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Office Liquidator, R.S. Motors (P) Ltd. Vs. J.S. Sawhney and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberCompany Appeal No. 427 of 1974 and 538 of 1975
Judge
Reported in[1977]47CompCas219(Delhi); 12(1976)DLT276
ActsCompanies Court Rules, 1959 - Rule 6; Companies Act, 1956 - Sections 542
AppellantOffice Liquidator, R.S. Motors (P) Ltd.
RespondentJ.S. Sawhney and ors.
Advocates: Rajeev Behl and; M.S. Vohra, Advs
Excerpt:
.....ought to have filed a written statement before 29th may, 1975, and having failed to file any written statement he must now seek the orders of the court for permission to file a written statement. the proceedings can be commenced by a writ of summons or by a writ of summons with the statement of claim endorsed. the rules to the supreme court (english supreme court) 'specify which summons have to he endorsed to state the claim. (6) as a question stion of practice and procedure which arises very rarely is being analysed, i would also like to refer to the procedure to be followed in the case of other company applications which arc instituted in the form of a judge's summons. the position which emerges is that generally, applications which are moved by a judge's summons are to be tried..........time after service on 29th may, 1975. no order was passed on that date regarding the filing of a written statement. nor was any written statement filed. nor was any time granted for filing a written statement. the next date fixed was 23rd july, 1975, for the service of the other, respondent- on that date, respondent no. 2 was not present and respondent no. 1 was also absent. the court passed an order directing ex-parte proceedings against respondent no. 1. this has led to the filing of the present application for setting-aside the ex-parte proceedings. (3) now, this application has been moved immediately after the last date i.e. 23rd july, 1975. no proceedings took place on 23rd july, 1975 and. thereforee, the question for consideration is what is the effect of the first respondent.....
Judgment:

D.K. Kapur, J.

(1) This application for setting aside ex. pane proceedings has been moved in relation to a company application pending in this Court moved by the Official Liquidator of M/s. R. S. Motors (P) Ltd. (in liqdn.). The application is under Section 543 of the Companies Act, 1956 and prays for certain reliefs concerning the actions of the ex-Directors of the Company (in Liqdn.), I have gone through the main company application and find that certain allegations against the ex-Directors of the Company, which I need not set out in any detail at this .stage, have been set out in the application; which has been styled as an application under Section 543 of the Companies Act, 1956. There is no doubt that it lias been moved not as a company petition but as a company application. Notice of this application was given to the respondents in the following words :-

'ISSUE summons in Form No. 121 to the respondents for 6th December, 1974'.

(2) Thereafter, the first respondent was served and appeared for the first time after service on 29th May, 1975. No order was passed on that date regarding the filing of a written statement. Nor was any written statement filed. Nor was any time granted for filing a written statement. The next date fixed was 23rd July, 1975, for the service of the other, respondent- On that date, respondent No. 2 was not present and respondent No. 1 was also absent. The court passed an order directing ex-parte proceedings against respondent No. 1. This has led to the filing of the present application for setting-aside the ex-parte proceedings.

(3) Now, this application has been moved immediately after the last date i.e. 23rd July, 1975. No proceedings took place on 23rd July, 1975 and. thereforee, the question for consideration is what is the effect of the first respondent being absent on 23rd July, 1975. In short, the question is whether respondent No. 1 can now file a written statement. This has led to the raising of the subsidiary question, which is wether respondent No- 1 was required by law to File a written statement either on 29th May, 1975 or 23rd July. 1975. the previous two dates of hearing.

(4) Under the provisions of the Code of Civil Procedure, on or before the first date of hearing, a defendant to a suit has to file a written statement because of the provision of Order 8 Rule I of the Code. If that provision applies also to the present proceedings, then, the first respondent ought to have filed a written statement before 29th May, 1975, and having failed to file any written statement he must now seek the orders of the Court for permission to file a written statement. As he did not file a written statement on 29th May, 1975 I do not see that the position was at all altered by his absence on 23rd July, 1975. So, the question to be decided is whether on 29th May, 1975 the first respondent was required by law to file a written statement. I have been taken through the provisions of law and have examined the Companies (Court) Rules, 1959 on the procedure which is to be followed in dealing with applications under Sections 542 and 543 of the Companies Act, 1956 and also in respect of other applications under these Rules.

