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Shankarlal Aggarwal and ors. Vs. Shankarlal Poddar and ors. - Court Judgment

LegalCrystal Citation
CourtSupreme Court of India
Decided On
Reported inAIR1965SC507; [1965]35CompCas1(SC); [1964]1SCR717
ActsCode of Civil Procedure (CPC), 1908 - Order 43, Rule 1; Companies Act, 1913 - Sections 202
AppellantShankarlal Aggarwal and ors.
RespondentShankarlal Poddar and ors.
Cases ReferredAsrumati Devi v. Kumar Rupendra Deb Raikot
company - winding up - order 43 rule 1 of code of civil procedure, 1908 and section 202 of companies act, 1913 - company ordered to be wound up - joint liquidators directed to sell properties - information of sale advertised - appellant and other bidders quoted prices - highest bid accepted with direction to pay 25% of bid money - due to non-availability of cash bidder left with impression that he had gone to bring money - many bidders left thinking as completion of bid - liquidator put property again to auction - liquidator inquired from appellant that whether their penultimate sale be treated as highest bid - offer refused as appellant were satisfied that they would get property for lesser sum - bid accepted - liquidator were not entitled to proceed as many bidders left. - - an order.....ayyangar, j. 1. the principal point raised for consideration in this appeal by specialleave relates to the correctness and legality of an order by a division benchof the calcutta high court refusing to confirm a sale by the liquidators of theassets of a company which is being wound up. the company in question - theluxmi spinning and weaving mills ltd. - a company incorporated under the indiancompanies act - was carrying on business at calcutta. on a petition of the 1strespondent - shankarlal poddar - made to the high court of calcutta, thiscompany was ordered to be would up compulsorily by order dated august 22, 1955.but before this order was passed, certain matters had transpired to which it isnecessary to advert. the appellants claiming that they had advanced loans tothe company under.....

Ayyangar, J.

1. The principal point raised for consideration in this appeal by specialleave relates to the correctness and legality of an order by a Division Benchof the Calcutta High Court refusing to confirm a sale by the liquidators of theassets of a company which is being wound up. The company in question - theLuxmi Spinning and Weaving Mills Ltd. - a company incorporated under the IndianCompanies Act - was carrying on business at Calcutta. On a petition of the 1strespondent - Shankarlal Poddar - made to the High Court of Calcutta, thiscompany was ordered to be would up compulsorily by order dated August 22, 1955.But before this order was passed, certain matters had transpired to which it isnecessary to advert. The appellants claiming that they had advanced loans tothe company under two registered deeds of mortgage and alleging that there hadbeen default on the part of the company in performing its obligations as topayment of interest etc. under the said deeds instituted a mortgage suit in theHigh Court of Calcutta for the usual reliefs under O. 34, Civil Procedure Code.Pending the disposal of the suit they moved the Court for the appointment of areceiver, and the second appellant and the Managing Director of the companywere appointed Joint receivers and they took possession of the assets of thecompany.

2. By reason of this circumstance, when the order for winding up was passedin August, 1955 though the Official Receiver was appointed as OfficialLiquidator, still he was directed not to interfere with the possession of theJoint Receivers. Subsequently by a further order dated September 8, 1955 twoindependent persons who are respondents 2 & 3 before us were appointed asJoint Receivers in the suit and they were also directed to function as JointLiquidators in the winding up proceedings.

3. The Joint Liquidators applied for direction to the Court as regards thesale of the assets and properties of the company and the Court by an orderdated December 20, 1955 directed their sale by public auction after dueadvertisement in the manner set out in the order and notice of this sale wasdirected to be given to the appellants who had by that date obtained a mortgagedecree in their suit. At this stage it is necessary to mention that in thewinding up proceedings the validity of the appellants' claim as creditors andas secured creditors is challenged, and a claim by the State of West Bengal toarrears of certain taxes in regard to which priority is claimed is also pendingadjudication by the Company Judge.

4. In pursuance of the aforesaid directions of the Court dated December 20,1955 the liquidators held certain auctions to which it is unnecessary to refersince these proved infructuous, but ultimately the appellants and other agreedto have the sale of the assets to be held free of all charges and encumbrancesand to their claims to security over the properties being transferred to thesale-proceeds when paid into Court. Consequent on this agreement the Court madean order on July 10, 1956 by which the Joint Liquidators were directed to sellthe properties free of all encumbrances, the sale proceeds realised being heldin Court to answer the claims of the creditors according to such priorities asmight be determined by the Court.

