PETITIONER:
SMT. JATAN GOLCHA
Vs.
RESPONDENT:
M/S GOLCHA PROPERTIES (P) LTD.
DATE OF JUDGMENT:
16/12/1970
BENCH:
GROVER, A.N.
BENCH:
GROVER, A.N.
SHAH, J.C.
HEGDE, K.S.
CITATION:
1971 AIR 374 1971 SCR (3) 247
1970 SCC (3) 573
ACT:
Indian Companies Act (1 of 1956), ss. 457(1), 483 Company
Judge’s order-No notice to person holding rights in the
property-Whether he has right to appeal.
Companies (Court) Rules, 1959 (Rajasthan High Court), rr.
103, 139-Scope of.
HEADNOTE:
The respondent-company holding leasehold rights in the
appellant land went into liquidation. Accepting the.
official liquidator’s report the company Judge (Rajasthan
High Court) without hearing anyone or issuing notice to the
appellant ordered auction of the lease hold right of the
respondent company. The appellant sent a letter to the
Official Liquidator revoking the licence granted to the
company and calling upon him to, deliver possession of the
land. The Official Liquidator claimed that the company was
entitled to a further period of lease under the agreement.
Notice was issued in respect of the proposed auction sale.
The appellant filed an appeal before the High Court. The
High Court held that since the appellant had not appeared
before the company Judge, she was not entitled to maintain
the appeal, and further that the only remedy of the
appellant was by way of a suit after obtaining leave of the
Company Judge under s. 446 of the Indian Companies Act. In
appeal to this Court,
HELD : The High Court was in error in not entertaining and
deciding the appeal preferred by the appellant who was the
owner of the land in which lease hold rights said to have
been created by her in favour of the company in liquidation
were sought to be sold.
An appeal lies under s. 483 of the Act from any order made
or decision given in the matter of winding up of a company
by the Court and it lies to the same, court to which, in the
same manner in which, and subject to the same conditions
under which appeals lie from any order or decision of the
Court in cases within its ordinary jurisdiction. Therefore
an appeal was corn tent against the order of the company
Judge. [249 D]
It is implicit in Rule 103 of the Company Court Rules that
if the directions which have to be given by the Court
would affect any person prejudicially he must be served with
a notice of the summons under the general rule of
natural justice and that no order should be made affecting
the rights of a party without affording a proper opportunity
to it to represent its case. .[250 A]
Further, the Official Liquidator as well as the, learned
company Judge were bound by the rules of natural justice to
issue a notice to the appellant and hear her before making
the order appealed against. If there was default on their
part in not following the correct procedure the appellant
could not be deprived of her right to get her grievance
redressed by filing an appeal. [250 C]
248
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1104 of 1970.
Appeal by special leave from the judgment and order dated
April 9, 1970, of the Rajasthan High Court in D. B. Civil
Special Appeal No. 126 of 1970.
M. C. Chagla, F. S. Nariman, P. N. Tiwari and O. C.
Malther, for the appellant.
M. C. Setalvad and B. P. Maheshwari, for the respondent.
The Judgment of the Court was delivered by
Grover, J. This is an appeal from a judgment of the
Rajasthan High Court holding that the appellant was not
entitled to file an appeal against the order of the Company
Judge directing sale of lease hold rights of the Golcha
Properties (P) Ltd. (in liquidation) in the land belonging
to the appellant.
The facts briefly are that on November 5, 1960 an agreement
was entered into between the appellant and the respondent
company allowing Golcha Properties (P) Ltd. to construct a
cinema threatre within three years from the issue of the ‘No
Objection Certificate’ on land measuring 42,900 sq. feet at
Bhagwandas Road, Jaipur belonging to the appellant. The
Company deposited a sum of Rs. 5 lakhs by way of security.
In October 1963 No Objection Certificate is stated to have
been issued for construction of a cinema theatre. In 1966 a
petition for winding up of the company was filed in the
Rajasthan High Court. On May 10, 1968 an order for winding
up of the company was made and a liquidator was appointed’
On July 11, 1969 the Official Liquidator made a report to
the Company-Judge for sale of the lease-hold rights of the
company in the land belonging to the appellant and the
structures standing on it. It appears that the Official,
Liquidator made a report under S. 457 of the Indian
Companies Act 1956 to obtain the necessary orders for sale.
