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TMI Blog2001 (9) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. It is the case of the appellant that in accordance with the contract dated 25-6-1997 entered into between the respondent and ABB Lummus Globa B.V. ( the LGV ), (a company incorporated under the laws of the Netherlands), the LGV agreed to supply to the respondent non-Indian sourced equipment and materials required by the respondent-company for the Crude Refinery set up by the said respondent-company at Vadinar in Gujarat. In order to perform the said obligations, LGV entered into a sub-contract dated 16-4-1999 with certain requisitions with the appellant for procurement of valves, fittings, floges, etc. (the goods). It is further the case of the appellant that since the respondent-company was in financial difficulties, in view of the request made by the respondent-company and LGV in turn to the appellant to accommodate the respondent-company, the appellant agreed to extend credit facility for a period of 90 days from the date of shipment of goods to an amount of DM 18 million approximately, equivalent to US $ 10 million subject to the respondent-company giving an irrevocable and unconditional corporate guarantee to the appellant. Accordingly, vide deed of undertaking d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the work of sourcing non-Indian equipments and materials with LGV. The total value of the supply under the said contract is approximately US $ 598 million. LGV is to supply these materials from various international sources not necessarily from the Netherlands which was the base country of LGV. The payment procedure to be followed under the contract, was that the respondents would open letters of credit in favour of LGV which letters of credit would be utilised from time to time, to claim payments against invoices (and other shipping documents) in respect of supplies made under the said contract. It may be noted that the invoices submitted for negotiation under the letters of credit do not indicate the source of the supplies. Invoices are raised by LGV on the respondents, irrespective of the fact whether LGV supplied the material itself directly or procured the same from other sources . In other words, it is impossible for the respondents to know whether the goods have come from the petitioners or from other suppliers. The corporate guarantee annexed at Ex. C to the petition was furnished by the respondents as a comfort for LGV. It may be noted that the corporate guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending that the application was made for roving inquiry without any relevancy and, therefore, the application deserved to be dismissed. It was also contended that there was no contract between the appellant and the respondent-company. Therefore, also inspection cannot be given. 7. After hearing the learned counsel for the parties, the learned Company Judge, by the impugned order dated 24-4-2001, rejected the application mainly on the following grounds : Before the respondent-company can be directed to give inspection of the documents prayed for by the appellant, the appellant will have to prove that ( i )The appellant had supplied certain goods to LGV for which it had raised invoices on LGV. ( ii )Then LGV in turn supplied those very goods to the respondent-company and also raised the invoices for the same. ( iii )Thereafter, LGV has either not received payment or having received the payment has not made the payment to the appellant-company. The learned Company Judge then concluded that since none of these facts are before the Court, the documents which are sought for cannot be said to be relevant and/or having any bearing on the controversy involved in the company p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The respondent-company wants to avoid this situation and, therefore, the documents are not permitted to be inspected in spite of their direct relevance to the controversy involved in the company petition. 9.3-3 When the appellant is invoking the guarantee given by the respondent-company and the respondent-company has pleaded that it has made the payment to LGV, it is the duty of the respondent-company to show whether the payment has been made against the sub-contract between LGV and the appellant company. 9.4 Because the documents were in possession of the respondent-company and had direct relevance to the controversy in the petition, the appellant had demanded inspection of the documents, but the learned Company Judge required the appellant to prove certain facts which, when proved, would lead to the final orders and then the documents would not be required after that stage. In fact the documents are required before the company petition is heard for admission. 10. On the other hand, Mr. K.S. Nanavati, the learned counsel for the respondents, has vehemently opposed the appeal. Apart from the preliminary contention that the order under appeal is only a procedural order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst procedural orders passed by the Company Court. The ratio of the said decision was culled out by a three-Judge Bench of the Apex Court in Central Bank of India Ltd. v. Gokal Chand AIR 1967 SC 799 in the following words : "....Section 202 of the Indian Companies Act, 1913 confers a right of appeal from any order or decision made or given in the matter of the winding up of a company by the Court. In Shankarlal Aggarwala v. Shankarlal Poddar AIR 1965 SC 507 at p. 514 this Court decided that these words, though wide, would exclude merely procedural orders or those which did not affect the rights or liabilities of parties." (p. 800) 11.2 The learned counsel has also heavily relied on the observations made by their Lordships of the Supreme Court in paragraphs 112, 114 and 115 in Shah Babulal Khimji v. Jayaben D. Kania AIR 1981 SC 1786, wherein the Court examined the nature of interlocutory or intermediary orders against which an appeal would not lie. 11.3 In M. Manohar v. T.R. Mills (P.) Ltd. [1997] 88 Comp. Cas. 375 , a Division Bench of the Karnataka High Court has also taken a similar view that an appeal under section 483 does not lie against an interl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." The effective winding up of a company would commence after the final order of winding up is passed by the Court under section 443 of the Act, but that is not the legislative intent in the context of section 483 because otherwise even an order of admission of a winding up petition and for publication of the advertisement would be non-appealable. The provisions of section 441(2) of the Act have a bearing on this aspect, since they provide that once the order of winding up is passed, winding up shall be deemed to commence from the time of presentation of the petition for winding up. Hence, any order made or decision given after institution of a petition for winding up of a company is an order made or decision given in the matter of a winding up of a company. 