5. The sale by public auction thus directed was duly advertised to be heldon September 8, 1956 at 2 p.m. The conditions subject to which the propertieswere to be sold which were approved by the Court included, inter alia, (1) thatthe sale was subject to a reserve price to be determined by a valuer andsurveyor which however was not to be made known to the bidders but had to bekept in a sealed cover until the bidding was over, (2) the sale was subject toconfirmation by the Court, (3) that it was in the discretion of the liquidatorsto accept or reject any bid, (4) as far as possible the highest bid was to beaccepted provided the liquidators considered that the bid was for a sufficientamount, (5) immediately on acceptance of the bid by the liquidators the bidderwas required to deposit 25 per cent of the amount of the bid in cash 'indefault whereof the liquidators were at liberty to put up the property againfor sale', (6) the purchaser was to pay the balance of purchase moneyswithin two weeks from the date of confirmation by the Court.

6. The sale was held as advertised. There were in all 36 bids for lot No. 1which consisted of the business and properties of the company starting with abid for Rs. 1,50,000/- from 8 bidders including the 1st appellant who himselfpersonally bid for Rs. 3,00,000/-. Thereafter there was keen competitionbetween one Nandlal Agarwalla and the appellant firm of Bansidhar Shankarlaland after successive bids by these two the highest bid reached was that byNandlal Agarwalla who bid for Rs. 3,37,000/-, the penultimate bid of theappellant-firm being Rs. 3,35,000/-. No further bids were offered and thereuponthe Joint Liquidators accepted the bid of Nandlal and he was directed to payimmediately Rs. 84,250/- this being 25% of his bid-money. The bidder, however,stated that he had not brought the cash and then the Receivers offered to takeinstead a cheque from his solicitors, if he so desired, but this also thebidder declined and thereafter Nandlal Agarwalla left the place giving theimpression on those there, including the Joint Liquidators that he had gone tobring the money. The liquidators waited for about 20 minutes but as he did notturn up they again put up the property for sale. Before doing so, however, they- the liquidators - enquired of the appellants whether they would stand by theirprevious bid for Rs. 3,35,000/- in which case they were informed that theirswould be treated as the highest bid. They would not agree and thereupon theliquidators put the property to auction again and the starting bid was by theappellant firm of Bansidhar Shankarlal who, as stated earlier, had, at theformer bidding, offered Rs. 3,35,000/- now starting the bid with Rs. 1,50,000/-and after 8 more bids there were no further bids beyond Bansidhars' for Rs.2,25,000/-. This bid was accepted by the official liquidators subject toconfirmation by the Court after they ascertained by opening the sealed coverreceived from the valuer that this amount was not below the price for which theproperty could be sold. Immediately on the acceptance being intimated Bansidharpaid the amount required to be paid by the conditions of the sale.

7. The liquidators took out a Master's summons on September 11, 1956,stating these facts and prayed for an order from the Company Judge that thesale be confirmed or such other directions be given as the Court may deem fitand proper. The summons was opposed by the 1st respondent and the main pointurged by him was that when Nandlal Agarwalla's bid was accepted by the JointLiquidators, several others who had come to bid for the property left theauction room under the impression that sale was going through and that thesubsequent sale at which the appellant was the highest bidder was not such ascould be confirmed by the Court. The summons was heard by the Company Judge -P. B. Mukharji J. - and the learned Judge passed an order acceding to theprayer of the liquidators to confirm the sale. Thereupon the 1st respondentfiled an appeal against the order confirming the sale and also applied for thestay of delivery of possession of the properties of the company to theappellant. In the application for stay the appellate court passed an order inthese terms :

'On Bansidhar Shankarlal giving an undertaking tothis Court to purchase the property for Rs. 3,35,000/- should the appeal be allowedand on Bansidhar Shankarlal depositing with their Solicitors Rs. 16,000/- to beheld by the Solicitors free from lien and subject to further order of thisCourt to abide by the result of the suit challenging the mortgage in favour ofBansidhar Shankarlal, there will be no further orders in this application andBansidhar Shankarlal will be entitled to possession of the factory and itsassets on a sum of Rs. 16,000/- being deposited with their Solicitors.'

