Smt. Jatan Golcha Vs. M/S Golcha
Properties (P) Ltd. [1970] INSC 254 (16 December 1970)
16/12/1970 GROVER, A.N.
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
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 leasehold
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
datedNovember 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 leasehold
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 Courtrejected
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 decision 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
exercise 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.
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