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TMI Blog2013 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... reof, at a monthly retainership prescribed in the said order. It is submitted that certain advocates tendered their resignations from the Panel of Advocates and at present, there are only four panel advocates defending all cases on behalf of the Official Liquidator, out of which one advocate is looking after cases pending before the Labour Court, Small Causes Court and other Courts. It is stated in the Report that in the year 1997-98 matters of Amruta Mills Ltd. (in liquidation) were listed for hearing. Several matters were pending in respect of the leased deeds executed in favour of the Companies (in Liquidation), more particularly Textile Mills. The Official Liquidator has, in paragraph 8 of the Report, referred to an oral direction given by a Single Judge (Coram: H.L. Gokhale, J - as His Lordship then was) to entrust the matter to Mr. Roshan Desai (hence-forth referred as "the concerned advocate") who was appearing for several Banks and was well conversant with land transaction matters. It is stated that in view of the aforesaid, these matters were entrusted to the concerned advocate. It is further stated in the Report that in the case of Vitta Mazda Ltd. (in Liquidation) the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmedabad Mills Co. Ltd. & Vijaya Mills Co. Ltd. ULC matters. (h) The Ahemdabad Manufacturing & Calico Mills Co. Ltd. 5. The Official Liquidator has stated in paragraph 22 of the Report, that an objection was raised regarding the appearance of concerned advocate in the matter of Mardia Steel Ltd. (In Liquidation), therefore, this Report is filed for ratifying the action taken by the Official Liquidator in entrusting the briefs to the concerned advocate as Special Arguing Counsel. In paragraph 23 it is mentioned that if the Court so directs, the Official Liquidator, will obtain prior approval before any brief is entrusted to the Special Arguing Counsel, and in case the brief is entrusted 'immediately', looking to the urgency of the matter, the Official Liquidator will seek ratification of the action of entrusting the brief. 6. Upon the present Report dated 27-12-2011, this Court (Coram: K.M. Thaker, J) passed an order on 29-12-2011, which is reproduced hereinbelow: "The applicant - Official Liquidator has taken out present report dated 27.12.2011 seeking below mentioned direction:- "24 (a) This Hon'ble Court may be pleased to ratify the action taken by the Official Liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not in the sanctioned panel, be ratified. 10. Unless and until the complete details of all the matters in which services of advocate/s has/have been engaged in such manner, i.e. except from the sanctioned panel, and unless the details of the terms and conditions on which the services have been engaged are set out in the application, the request cannot be considered. 11. It is beyond comprehension as to why the OL should not have mentioned such relevant details in present report. 12. It is also beyond comprehension as to why the decision was taken without informing the Court and without seeking sanction from the Court at the time when the ' services of advocate/s, whose names are not mentioned in the sanctioned panel, was/were being engaged. 13. Since now such facts have come to the notice of the Court and since it prima-facie appears that the action are contrary to and in breach of the applicable Rules and also the Scheme, the Court considers it appropriate to direct the OL to place on record all details of all such matters where advocates/s has/have been engaged by the OL, without sanction of the Court, by fixing terms directly and not from the sanctioned panel. 14. It app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or is incorrect and permission and approval of the Hon'ble Court in the matter relating to Company Law and Liquidation approval and permission of the Hon'ble Court is mandatory." (emphasis supplied) 8. In paragraph 10 of the report, it is stated thus:- "10. So far as Lease matters in respect of land are concerned, the details is given under what circumstances the matters were entrusted to Mr. R.M. Desai, Advocate. In support thereof, the Official Liquidator begs to annex copies of the letter dated 9th March, 1999 and 18th November, 1999 at Annexure "B", which clearly indicates that as per the orders of the Hon'ble Court, Shri R.M. Desai, Advocate was authorized to appear and conduct the matter for and on behalf of the Official Liquidator." 9. No other explanation has been rendered in support of the prayer for ratifying the action of the Official Liquidator, appointing the concerned advocate as Special Arguing Counsel. 10. This Court was not satisfied by the explanation given by the Official Liquidator in the above-mentioned Report, which led to passing of the order dated 01-02-2012, (Coram: K.M. Thaker, J.) that is reproduced hereinbelow: "1. Despite the opportunity, unt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll satisfactorily explain the reasons why the appointment/s was/were made at the relevant time without prior approval/sanction. 10. Further more, the details of each of the case numbers i.e. OLR numbers and/or numbers of OJCA and/or numbers of the company application and/or numbers of company petition etc. in which appointment/s in such manner are made shall be mentioned. 11. The date on which the appointment was made shall also be mentioned and the reason why in each of the cases appointment/s was/were made without approval or sanction shall also be mentioned (case wise) and the delay in taking out the application to inform the court and to place on record the justification for such decision/appointment and explaining the circumstances which required such appointment on urgent basis without prior approval or sanction and also the reason explaining delay shall also be placed on record. 12. The names of the advocates who are appointed in such manner i.e. without prior sanction and approval of the Court in each of the cases shall also be mentioned. 13. S.O. to 27/02/2012." 