8. There were a few more directions made by the Court to which however it isunnecessary to refer.

9. The appeal was allowed and the order confirming the sale was set asideand the liquidators were directed to resell the property after dueadvertisement. It is from this decision of the Division Bench that this appealhas been preferred by special leave.

10. Learned Counsel for the appellants urged before us the following points:

(1) The sale by auction by theJoint Liquidators effected after obtaining the sanction of the Court onDecember 20, 1955, under s. 179(c) of the Indian Companies Act, 1913 was merelyan act performed by them in the course of their administration of the assets ofthe company and the action of the Judge in confirming such sale also partook ofthe nature of an administrative act, and not being a judicial order no appeallay against it.

(2) Even if the order of theCompany Judge was a judicial order, still it was not a judgment within clause15 of the Letters Patent of the Calcutta High Court and so no appeal lay to theDivision Bench.

(3) No doubt, s. 202 of theIndian Companies Act permits appeals against orders and decisions in the courseof a winding up but that provision is of no avail, because for an order to beappealable under s. 202, it has, in the case of an order of a Single Judge ofthe High Court, to satisfy the requirements of clause 15 of the Letters Patent.

(4) Even if the order of MukharjiJ., was a judicial order capable of appeal, still it was a discretionary orderand could not be interfered with by an appellate court merely because theyconsidered that it was not a correct order to pass.

11. In the light of these submissions the questions to be considered are :(1) whether the order of the Company Judge confirming the sale was merely anadministrative order passed in the course of the administration of the assetsof the company under liquidation and therefore not a judicial order subject toappeal, (2) (a) whether on a proper construction of s. 202 of the IndianCompanies Act it was a condition for the availability of an appeal that theorder should be open to appeal under clause 15 of the Letters Patent of theHigh Court, (b) If the above were answered in the affirmative, whetherindependently of s. 202 the order of the Company Judge in this case amounted toa judgment within clause 15 of the Letters Patent, and (3) whether theappellate court acted improperly in interfering with the order of the learnedCompany Judge.

12. We shall deal with these points in that order. (1) First as to thescheme of the relevant provisions under the Companies Act. Section 179 of theCompanies Act, 1913, specifies the powers of the official liquidator. Itenacts, to quote only the words material for the present appeal :

'179. Powers of Officialliquidator. - The official liquidator shall have power, with the sanction ofthe Court, to do the following things :-



(c) to sell the immovable andmovable property of the company by public auction or private contract, withpower to transfer the whole thereof to any person or company, or to sell thesame in parcels;


Though s. 180 which reads :

'180. Discretion of officialliquidator. - The Court may provide by any order that the official liquidatormay exercise any of the above powers without the sanction or intervention ofthe Court,....'

makes provision for eliminating the need for the sanction of the Courtrequired for action by the official liquidator under s. 179, as such a powerwas not exercised in this case this section may be left out of account. Section183 of the Act makes provision for the exercise of control by the Court overthe liquidator and sub-s. (3) enables the official liquidator to apply to theCourt for directions in relation to any particular matter arising in thewinding up. Section 184 of the Act requires the Court to cause the assets ofthe company to be collected and applied in discharge of its liabilities.

On the basis of these provisions, we shall proceed to consider whether theconfirmation of the sale was merely an order in the course of administrationand not a judicial order. The sale by the liquidator was, of course, effectedin the course of the realisation of the assets of the company and for thepurpose of the amount realised being applied towards the discharge of theliabilities and the surplus to be distributed in the manner provided by theAct. It would also be correct to say that when a liquidator effects a sale heis not discharging any judicial function. Still it does not follow that everyorder of the Court, merely for the reason that it is passed in the course ofthe realisation of the assets of the company must always be treated as merelyan administrative one. The question ultimately depends upon the nature of theorder that is passed. An order according sanction to a sale undoubtedlyinvolves a discretion and cannot be termed merely a ministerial order, forbefore confirming the sale the Court has to be satisfied, particularly wherethe confirmation is opposed, that the sale has been held in accordance with theconditions subject to which alone the liquidator has been permitted to effectit, and that even otherwise the sale has been fair and has not resulted in anyloss to the parties who would ultimately have to share the realisation.