On July 21, 1969 the Company Judge without hearing any one
or issuing notice to the appellant ordered that the lease-
hold rights and the structures be auctioned as proposed by
the Official Liquidator On October 3,1969 the appellant’s
attorney sent a letter to the Official Liquidator stating
that the licence granted to the company under, an. agreement
dated- November 5, 1960 stood revoked and called upon him to
deliver possession of the land and also pay compensation
amounting to Rs. 10, lakhs. On February 9, 1970 the
Official Liquidator sent a reply claiming that the company
was entitled to a lease for 20 years under the agreement.
On March 14, 1970 a notice was issued in a newspaper (Times
of India) in respect of the proposed auction sale ,of lease-
hold rights which was to take place on April 14, 1970.
249
According to the appellant she enquired from the Official
Liquidator under whose authority the, property was being
sold to which no reply was sent by the Official Liquidator.
On April 3, 1970 the appellant applied for a certified
copy of the order dated July 21,1969 after taking inspection
of the record in the High Court. The certified copy was
sent on April 24, 1970. On the same date the appellant
filed an appeal before the High Court. The High Court-
rejected that application summarily but recorded short
order.
In the order of the High Court reference has been made to
Rule 139 of the Companies (Court) Rules 1959 and it has been
pointed out that since the appellant had not appeared before
the Company Judge she was not entitled to maintain the
appeal. It was conceded that no notice had ever been sent
to her either by the Official Liquidator or the Company
Judge before the order appealed against relating to
appellant’s property was made. The High Court was of the
view that the only remedy of the appellant was by way of a
suit after obtaining leave of the Company Judge under s. 446
of the Act. Now an appeal lies under s. 483 of the Act from
any order made or decision given in the matter of finding up
of a company by the court and it lies to the same court to
which, in the same manner in which, and subject to the same
conditions under which, appeals lie from any order or deci-
sion of the Court in cases within its ordinary jurisdiction.
There can be no manner of doubt that an appeal was competent
against the order made by the Company Judge on July 21, 1969
in view of the terms of s. 483. The only question is
whether because the Official Liquidator failed to discharge
his duties properly by having a notice issued to the
appellant, whose rights were directly affected by the order
proposed to be made, the appellant was debarred from filing
the appeal. In our opinion apart from Rule 139 to which
reference has been made by the High Court the Official
Liquidator as well as the learned Company Judge were bound
by the rules of natural justice to issue a notice to the
appellant and hear her before making the order appealed
against. If there was default on their part in not
following the correct procedure it is wholly
incomprehensible how the appellant could be deprived of her
right to get her grievance redressed by filing an appeal
against the order which had been made in her absence and
without her knowledge. It would be a travesty of justice if
a party is driven to file a suit which would involve long
and cumbersome procedure when an order has been made
directly affecting that party and redress can be had by
filing an appeal which is permitted by law. It is well
settled that a person who is not a party to the suit may
prefer an appeal with the leave of the appellate court and
such leave should be granted if he would be prejudicially
affected by the judgment.
250
Rule 103 of the Companies (Court) Rules provide for taking
out summons for directions not only with reference to the
settlement of the list of contributories and the list of
creditors but also the axercise by the Official Liquidator
of all or any of the powers under s. 457(1) and any other
matter requiting directions of the court. The exercise of
the power under s. 457 (1) (c) of the Act to sell the
immovable and movable property of the Company by public
auction or private contract would certainly fall Within the
ambit of the Rule. That Rule expressly provides for issuing
of a notice of the summons to the petitioner on whose
petition the order for winding up was made. It is implicit
that if the directions which have to be given by the court
would affect any person prejudicially he: must be served
with a notice of the summons under the general rule of
natural justice and that no order should be made affecting
the rights of a party without affording a proper opportunity
to it to represent its case. The High Court was thus
clearly in error in not entertaining and deciding the appeal
preferred by the appellant who was the owner of the land in
which lease hold rights said to have been created by her in
favour of the Company in liquidation were sought to be sold.
The appeal is allowed and the order of the High Court is set
aside. The case is remanded to the High Court for disposing
of the appeal in accordance with law. Costs shall abide the
event.
Y.P. Appeal
allowed.
251