11. Consequently, the Official Liquidator filed another Report dated 23-02-2012, reiterating the stand take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Official Liquidator, therefore, the approval of this court for entrustment of the Scheme matters to the concerned advocate, is sought for. 15. In paragraphs 8, 9, 10, 11, 12, 13, 14, 15 and 16, the briefs entrusted by the Official Liquidator and the manner in which the cases have been defended by the concerned advocate have been elaborated upon. The stand taken by the Official Liquidator in the Report is that, he has not obtained permission under Rule 307 of the Companies (Court) Rules, 1959 from the Court before engaging the concerned advocate and, in his view, such permission is not required, as the clause regarding "Arguing Counsel" in the Scheme is such that the Official Liquidator can entrust the brief to an advocate of his choice without obtaining permission of the Court. 16. On 27-02-2012 this Court (Coram: K.M. Thaker, J) passed an order indicating that the Official Liquidator has not filed the Report mentioning the details which were called for vide order dated 01-02- 2012. 17. In none of the above-mentioned Reports filed by the Official Liquidator have the specific queries of the Court been addressed in proper perspective. Nor have the requisite details sought by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very conveniently misconstrued, the clause in the scheme, which as the O.L. claims, is approved by the Court, which makes provision for engaging 'Special Arguing Counsel'. 5. It is noticed that by misconstruing the said clause the O.L. has continued to engage certain Advocate in various cases, without sanction and permission from the Court and the O.L. has conveniently ignored to take sanction and permission of the Court. 6. This action of the O.L. amounts to defiance of and undermining the Court. 7. Therefore, at appropriate stage necessary orders including orders imposing cost may be passed by the Court against such conduct of O.L. 8. In the meanwhile, on account of the conduct of the O.L. of misconstruing or conveniently construing the clause making provision for engaging 'Special Arguing Counsel', it has become necessary to make appropriate clarification/modification in the said clause. 9. It is pertinent to note that the said clause, which is reproduced at page 24 in the report dated 23rd February 2012, obliges the O.L. to engage even 'special engaging counsel' only after ascertaining the 'discretion of the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition shall be deemed to have been included in the relevant clause as if they always were there and the said scheme shall, to the aforesaid extent, stand clarified and shall be deemed to have been framed with the said words. Consequently the relevant clause in the said scheme shall now read as follows: "Special Arguing Counsel- Notwithstanding anything contained hereinabove, for highly contested matters wherein complicated questions of law are involved and such other alike matters other than the company law/liquidation matter, at the discretion of the Court and only with the prior sanction, approval and permission of the Court, the Official Liquidator may engage senior/senior designated advocates/senior law officers as special arguing counsel from case to case basis on such fee as are applicable to the Central Govt. Counsel/Senior Law Officers or as may be determined and sanction by the Company Court in individual case. In any case Official Liquidator shall not engage any Advocate, in any category, even as Special Arguing Counsel, without prior sanction, permission and approval of the Court unless his/her name is mentioned in the panel approved by the Court. 14. The Official Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be determined and sanctioned by the Company Court in individual case. In any case Official Liquidator shall not engage any Advocate, in any category, even as Special Arguing Counsel, without prior sanction, permission and approval of the Court unless his/her name is mentioned in the panel approved by the Court." (emphasis supplied) 20. It has been specifically mentioned in paragraph 14 of the above-mentioned order that the Official Liquidator is directed to appropriately incorporate the clarificatory addition, as mentioned in the Scheme, in the aforesaid terms, and all actions taken by the Official Liquidator shall be in accordance with the said clarificatory addition. It has further been stated that in any matter whenever the Scheme is required to be placed before the court for seeking orders, the Scheme with aforesaid clarificatory addition shall be placed before the Court and all actions shall be taken accordingly. The Court gone on to say that "Any lapse on this count shall be treated as defiance by the O.L." It is further clarified that the Official Liquidator shall never engage any advocate (except from the settled/approved panel) in any category without the court's appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order this Court has observed as under: "6. Until now the Official Liquidator has not cared to even seek ratification, what to say about convenient failure in taking prior approval in not one but various cases while appointing advocate/s on behalf of the office of the Official Liquidator. 7. Therefore, as a last chance time until 24/02/2012 is granted to the Official Liquidator to place on record satisfactory justification in respect of each of the cases where any advocate, (whose name is not contained and/or at the relevant time i.e. when the appointment was made was not contained in the panel approved by the Court), was appointed or has been appointed without prior approval/sanction of the Court." 