The next question is whether such an order could be classified as anadministrative order. One thing is clear, that the mere fact that the order ispassed in the course of the administration of the assets of the company and forrealising those assets is not by itself sufficient to make it anadministrative, as distinguished from a judicial, order. For instance, thedetermination of amounts due to the company from its debtors which is also partof the process of the realisation of the assets of the company is a matterwhich arises in the course of the administration. It does not on that accountfollow that the determination of the particular amount due from a debtor who isbrought before the Court is an administrative order.

It is perhaps not possible to formulate a definition which wouldsatisfactorily distinguish, in this context, between an administrative and ajudicial order. That the power is entrusted to or wielded by a person whofunctions as a Court is not decisive of the question whether the Act ordecision is administrative or judicial. But we conceive that an administrativeorder should be one which is directed to the regulation or supervision ofmatters as distinguished from an order which decides the rights of parties orconfers or refuses to confer rights to property which are the subject ofadjudication before the Court. One of the tests would be whether a matter whichinvolves the exercise of discretion is left for the decision of the authority,particularly if that authority were a Court, and if the discretion has to beexercised on objective, as distinguished from a purely subjective,consideration, it would be a judicial decision. It has sometimes been said thatthe essence of a judicial proceeding or of a judicial order is that thereshould be two parties and a lis between them which is the subject ofadjudication, as a result of that order or a decision on an issue between aproposal and an opposition. No doubt, it would not be possible to describe anorder passed deciding a lis before the authority, that it is not a judicialorder but it does not follow that the absence of a lis necessarily negativesthe order being judicial. Even viewed from this narrow standpoint it ispossible to hold that there was a lis before the Company Judge which he decidedby passing the order. On the one hand were the claims of the highest bidder whoput forward the contention that he has satisfied the requirements laid down forthe acceptance of his bid and was consequently entitled to have the sale in hisfavour confirmed, particularly so as he was supported in this behalf by theofficial liquidators. On the other hand there was the 1st respondent and not tospeak of him, the large body of unsecured creditors whose interests, even ifthey were not represented by the 1st respondent, the Court was found toprotect. If the sale of which confirmation was sought was characterised by anydeviation from the conditions subject to which the sale was directed to be heldor even otherwise was for a gross undervalue in the sense that very much morecould reasonably be expected to be obtained if the sale were properly held, inview of the figure of Rs. 3,37,000/- which had been bid by Nandlal Agarwalla,it would be the duty of the Court to refuse the confirmation in the interestsof the general body of creditors and this was the submission made by the 1strespondent. There were thus two points of view presented to the Court by twocontending parties or interests and the Court was called upon to decide betweenthem. And the decision vitally affected the rights of the parties to property.In this view we are clearly of the opinion that the order of the Court was, inthe circumstances, a judicial order and not an administrative one andwas,therefore not inherently incapable of being brought up in appeal.

(2) The next point for consideration is whether even if this was a judicialorder no appeal lay from it under s. 202 of the Indian Companies Act unless theorder amounted to a judgment within clause 15 of the Letters Patent of theCalcutta High Court. Section 202 runs as follows :

'202. Appeals from orders. -Re-hearings of, and appeals from, any order or decision made or given in thematter of the winding up of a company by the Court may be had in the samemanner and subject to the same conditions in and subject to which appeals maybe had from any order or decision of the same Court in cases within itsordinary jurisdiction.'

13. It was submitted that assuming the order of the Company Judge was'an order or decision made or given in the matter of the winding up of acompany by the Court' the last words of the section 'subject to thesame conditions in and subject to which appeals may be had from any order ordecision of the same Court in cases within its ordinary jurisdiction'restricted the right of appeal conferred by the 1st limb of the section tothose which might be preferred under clause 15 of the Letters Patent in thecase of a judgment of a Single Judge of the High Court. In support of thissubmission learned Counsel relied on the decision of the Calcutta High Court inMadan Gopal Daga v. Sachindra Nath Sen I.L.R. (1927) Cal. 262. It wasthere held that an order made in the winding up of a company by a Single Judgeof a High Court in order to be appealable under s. 202 must satisfy therequirements of clause 15 of the Letters Patent, viz., that it must be 'ajudgment' within the meaning of that clause. C. C. Ghose, J. rejected theconstruction that the words 'same manner and subject to the sameconditions' occurring in s. 202 were merely a reference to the procedureto be observed as regards the manner of filing an appeal or the forum to whichthe appeal lay and not the substantive right to prefer an appeal. Buckland, J.who agreed with Ghose, J. considered that though the word 'manner'might refer to the procedure for filing an appeal, the word'conditions' could not be given any such limited meaning but wouldimport a reference to the limitation on the right to appeal itself as laid downin clause 15 of the Letters Patent where the order appealed from was that of aJudge of the High Court. It must be mentioned that in the appeal now before usthe objection that no appeal lay from the order of Mukherji, J. was raisedbefore the Bench, but the learned Judges rejected it on the ground that theorder of the learned Judge was 'a judgment' within clause 15 of theLetters Patent and so appealable under that provision.

