9911796707
TMI Blog1957 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... kh, advocate, Sri Raghav Ram Varma, advocate, and Sri B. L. Tandon, chartered accountant (impleaded in this appeal as respondents Nos. 3 to 5 and in the petition as respondents Nos. 2 to 4 and hereinafter referred to as the liquidators) as official liquidators of the company that had been ordered to be wound up. In February, 1956, under the directions of the District Judge an advertisement was published in the papers inviting tenders for taking the mills on lease. Tenders were submitted but none was found to be acceptable. A fresh advertisement inviting further tenders was then published and in response to it four tenders were received including one by Messrs. G. D. Mehrotra and Co., the petitioner (who is now respondent No. 1 and will hereinafter be referred to as the respondent) and one by Ramlal Raja Ram, the appellant (who was impleaded as respondent No. 5 in the original petition and will hereinafter be referred to as the appellant). The respondent offered to pay a monthly rental of Rs. 22,500 but later on submitted by way of clarification that in addition he would be prepared to pay some amount for the depreciation of the mills as and when determined by the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the office of the mills was handed over to the respondent on the same date. According to the liquidators, this was done because the respondent insisted that it being a very auspicious day the delivery of possession must be started on that date. The respondent, on the other hand, contends that as possession had been directed to be delivered to him the delivery of possession was started in ordinary course on that very date. Thereafter disputes arose between the respondent and the liquidators on several points including the preparation and verification of the lists of properties over which possession was to be delivered, the settlement of the terms of the lease and the final approval of the draft lease. The respondent had, however, in compliance with the orders of the District Judge, deposited a sum of Rs. 57,000 on account of two months' rent, with the liquidators. On the 18th September, 1956, the respondent applied to the District Judge pointing out that he had complied with the conditions imposed in the order of the 3rd of September, 1956, and had even purchased the requisite general stamp for the execution of the lease. He prayed that the liquidators be directed to execute the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders and workers if the properties and assets of the company were handed over to the respondent or a lease was executed in his favour. They recommended that the orders dated the 3rd of September, 1956, and the 6th of September, 1956, be modified and that they be permitted to return the security money deposited by the respondent to him. They pointed out that in the order of the 3rd of September, 1956, they had been directed to take steps for the sale of the mills in case the lease did not materialise and sought directions in the matter. A copy of this report of the liquidators was given to the counsel for the respondent and when the report came up before the District Judge for consideration on the 1st of October, 1956, the liquidators as well as the counsel for the respondent were present. The counsel addressed some arguments to the court but then prayed that time be given to him, for contacting his client for instructions. This request was not granted and the learned District Judge proceeded to make the first of the two orders passed on the 1st October, 1956, the validity of which was challenged by the appellant in the writ petition out of which this appeal has arisen. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the District Judge, Banaras, dated the 18th September, 1956, and the 1st of October, 1956, and the lease alleged to have been executed on the 1st of October, 1956, in favour of Ramlal Raja Ram. (2)Issue a suitable direction, order or writ including a writ in the nature of mandamus directing the District Judge of Banaras to execute a lease on the terms and conditions contained in his order dated the 3rd September, 1956, in favour of the petitioner and to deliver possession of the entire mills to the petitioner. (3)Issue a suitable direction, order or writ including a writ of mandamus directing the District Judge of Banaras to take back possession of any portion of the mills that may have been delivered to Ramlal Raja Ram. (4)Issue a suitable direction, order or writ in the nature of mandamus directing the District Judge not to disturb the possession of the petitioner over that portion of the mills in respect of which possession had been delivered to the petitioner. (5)Issue any suitable interim order, direction or writ including a writ in the nature of mandamus for the pendency of this petition not to give effect to the lease alleged to have been execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the appellant. They were : (1)That the orders of the District Judge dated the 1st of October, 1956, were really administrative or executive orders. They were not judicial or quasi-judicial orders. They could not therefore be interfered with under article 226 of the Constitution. (2)That alternatively the respondent had other adequate remedies equally speedy and efficacious. If the orders of the 1st of October were really judicial or quasi-judicial orders he would have gone up in appeal against them. If the respondent's contention was correct and there was a "completed contract" in his favour which could be specifically enforced it was open to the respondent to approach the regular civil court for the enforcement of the contract. These alternative remedies being available it was not open to the respondent to invoke the jurisdiction of the High Court under article 226 of the Constitution. (3)The writ jurisdiction of the High Court was not meant for enforcing contractual rights. Before the petition had been filed rights of the appellant had come into existence. A lease had actually been executed in his favour and he had been put in possession of the property. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lease in favour of the appellant. There was no question of the liquidators acting mala fide or of the orders of the 1st of October being improper or without jurisdiction. (4)That everything which the liquidators had said in their report of the 1st of October, 1956, was fully known to the respondent before the orders of that date were passed by the District Judge. The counsel for the respondent was called and heard. There was, therefore, no question of any principles of natural justice being violated or of the orders being passed without affording the respondent an opportunity of having his say. The learned Judge repelled the first two preliminary objections raised by the appellant by saying that the impugned orders were really judicial or quasi-judicial orders, that they were not appealable under section 202 of the Companies Act and that a regular suit would not have afforded an equally efficacious and adequate remedy against the grievances of the respondent. He held that the existence of an alternative remedy was not an absolute bar to the maintainability of a petition under article 226 of the Constitution. He did not deal in his judgment with the third preliminary object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant that the third preliminary objection raised against the petition was really fatal to it and deserved more serious consideration. That objection alone was enough for the rejection of the petition even if the decision of all the other questions raised was assumed to be in favour of the respondent. Briefly put, the argument in connection with the aforementioned objection is this. It is established beyond doubt that before the petition was filed a proper lease in respect of the mills had been executed by the liquidators and the appellant. The appellant had also been put in possession of almost the entire property leased out. After the petition was filed an order was obtained that the status quo be maintained. That order could not however affect either the lease which had already been made or the possession which had been handed over to the appellant. Subsequently the lease was allowed by the court to be registered and the registration related back to the date of its execution. The appellant could, therefore, claim to be in actual possession of practically the entire property on the basis of a valid lease properly executed and registered. The utmost which the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court under article 226 of the Constitution to quash either the order directing the respondent to satisfy the liquidators about his suitability or the order revoking the sanction of the proposal of the respondent's lease. Nor can this court under that article direct the District Judge to resanction the lease in the respondent's favour. In the circumstances none of the reliefs claimed by the respondent could be granted and the petition was really a futile one. It should have been dismissed leaving the respondent to pursue any other remedy which he may have been advised to pursue for the redress of his real or apparent grievances. In his reply to this contention of the appellant, the learned counsel for the respondent urged four points: (1)The District Judge was in charge of the liquidation proceedings. He had appointed the liquidators. The liquidators were, therefore, his agents. For all practical purposes there was virtual identity between the liquidators and the court. Every act of the liquidators could, therefore, be deemed to be an act of the court. If the liquidators had entered into a contract to make a lease in favour of the respondent the contract must be held to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the property and is working the mills in accordance with the terms of the lease. Before the lease can be cancelled or quashed on any ground, difficult and complicated questions of fact and law will have to be gone into. It appears not to be possible to decide these questions without further evidence, and in our opinion a proceeding under article 226 is not appropriate for this purpose. The contention that the lease in favour of the appellant can be quashed under article 226 of the Constitution because it is an act of the court, the liquidators being its agents, appears to us to be entirely unacceptable. It is true that when a company is ordered to be wound up the liquidation proceedings have to be conducted under the supervision of the court. The liquidators can be appointed and removed by the court and have to act under its control. The liquidators, however, possess a status recognized by statute which defines their powers and functions. These powers and functions are not identical with the powers and functions of the court. The mere fact that some of their powers can be exercised by the liquidators with the sanction of the court is not enough to establish an identity bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 226 of the Constitution, therefore, appears to be well founded. Under section 179 of the Indian Companies Act, 1913, official liquidators have the power to carry on the business of the company so far as it may be necessary for the beneficial winding up of the same and also to do such other things as may be necessary for the winding up of the affairs of the company and distributing the assets. The exercise of the power is certainly subject to the sanction of the court. The power, however, vests in the liquidators and has to be exercised by them. The court has only to accord its sanction or to refuse the same. Even if the court sanctions a proposal made by the liquidators under the provision the liquidators are not bound to carry it out. It is to be open to them to drop the proposal so sanctioned and to put up other proposals before the court for sanction. They cannot be compelled to act upon any proposal against their wishes if they consider it to be contrary to the interests of the company. For instance, it is not open to the court to compel them to consent to a compromise or arrangement with a creditor or contributory ( Pearson's case, East of England Banking Co., In re [1872 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er