8. Despite such observations on earlier occasion in present matter and other similar matters involving delay and default on part of the Official Liquidator in complying the directions issued by the Court, today also request for adjournment is made on behalf of the Official Liquidator and the directions issued earlier are not complied with. 9. Therefore, on the condition that the Official Liquidator shall pay cost of Rs. 1,000/- to State Legal A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme approved by the Hon'ble Court in Official Liquidator Report No.93 of 2009 vide order dated 25.8.2009, for entrusting brief in a company law/liquidation matter permission is deemed to have been granted and the permission is required only for highly contested matters wherein complicated questions of Law are involved. The Clause of Special Arguing Counsel is reproduced herein for ready reference: Special Arguing Counsel - Notwithstanding anything contained hereinabove for highly contested matters wherein complicated questions of Law are involved and such other alike matters other than the company law/liquidation matter, at the discretion of the Hon'ble Court, the Official Liquidator may engage senior/senior designated advocates/senior law officers as special arguing counsel from case to case basis on such fee as are applicable to the Central Govt. Counsel/Senior Law Officers or as may be determined and sanctioned by the Hon'ble Company Court in such individual case." 25. Even though this Report has been filed after passing of the order dated 06.03.2012, the Official Liquidator has conveniently failed to reproduce the clause regarding Special Arguing Counsel with the clarific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sanction." 27. In paragraphs 6 to 8 discussion has been made regarding the Advocates' Panel of the Official Liquidator and details have been mentioned regarding the resignations of some of them, as has already been stated in earlier Report. Regarding the concerned advocate, it is stated thus: "9. That, the Official Liquidator further most respectfully submits that the matters assigned to Shri Roshan Desai, Advocate are of the nature wherein the question of Law are involved and are complicated in nature i.e. Land matter (ULC/Lease/tenancy), 391 to 394 of the Companies Act, 1956 of the Companies under Liquidation, matter involved under section 531 and 536 of the Companies Act, 1956, substitution matters, EPF Matters, inter-se transaction between the holding and subsidiary companies etc, which can set a principle in future of the Companies, under liquidation." 28. The Official Liquidator has filed a fifth Report dated 03-04-2012. A perusal of the same reveals that it substantially pertains to the selection of a new panel of advocates by a Committee consisting of the Registrar General of this Court and the Official Liquidator, along with one Nominee of the Registrar General. Sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior permission and approval of the Court, unless his / her name is mentioned in the Panel approved by the Court. 35. It has been categorically stated in the order dated 06-03-2012 that the clarificatory addition to clause (f) regarding Special Arguing Counsel, shall be deemed to have been included in the original clause as if it was always there, and the Scheme shall, to the aforesaid extent, stand clarified and shall be deemed to have been framed with the said clause. 36. The tone and tenor of the Reports of the Official Liquidator mentioned hereinabove suggests that in spite of several orders of the Court as enumerated hereinabove, the Official Liquidator continues to assert his own views and opinion, that approval and permission of this Court is not required for entrustment of matters to a Special Arguing Counsel. It is the stand of the Official Liquidator that he is authorized to do so without permission of the Court. Even after passing of the order dated 06-03-2012 the same stand has been reiterated in the Report filed on 24-03-2012. Significantly, the clause pertaining to Special Arguing Counsel, as reproduced in the Report dated 24-03-2012, is without the clarificatory a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Official Liquidator to the concerned advocate stating as below: "Since similar matters are already entrusted to you by this office, you are requested to kindly cause your appearance in the matter for and on behalf of the Official Liquidator in the best interest of the Company (In Liqn) . Progress of the matter may be intimated to this Office from time to time." 38. This communication is also at the behest of the Official Liquidator and no order of the Court has been produced. As these letters are internal communications between the Official Liquidator and the concerned advocate the Court has nothing to do with them and they cannot be misconstrued as granting authorisation by the Court to the Official Liquidator to engage the concerned advocate, as is being misrepresented by the Official Liquidator. 39. At this stage, it would be relevant to refer to Rule 307 of the Companies (Court) Rules, 1959, which reads as below: "307. The Official Liquidator shall, as far as possible, personally appear and conduct all proceedings before the Court in the liquidation, provided that the Official Liquidator may apply to the Court for sanction to employ an advocate or advocates to assist him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Official Liquidator for not seeking the sanction of the court before engagement of the concerned advocate are adequate or satisfactory. The prayers made by the Official Liquidator in the Report dated 25-12-2011 are, therefore, unacceptable to this Court and hence, stand rejected. 43. At this stage, when the dictation of the order in the open Court is almost completed and only the operative part remains to be dictated, a request has been made by the concerned advocate to grant him an opportunity of hearing. As the Court is hearing a Report filed by the Official Liquidator for ratification of his actions, it is a matter solely between the Court and the Official Liquidator, therefore, it is not required that the concerned advocate be heard. 44. During the course of hearing, as the Official Liquidator could not assist the court properly even on factual aspects, the Court requested Dr. Amee Yajnik, learned advocate, who is on the panel of the Official Liquidator, and Mr. Ashok L. Shah, learned advocate, to assist the court on factual aspects to a limited extent. The Court acknowledges the assistance rendered by them. 45. Though the Official Liquidator is functionally under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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