14. This interpretation of the scope of s. 202 of the Companies Act has notbeen accepted by several other High Courts. The leading case in support of theother view is Bachharaj Factories Ltd. v. The Hiraji Mills Ltd. I.L.R. (1955)Bom. 550. The learned Judges were dealing with an appeal against an order ofthe Company judge adjourning a petition for winding up in order to enablecertain shareholders to file a suit for a declaration that certain debentureswere not valid in law. The Company Judge made the order under s. 170 of theCompanies Act which provides that on hearing a petition for winding up theCourt may dismiss or adjourn the hearing conditionally or unconditionally ormake any interim order etc. A preliminary objection was taken to the hearing ofthe appeal on the ground that the order from which the appeal was preferred wasnot a judgment within the meaning of clause 15 of the Letters Patent andtherefore no appeal lay. It was urged that under s. 202 the right of appealconferred was subject to 'the same conditions' to which appeals mightbe had from the decision of the Court in cases within its ordinary jurisdictionand since the said condition was not fulfilled the appeal was incompetent.Chagla, C.J. repelled this contention and pointed out that the Courts whichdealt with winding up petitions and to whose orders s. 202 applied were not merelythe High Courts but also the District Courts. If the construction of thesection on whose correctness the preliminary objection was based were upheld itwould mean that in the case of an order made by a District Court theappealability of that order would be dependent on its satisfying the conditionsof appeal for 'decisions' laid down under the Civil Procedure Code.Under the Code 'orders or decisions' are classified into two heads -decrees and orders. Whereas an appeal lies by virtue of s. 96 of the Codeagainst every decree which is defined in s. 2 of the code, only certain typesof orders under particular provisions of the Code which are listed in s. 104are capable of appeal and none others. It was not in dispute that very few ofthe orders passed in a winding up would amount to decrees within the Code.There was no doubt either that most of the orders or decisions in winding upwould not be comprehended within the class of appealable orders specified in s.104 or O. 43, r. 1. If therefore the contention of the respondent were acceptedit would mean that in the case of orders passed by the District Courts appealswould lie only against what would be decrees under the Code as well asappealable orders under s. 104 and O. 43, r. 1 and very few of the orderspassed in the Courts of the winding up would fall within these categories. Onthe other hand, the expression 'judgment' used in clause 15 is wider.The learned Judge pointed out that the position would therefore be that adecision rendered or an order passed by a District Court would not beappealable because the conditions laid down by the Civil Procedure Code werenot satisfied, yet an exactly identical order or decision by the judge of theHigh Court would be appealable because it might constitute a judgment withinclause 15. The learned Judge therefore rejected a construction which would havemeant that the same orders passed by District Courts and by a Single Judge of aHigh Court would be subject to different rules as to appealability. The learnedJudge observed that the right of appeal was conferred by the 1st limb of s. 202and that the second limb merely dealt with the procedural limitations of thatappeal. He further pointed out that the expression 'order ordecision' used in s. 202 itself indicated that the order or decision wasnot merely procedural in character but that which affected the rights andliabilities of parties. The learned Judge referred to the decisions in MadanGopal Daga v. Sachindra Nath Sen I.L.R.(1927) Cal. 262, and the casesfollowing it and expressed his dissent with the reasoning which found favourwith the Judges of the Calcutta High Court. The decision in Bachharaj FactoriesLtd. I.L.R. (1955) Bom. 550 was later followed by the same Court in WesternIndia Theatres Ltd. v. Ishwarbhai Somabhai Patel : AIR1959Bom386 . Wefind ourselves in agreement with the view here expressed. Madan Gopal DagaI.L.R.(1927) Cal. 262, proceeds wholly on the meaning which could beattributed to the word 'conditions' in the expression 'subjectto the conditions' occurring in s. 202 and does not take into account thecontext in which s. 202 was designed to operate and particularly the fact thatmore than one grade of Court each governed by different rules as to the natureof the decision which would enable an appeal to be preferred could be vestedwith jurisdiction under the Act. When by the proviso to s. 3 of the IndianCompanies Act, 1913 the Indian Legislature enabled jurisdiction to be vested inDistrict Courts so as to be constituted the 'Court having jurisdictionunder the Act', knowledge must be imparted to it that the District Courtsand the High Courts functioned under different statutory provisions as regardsrights of appeal from their orders and decisions. Besides, it would also befair to presume that they intended to prescribe a uniform law as regards thesubstantive right of appeal conferred by s. 202. It could not therefore be thatan identical order if passed by one class of 'court having jurisdiction underthe Act' would be final, but that if passed by another Court vested withidentical powers and jurisdiction would be subject to an appeal.

