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Subramaiah Setty and ors. Vs. Official Liquidator - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKarnataka High Court
Decided On
Case NumberCompany Application Nos. 245 of 1983 and 244 of 1984 in Company Petition No. 12 of 1977
Judge
Reported in[1986]60CompCas700(Kar); ILR1985KAR1402
ActsCompanies Act, 1956 - Sections 549 and 549(1)
AppellantSubramaiah Setty and ors.
RespondentOfficial Liquidator
Excerpt:
.....heard to the person concerned. the word report found in the aforesaid sections cannot be read as official report. the act, furnishes a complete machinery in itself for the better administration and supervision of panchayats. if the word report is to be read as official report, them, the official before giving such report will have to conduct mini enquiry, inasmuch as he cannot send the report blindly without application of his mind and without hearing the parties. such mini enquiry is not contemplated under the act and the same is not the intention of the legislature also. the legislation consciously is silent about two tier enquiry. courts will not legislate under the garb of interpreting the existing law. the court has to interpret the word report in its ordinary popular sense,..........restricted meaning is given to what is mentioned in r. 15 of o. 11 in regard to the documents and records mentioned in pleadings, the official liquidator is bound to give inspection to those documents mentioned in appendix i of the report which is part of the pleading in company application no. 245 of 1983. in that circumstance, the official liquidator and his counsel has no objection to give inspection of those books and records including files, etc., which are in the possession of the official liquidator and listed in the appendix to the report of the auditor on which the official liquidator relies upon to prosecute proceedings under s. 549 of the companies act. i must not hesitate to express that in proceedings under s. 549 of the companies act, the respondents stand almost in the.....
Judgment:

Chandrakantaraj Urs, J.

1. This petition purporting to be under r. 9 of the Companies (Court) Rules, 1959, read with r. 14A of the Companies (Central Govt.'s) General Rules and Forms, 1956, and O. 11, r. 15 of the CPC.

2. The prayer is for granting inspection of documents in the custody of the official liquidator in regard to proceedings under s. 549(1) of the Companies Act, 1956, pending in this court. Application is made by respondents Nos. 2 to 8 in the misfeasance proceedings.

3. The counsel for the official liquidator has resisted the prayer on the ground that such an inspection is not permissible as there is no specific document mentioned in the judge's summons which the respondents want to inspect with reference to the misfeasance and the records and books of the company in liquidation. I do not think there is much substance in it. Rule 14A of the Companies (Central Govt.'s) General Rules and Forms provides for inspection by a creditor or a contributory at any stage after the winding-up order is made to inspect the documents and records of the company in liquidation after an application after an application in writing in that behalf is made to the official liquidator, notwithstanding that the winding-up is by an order of the court or under the supervision of the court.

4. Provisos to sub-r. (1) of r. 14A of the aforementioned Rules provides for special contingencies with which we are not concerned in this case as there is no dispute that inspection was sought by the contributory after the winding-up order. The application is made in the court, because it is refused to him by the official liquidator. The Companies (Courts) Rules, 1959, made by the Supreme Court provides for following the procedure prescribed in the CPC as far as possible in proceedings under the Act.

5. It was argued by the counsel for the official liquidator that O. 11, r. 15, CPC, provides for inspection of documents mentioned in the pleadings. In the application under s. 549, the official liquidator has relied upon the report which forms part of the pleadings. The report, in turn, mentioned the books and papers inspected by the auditor before preparation of the report and it is listed as Appendix I to his report. Even if a restricted meaning is given to what is mentioned in r. 15 of O. 11 in regard to the documents and records mentioned in pleadings, the official liquidator is bound to give inspection to those documents mentioned in Appendix I of the report which is part of the pleading in Company Application No. 245 of 1983. In that circumstance, the official liquidator and his counsel has no objection to give inspection of those books and records including files, etc., which are in the possession of the official liquidator and listed in the appendix to the report of the auditor on which the official liquidator relies upon to prosecute proceedings under s. 549 of the Companies Act. I must not hesitate to express that in proceedings under s. 549 of the Companies Act, the respondents stand almost in the place of the accused inasmuch as they are answerable to the misconduct alleged against them. In that sense, the court has to take liberal view and should not shut out the defence open to the respondents merely on technical grounds. If inspection of the books and records mentioned in Appendix I to the auditors report is not sufficient and if to the knowledge of the applicants in Company Application No. 244 of 1984, there are other books and records in possession of the official liquidator, they may specify those books and records for being summoned to the court at the appropriate stage.

6. Subject to the above, the official liquidator shall give inspection of the books and records mentioned in Appendix I during office hours in the presence of his officials any time hereafter to the counsel for the applicants or other authorised agents of the applicants.

7. Call Company Application No. 245 of 1983 two weeks hence.

8. If the inspection is not over and the written statement ready for the respondents in C.A. No. 245 of 1983, they may pray for extension of time.


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