in terms identical with sections 177B and 196 of the Indian Act. It was there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form as officers of the Court, and they must act on their own responsibility and not under the control of the Board of Trade. Stiebel's Company Law and Precedents, Edition 3, Vol. 2, at page 1128, discusses this matter under the heading "Differences between Compulsory and Voluntary Winding-up." The following quotation may be cited with advantage: "The main distinctions between a voluntary winding-up, whether under supervision or not, and a compulsory winding-up are that in the former the official receiver is never liquidator. There is no report or further report by the official receiver, and most important of all, there can be no public examination." For the reasons given above, I am of the opinion that the learned Single Judge was right in his decision that in a voluntary winding-up an application for public examination of a director could not be made under the provisions of section 196 of the Indian Companies Act, The view that the learned Company Judge took is fully supported by English law on the subject and by the interpretation that I have placed on the various provisions of the Act bearing on the subject. The result, therefore, is that this appeal cannot succeed and I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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