15. There is also one another aspect from which the problem could be viewed.Taking first the provisions of the Civil Procedure Code which would govern theorders passed by District Courts; it would be seen that apart from'decrees' which are appealable by reason of s. 96 of the Code,'orders' are appealable in accordance with s. 104. That section afterenumerating certain orders which are made applicable, contains a residuaryclause (i) conferring a right of appeal in respect of 'any order madeunder rules from which an appeal is expressly allowed by rules' - and therule referred to is O. 43, r. 1. Now under s. 122 of the Code each of the HighCourts is vested with power 'to make rules, to annul, alter or add to allor any of the rules in the 1st Schedule'. In exercise of this power HighCourts have in respect of the Civil Courts subject to their appellate jurisdictionmade alterations and additions in the rules including those in O. 43, r. 1,either extending or restricting the right of appeal conferred by the Code asoriginally enacted. The question that arises on this state of circumstances iswhether the legislature, when it enacted s. 202 of the Companies Act, intendedthat the right of appeal should vary from State to State depending on theparticular rule in force in that State by reason of the exercise by the HighCourt of its power under s. 122, Civil Procedure Code.

16. The anomaly created by the construction urged by learned Counsel for theappellant does not stop here. Even taking the case of the High Courtsthemselves, the construction of the word 'condition' as including theappealability of the decision would lead to rather strange results. Therelevant words of s. 202 are :

'Subject to the same conditions.... to whichappeals may be had from any order or decision of the same Court in cases withinits ordinary jurisdiction' - 'Ordinary jurisdiction' and not'ordinary original jurisdiction.'

17. The question that would arise is as to what is meant by 'ordinaryjurisdiction' of the Court. Plainly the words would only excludejurisdiction vested in the Court by special statutes as distinguished from thestatutes constituting the Court. Undoubtedly; in the case of a High Court thelimits of whose jurisdiction are governed by its Letters Patent, the LettersPatent would determine what the 'ordinary jurisdiction' is. But thatLetters Patent is not immutable and has been the subject of severalalterations. Thus when the Companies Act was passed in 1913, an appeal lay fromevery 'judgment' of a Single Judge of the High Court. But in March1919 it was amended so as to exclude the rights of appeal from judgment passedin exercise of revisional jurisdiction and in exercise of the power ofsuperintendence under s. 107 of the Government of India Act, 1915. There can beno doubt either that the exercise of revisional or supervisory jurisdiction isas much 'ordinary jurisdiction' of the High Court as its original orappellate jurisdiction and it cannot be that there has been any alteration inthe law as regards the appealability of decisions of a High Court under s. 202of the Companies Act by reason of the amendment of the Letters Patent. Again,the Letters Patent were amended in January, 1928 when appeals against decisionsin second appeals were made subject to the grant of leave by Judges renderingsuch decisions. If the decision in a second appeal were in the exercise of 'ordinaryjurisdiction', and there can be no controversy about it, then theconstruction of s. 202 of the Companies Act in relation to a High Court whichis the primary Court exercising jurisdiction under the Companies Act (vide s.3(1) of the Act) would lead to anomalous results as judgments or decisionsrendered in different types of cases, though all of them are in the exercise of'ordinary jurisdiction', are subject to different conditions asregards appealability. We thus agree with Chagla, C.J. that the second part ofthe section which refers to 'the manner' and 'the conditionssubject to which appeals may be had' merely regulates the procedure to befollowed in the presentation of the appeal and of hearing them, the period oflimitation within which the appeal is to be presented and the forum to whichthe appeal would lie and does not restrict or impair the substantive right ofappeal which has been conferred by the opening words of that section. We alsoagree with the learned Judges of the Bombay High Court that the words'order or decision' occurring in the 1st part of s. 202, though wide,would exclude merely procedural orders or those which do not affect the rightsor liabilities of parties. Learned Counsel for the appellant did not suggest thatif this test were applied the order of the learned Company Judge would be anorder or decision merely of a procedural character from which no appeal lay.

