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TMI Blog1960 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies (Court) Rules, 1959, hereinafter referred to as the Company Rules, and applied ex parte under rule 243(1) for private examination, inter alia, of the above named applicants under section 477 of the Companies Act, 1956. The summons was in accordance with rule 243, sub-rule (2) of the Company Rules accompanied by a statement signed by the official liquidator setting forth the facts upon which the application was based. It appears that on 18th January, 1960, G.K. Mitter J., who heard this ex parte summons upon hearing the attorney of the official liquidator and upon reading the order of winding up of the company dated 8th January, 1958, and the statement of the official liquidator with the annexure thereto, passed an order in Form No. no of the Company Rules that the above applicants amongst others be summoned to attend court on 22nd March, 1960 at 10-30 a.m. for the purpose of being examined under section 477 of the Companies Act concerning promotion, formation, trade, dealings, property, books, papers and affairs of the company and the said persons be required to bring with them books and papers as mentioned in the said order. The said order was duly drawn up and completed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an ex parte order the rights of a party are affected he can apply to have the order set aside and that no order should be made against and to the prejudice of another without giving opportunity to the other to object to it, it may be observed that (in my opinion) the order complained of did not adversely affect the rights of any of the applicants. The order simply summoned the applicants to appear before the court for the purpose of being examined under section 477 of the Companies Act concerning the affairs of the company and to produce certain books. There is no charge, no complaint or allegation against the applicants who are not parties to the application under section 477 of the Act--they are only required to furnish information with regard to the company, and secondly, this elementary principle is applicable only in the absence of any special legislative rule excusing notice (Woodroff J., S.M. Sudevi Devi v. Sovaram Agarwallah [1906] 10 CWN 306,310). Here, however, under rule 243(1) of the Company Rules the official liquidator was entitled to move ex parte. A witness summoned under this section is in a position different from an ordinary witness and must be summoned by summ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for notes of the deposition taken in private examination under section 477 of the Companies Act but there is no other rule providing protection for the liquidator's statement which accompanied the summons in Form No. 109. The applicants are not in the position of an ordinary witness, they have a higher right than an ordinary witness, they have right to say (a) that the order has been harsh and oppressive, (b) that the order is of inquisitorial nature, and (c) that the order is mala fide and unless the applicant is allowed to look into the official liquidator's statement he cannot take these points or, in other words, he is deprived of taking these points. This in substance is the entire argument on behalf of the applicants. I do not think there is much substance in the counsel's argument -- the fallacy is obvious because the argument proceeds on the assumption that the applicants are parties and entitled to the notice of the application under section 477 of the Companies Act and that their rights have been affected by the order of 18th January, i960 ; but it is not so, as I have already observed before, while dealing with the first question and I need not repeat again. Rule 243(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clerk, who thereupon issues an order, and the written statement cannot be got at by anybody, whereas an affidavit can," The above observations, it appears, have not been doubted by any court ever since. I respectfully adopt the reasonings of the learned Master of the Rolls. According to our new rules 243(1) and 243(2) the official liquidator also applies ex parte on summons in Form 109 which is accompanied by a statement signed by him setting forth the facts on which the application is based. So it appears that the new rules 243(1) and 243(2) of the Company (Court) Rules, 1959, have laid down and adopted the same procedure as referred to by the learned Master of the Rolls in Gold Co., In re (supra ) and it further appears to me that the framers of these new rules also intended that the same practice should be followed here. I say this because I find the procedure laid down in rules 243 (1) and 243(2) as entirely different from old rule 195 under the Indian Companies Act, 1913,now superseded. The old rule 195 provided that : "An application for the examination of a person or persons under section 195 of the Act shall be made ex parte to the judge by petition verified by the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfidential informations for the court's consideration. It is a matter entirely between the court and its officer. The applicant may well say to the judge that he had strong ground for suspecting that certain transactions were fraudulent and if proved would bring large sum of money and it was worthwhile spending some money for examination of certain witnesses to ascertain the facts. In such a case the court will exercise a discretion. In Gold Co., In re [1879] 12 Ch. D. 77, 85, Jessel M.R. said : "In fact the whole object of the section is to assimilate the practice in winding up to the practice in bankruptcy which was established in order to enable assignees, who are now called trustees, in bankruptcy to find out facts before they brought an action, so as to avoid incurring the expense of some hundreds of pounds in bringing an unsuccesful action, when they might, by examining a witness or two, have discovered at a trifling expense that an action could not succeed." I respectfully adopt these reasonings of the learned Master and hold that the applicants are not entitled to inspection as prayed. In this view of the matter the other arguments of the learned counsel do not arise and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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