appeal was that this court should quash the orders of the District Judge and direct him to exercise his discretion in a particular manner, viz., to allow the lease to be given to the respondent without any satisfaction about his suitability and to resanction the lease that was proposed to be executed in his favour. He also wanted the court to compel the liquidators to execute the lease in his favour even though they felt that it would not be in the interest of the company to do so. It is difficult to see how all this could be done either by a writ of certiorari or by a writ of mandamus. The lease in favour of the appellant being there, and he having secured possession of the leased property in pursuance of it, he can claim to be entitled to continue in possession as long as the lease lasts. The respondent however wants that the mills should be leased out to him and that he should be put in possession of them. Realising that what the respondent wanted could not be obtained by a writ of certiorari his learned counsel has urged that a writ of mandamus should be issued requiring the appellant to give up possession and requiring the court and the liquidators to take back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding the office in question .A mandamus will not lie unless the election can be shown to be merely colourable." They, therefore, found themselves unable to: "...see why in principle there should be a distinction made between such a case and the case of a person, who has, apparently, entered into bona fide possession of a property without knowledge that any person had been illegally evicted therefrom." They, therefore, declined to issue a writ of mandamus directing the party in possession to leave it and hand it over to the evicted person. In view of what was laid down in this case it appears to us that it is not open to this court to issue a writ of mandamus or an order or direction in the nature of mandamus for the purpose of dispossessing the appellant or putting the respondent in possession unless it is established by the respondent that the appellant has been guilty of collusion or that his lease or possession in pursuance of it are colourable transactions. In this case, however, though it was alleged in the petition that the liquidators had acted mala fide, the petition and the affidavit filed in support of it do not contain even a suggestion that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad granted a prospecting licence and a lease of that land in favour of the respondent" who wanted to interfere with the petitioner's right. The Government as well as the respondent were, therefore, directed by a writ of mandamus not to interfere with the petitioner's occupation of the land. The land in that case was in the possession of the petitioner and there was therefore no question of another person being dispossessed by a writ of mandamus. It does not, therefore, appear to be possible in proceedings under article 226 of the Constitution, either to order dispossession of the appellant or to direct that the respondent be put in possession of the mills. Nor can the liquidators be directed under article 226 of the Constitution to execute a lease in favour of the plaintiff even if it be assumed that there was a valid and binding contract between them and the respondent for the making of the lease. It has not been suggested that such a direction to execute that lease can be made by a writ of certiorari or prohibition. For this purpose also it is said that a writ of mandamus is the proper remedy. It is however well settled that a writ of mandamus cannot be issued to enfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us." The observations obviously do not apply to the present case because the liquidators cannot be held to have entered into any contract with the respondent in pursuance of any statute nor can it be said that the contract imposes upon them a public duty which can be enforced by a writ. The case of Bristol Rail Co' s case ( supra ) is not available to us but from the note about it on page 86 of Halsbury's Laws of England it appears that in that case a railway company had agreed to pay a certain amount in settlement of a claim for damages as the agreement had been made under seal which could not be. enforced by action. A writ was, therefore, issued to compel the railway company to make the payment. We do not see how the case can be of any help to the respondent. Reference was also made to two other cases, Nuruddin Ahmad v. State of Assam ILR [1955] Assam 510 and Stale of Orissa v. Madan Gopal Rungta [1952] SCR 28. These cases, too, appear to be of no assistance to the respondent. In the Orissa case an interim direction had been issued directing the State of Orissa to refrain from disturbing the petitioner's possession for three months, and it was held by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in English law." The powers of the court under article 226 are wide but they are not untrammelled. These powers have to be exercised subject to a sound judicial discretion, and it is not possible for the court to ignore the practice that obtains and the rules that are followed in the country where writs had their origin. It is not necessary for the court to pin down the respondent to the reliefs which he claims and if it is found that relief can be given in any other form the court will not hesitate to grant it. In deciding what relief can be granted to a petitioner under article 226 of the Constitution in the circumstances of a particular case the court has, however, to be guided by the "broad and fundamental principles" which regulate the grant of writs in English law. Now the main reliefs claimed by the respondent in this case are ( i ) the quashing of the orders, dated the 28th September and the 1st October, 1956, and the lease in favour of the appellant; ( ii ) a direction that the liquidators should execute a lease in favour of the respondent; and ( iii ) dispossession of the appellant and putting the respondent in possession." No writ in any recognised form can be issued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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