18. On the footing that we accepted the construction of s. 202 of theCompanies Act which found favour of the learned Judges of the Calcutta HighCourt in Madan Gopal Daga I.L.R. (1927) Cal. 262, that in order to beappealable the decision must satisfy the test of being 'a judgment'within clause 15 of the Letters Patent of the High Court, learned Counsel submittedto us elaborate, arguments as to what was comprehended within the expression,'judgment' in clause 15 of the Letters Patent and invited us to holdthat the order of Mukharji J., confirming the sale was not a judgment and thatthe decision of the learned Judges in the judgment now under appeal that it was'a judgment' was erroneous. There has been very wide divergence ofopinion between the several High Courts in India as to the content of theexpression 'judgment' occurring in clause 15 of the Letters Patent.This conflict of opinion was referred to by this Court in Asrumati Devi v. Kumar Rupendra Deb Raikot : [1953]4SCR1159 and in, State of Uttar Pradeshv. Dr. Vijay Anand Maharaj : [1962]45ITR414(SC) where, after setting out thecleavage of views on the question by the several High Courts, the points as tothe proper construction of the word was left open for future decision when theoccasion required. We consider that that occasion has not arisen before useither since in view of the construction which we have adopted of sthat s. 202of the Indian Companies Act the scope of the expression 'judgment' inthe Letters Patent does not call for examination or final decision.

19. The next contention put forward was this. The learned Company Judge had adiscretion to confirm or not to confirm the sale. In order that the discretionmight be properly exercised the official liquidators had placed every materialfact in the Master's summons which they filed and every one of those facts hadbeen considered by the learned Judge. If, after considering those facts, thelearned Judge thought that it was a fit case in which the sale could beconfirmed it was not open to an appellate court to interfere with that ordermerely because on its appreciation of the facts it would have refusedconfirmation and directed a fresh sale. Learned Counsel further submitted thatif the Company Judge had applied his mind to the facts and every fact wasbefore him the order passed in the exercise of his discretion could be interferedwith only if any relevant facts were disregarded or if the order was arbitraryor capricious or if the appellate court considered that there has been amiscarriage of justice and his submission was that on the facts of this case nosuch infirmities attached to the order confirming the sale.

20. Before considering the objection in this form it would be proper toexamine whether the liquidators were within their power in proceeding with thesale after Nandlal Agarwalla failed to turn up after an appreciable interval.The power of the liquidators in this behalf was, according to the learnedCounsel for the appellant, derived from clause 5 of the conditions of salewhich reads :

'5. Immediately on acceptance of the bid by theJoint Receivers and Liquidators subject to clause 1 hereof, such bidder shalldeposit 25 percent of the amount of such bid with the Joint Receivers andLiquidators in cash, in default whereof the Joint Receivers and Liquidatorswill be at liberty to put up the property again for sale.'