14. The learned counsel for the respondent-company relied on the decision of this Court in Niranjan Jayantilal Tolia v. Official Liquidator [1985] 3 Comp. L.J. 468 (471) for the purpose of contending that in the matter indicates not incidental to the winding-up but is part of the winding up itself . That was a case where the question was whether an appeal would lie against a conviction pursuant to the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R.V. Algappa 1912 ILR 35 (Mad.) that even an interlocutory judgment which determines some preliminary or subordinate point or plea or settles some step without adjudicating the ultimate right of the parties may amount to a judgment. The Apex Court rejected both extreme interpretations and held that the correct tests were laid down by Sir White C.J. in Tuljaram Row s case ( supra ) minus the broader and the wider attributes adumbrated by Sir White C.J. in more explicitly by Krishnaswamy Ayyar, J. The observations of learned Chief Justice Sir Arnold White were analyzed and the Supreme Court laid down the following tests in order to assess the import and definition of the word judgment as used in clause 15 of the letters patent : "( i )It is not the form of adjudication which is to be seen but its actual effect on the suit or proceeding; ( ii )If, irrespective of the form of the suit or proceeding, the order impugned puts an end to the suit or proceeding it doubtless amounts to a judgment; ( iii )Similarly, the effect of the order, if not complied with, is to terminate the proceedings, the said order would amount to a judgment; ( iv )Any order in an independent proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 38(1) of the Delhi Rent Control Act, which read as under : "An appeal shall lie from every order of the Controller made under this Act to the Rent Control Tribunal (hereinafter referred to as the Tribunal) consisting of one person only to be appointed by the Central Government by notification in the Official Gazette." (p. 800) The Apex Court interpreted the aforesaid provisions in the following words "(3) The object of section 38(1) is to give a right of appeal to a party aggrieved by some order which affects his right or liability . In the context of section 38(1), the words every order of the Controller made under this Act , though very wide, do not include interlocutory orders, which are merely procedural and do not affect the rights or liabilities of the parties. In a pending proceeding, the Controller may pass many interlocutory orders under sections 36 and 37, such as orders recording the summoning of witnesses, discovery, production and inspection of documents , issue of a commission for examination of witnesses, inspection of premises, fixing a date of hearing and the admissibility of a document of the relevancy of a question. All these interlocutory order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the facts of the case before the Karnataka High Court in M. Manohar s case ( supra ), the learned Company Judge refused permission to a witness to refresh his memory with the help of notes which were permitted to be admitted in evidence, and the Court held that it was a procedural order which did not affect the rights of the party. In our view, even on the basis of the interpretation that we are adopting, appeal would not lie against such an order as the decision not to permit a witness to refresh his memory with notes cannot be said to be an order affecting the rights of any party. Similarly, the decision of the Karnataka High Court in Metro Malleable Mfrs. (P.) Ltd. v. Canara Bank [1981] 51 Comp. Cas. 616 , does not carry the respondent-company s case any further as in that case the Court held that the order granting application under order 1, rule 10, of the Code of Civil Producure for impleading another party in the petition for winding up cannot be said to be an order affecting the rights of the respondent-company. 20. However, the reasoning given by another Bench of the same Court in Vijaya Bank Employees Housing Co-operative Society Ltd. v. C. Srinivasa Raju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reject an application for inspection and production of certain documents, but the learned Company Judge has rejected the application on the ground that an order for inspection and/or production of these documents cannot be passed unless the petitioning creditor first proves certain facts. The learned Company Judge then held that those preliminary facts were not proved and, therefore, inspection and/or production of the documents cannot be ordered. The findings given by the learned Company Judge that these preliminary facts are not proved virtually amounts to dismissal of the winding up petition, for all practical purposes. As explained hereinafter, those documents are not only relevant but they are also vital and go to the root of the dispute between the parties. If inspection and production of those documents is not granted, valuable rights of the appellant would be affected. Since the appeal under section 483 is not against the judgment, the test whether the order determines the rights and liabilities of the parties is not to be applied, but the limited test to be applied is whether the order affects any rights or liabilities of the parties. In the context of the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant called upon the respondent-company to give inspection of the documents under which the respondent-company had received the goods from the LGV, so that the goods covered by the invoices raised by LGV on the respondent-company could be tallied with the goods covered by the invoices raised by the appellant on the LGV. It cannot, therefore, be said that the documents of which inspection was sought by the appellant were irrelevant to the controversy which is the subject-matter of the petition. 24.3 Similarly, when the deed of undertaking required the respondent-company to pay the appellant without any protest or demur in case the respondent-company had not paid the amount to the LGV and when it is the case of the respondent-company that it had made payment to the LGV, the documents showing payment by the respondent-company to the LGV are certainly relevant. 25. In view of the above factual aspects, it is clear that the following three documents at item Nos. ( a ), ( b ) and ( c ) in the prayer clause of Company Application No. 127 of 2001 are relevant to the controversy in Company Petition No. 265 of 2000 : ( a )Letter of credit opened in favour of LGV. ( b )Proof of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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