21. We might add that this is the only clause under which, on a salebecoming abortive, the liquidators were empowered to continue the same withouta fresh advertisement. It would be seen that this clause requires the bidderwhose bid is accepted to deposit immediately 25% of the bid amount. In thecontext of the facts that transpired in the present case the significance ofthe word 'immediately' would become clear. If on the failure of Nandlal to makethe deposit immediately the liquidators had proceeded to hold a fresh auctionit would be apparent that all those who had come there to bid would still bethere, but what happened was that the liquidators gave time to Nandlal to gohome in the expectation that he would come back with the amount required to bedeposited. In the circumstances it was not unnatural that the persons who hadgathered there to bid were under the impression that he would bring the moneyand make the deposit and as a matter of fact the narration of facts by theliquidators in their Master's summons clearly shows that they themselves wereunder this impression. In the circumstances the continued presence of thebidders there manifestly served no purpose and several of them therefore leftthe place and went away. The bidding list which is Annexure 'A' to the petitionof the liquidators showed that New India Transport Co. which had bid up to Rs.2,55,000/-, Babulal Bhagwandas who bid up to Rs. 2,75,000/- and ChabildasAgarwal who went up to Rs. 2,85,000/- were not there when the second auctionwas held. The result therefore was that when after waiting for about 20 minutesthe liquidators continued the auction several had left and the appellant wasable to become the highest bidder for the price of Rs. 2,25,000/-. This featureof the case was missed by the learned Company Judge and forms the basis of thedecision of the Division Bench. We would go further and add that on a properconstruction of condition 5 the liquidators were not entitled to proceed withthe sale in the circumstances that happened because of the interval of time theygranted to Nandlal to make the deposit which gave the impression to those whogathered there that there would be no further auction on the same date at whichthey were entitled to bid. Learned Counsel for the appellant referred us to thefact that one S. K. Chakrabarti who in the first auction had bid up to Rs.2,98,000/- was present at the resumed auction and that he bid then only for Rs.2,00,000/- and that this feature of the resumed auction was not noticed by thelearned Judges in appeal. We consider that this is not a very relevantcircumstance for a decision of the question either as regards the power of theliquidators to hold the fresh sale without advertisement or whether the sale atthe resumed auction had been at an undervalue. It is possibly profitless tospeculate how or why it happened that persons who half an hour earlier had beenwilling to bid for much larger figures suddenly permitted the appellant tobecome the purchaser of Rs. 2,25,000/-. It may be mentioned that at the resumedbidding there were only six bidders of whom three had not bid at the earlierauction at all, though apparently they were present - Shantilal Bansidhar,Power & Machinery Construction Co., and Relay Corporation. Besides, thesethree, there were only two others - Mahabir Prasad who had earlier bid for Rs.2,10,000/- and now contented himself with a bid of Rs. 1,90,000/- and S. K.Chakraborty who though originally thought that the property was worth havingfor Rs. 2,98,000/- now refused to go beyond Rs. 2,00,000/-. These facts showthat if those others who had gathered there at the beginning of the auction butwho left the place under the impression that Nandlal would make the requiredpayment had continued there, the appellant's bid for Rs. 2,25,000/- would nothave been the higher bid. We consider therefore the learned Judges of theDivision Bench were justified in considering that the sale to the appellantought not to have been confirmed.

22. There was one further point made by learned Counsel that when the learnedJudges allowed the appeal of the respondent they should not have directed aresale of the property by a fresh auction but should have confirmed the sale tothe appellants at the price of Rs. 3,35,000/- which was the amount of their bidat the first auction. The basis of this argument was the undertaking which theygave at the time of the disposal of the application for interim stay pendingthe hearing of the appeal. We have already extracted the terms of thatundertaking. It is not easy to find any legal basis for this argument. It istrue that in the event of the appeal being allowed the Court might have,possibly with the consent of the 1st respondent before us, insisted upon theappellant taking the property for Rs. 3,35,000/- but that surely cannot givethe appellants any legal right to insist that the property be sold to them. Itwas a condition for the grant of the indulgence of stay and by no stretch oflanguage could that be read implying that the appellants had a right topurchase the property. It is true that the appellants have made a grievanceabout this matter in the application for leave to this Court as well as in thestatement of the case but that hardly improves the position.

23. This matter may also be looked at from a slightly different point ofview. Immediately Nandlal failed to turn up on September 8, 1956 theliquidators enquired of the appellants whether they were willing that theirpenultimate bid be treated as the highest bid and they be declared purchasers.This offer was refused as apparently they were satisfied that they would beable to get the property for a much less sum. Thereafter the liquidators tookout a Master's summons seeking sanction of the Court for the sale to them forRs. 2,25,000/-. The appellants supported that application. In other words, theywanted that the Court should confirm the sale to them for Rs. 2,25,000/- andthat was the order which they obtained from the learned Company Judge. It wasonly when the appeal was filed and an application for stay was moved before theappellate court by the 1st respondent here that the offer which is embodied inthe undertaking was made. In the circumstances it is difficult to see whatjustification there is for the contention that the learned Judges should, whenthey allowed the appeal, have confirmed the sale to them for Rs. 3,35,000/-. Weconsider there is no substance in this submission.

24. The result is the appeal fails and is dismissed with the costs of the1st respondent.

25. Appeal dismissed.

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