(5) The procedure prescribed by the Companies (Court) Rules, 1959 is somewhat different from the procedure prescribed under the Code of Civil Procedure and indeed differs materially from the procedure normally followed even in the Original Side of this Court. The Companies (Court) Rules have divided the various applications which can be moved before the Court under the Companies Act, 1956 into two categories. One category is described as petitions and the other as applications. The nomenclature being used by this Court, is company petitions and company applications. The provisions of Rule 10 of the said Companies (Court) Rules, 1959, say that all applications under the Act shall be moved either by a petition or by a judge's summons. Then Rule Ii proceeds to specify which applications are to be moved in the form of petitions and which applications are to be moved by a judge's summons. There are 23 specified applications which are to be moved by petitions and the remaining applications are to be moved by a judge's summons. There is no doubt that an application under Section 543 moved in respect of a company which is being wound up has to be moved by a judge's summons. Somewhat inconsistently, a similar application moved during the pendency of an application under Section 397 or 398 has to be moved by a petition because of item 19 in Rule II. Now, when a company application has been moved by a judge's summons, the question still remains as to what the respondent is to do when he appears before the court. Is he to file a written statement or is he merely to put in appearance before the court It is now necessary to turn to Rule 260 which deals specifically with applications under Section 542 or 543 of the Act. This Rule states that an application under these sections has to be moved by a judge's summons in Form Nos. 120 and 121. An examination of Form No. 120 or 121 shows that it does not require the applicant to state the facts which are relied upon. Then, Rule 261 shows that after the summoned party has put in appearance, the court can give directions as to the filing of points of claim and points of defense. The relevant forms appertaining to this stage of the proceedings under Sections 542 or 543 are respectively Forms 122 and 123. These forms show that the material facts which are relied upon have to be stated at this stage of the proceedings. It, thereforee, seems to me, that the procedure to be adopted in cases under Sections 542 or 543 is materially different from the (procedure followed under Code of Civil Procedure. It corresponds in fact to the procedure which is generally followed in the Courts in England. It may be recalled that there are two general methods to commence proceedings in the English High Court; the proceedings can be commenced by a writ of summons or by a writ of summons with the statement of claim endorsed. The Rules to the Supreme Court (English Supreme Court) 'specify which summons have to he endorsed to state the claim. In other cases the statement of claim is to be presented to the party after the appearance of that party. It is open to an intending suitor to endorse his statement of claim even if he is not required to do so by law. The English procedure has also been vsarld from time to time with the object of getting the party before the court first and enabling the pleadings etc. to be settled after appearance. This seems to be the procedure under 542 or 543 as envisaged by the Companies (Court) Rules. I am, thereforee, of the view that in this particular case the respondents were not required to file a written statement on appearance because the provisions of Order 8 Rule I of the Code were nut applicable in this particular case.

(6) As a question stion of practice and procedure which arises very rarely is being analysed, I would also like to refer to the procedure to be followed in the case of other company applications which arc instituted in the form of a judge's summons. In cases other than applications under Sections 542 or 543, the procedure is somewhat different. Rule 19 deals with the procedure in the case of judge's summons under other sections of the Companies Act. This Rule provides that a judge's summons in Form No. 2 has to issue. It also states that such a summons shall be supported by an aftidavit. Now turning to Form No. 2, it will be seen that this form also does not make any provision for setting out the facts of claim. Thus, if the respondent was served with a mere summons in Form No. 2 unacccompanied by any other document, he would certainly find it impossible to file a written statement; he would not know the facts on which the claim was based. However, Rule 19 indicates that such a summons has to be accompanied by an affidavit. Presumably, such an affidavit has to set out all the facts on which the applicant seeks to rely for the purposes of getting relief on the judge's summons. If such affidavit is sent along with a judge's summons in Form No. 2 to the respondent I do not see any reason why a written statement cannot be filed. The Companies (Court) Rules, 1959 arc entirely silent as to what is to happen on the appearance of the respondent in response to a judge's summons in Form No. 2. There are detailed provisions as to how the summons is to be served but none as to what is to happen on the appearance of the party This means that Rule 6 of these Rules has to be relied upon. In that Rule it is stated that the practice and procedure of the Court and the provisions of the Code so far is applicable will apply to all proceedings under the Act or the Rules. The Code is defined as the Code of Civil Procedure. It follows that when no procedure can be spelt out of Rules, the procedure to be followed has to be that which is specified in the Code. Thus. the position which emerges is that generally, applications which are moved by a judge's summons are to be tried exactly like civil suits by reason of the application of the Code of Civil Procedure by Rule 6 and because of what is stated in Section 141 of the Code of Civil Procedure. This means that in the case of ordinary applications which arc accompanied by an affidavit, a written statement should be filed. I may also refer to Rule 10 which specifies that the judge has power to allow applications to be tried in a different form. Thus, I am of the view that the procedure can be varied in the judge's discretion, from that which is followed in relation to suits. But in the absence of any such order the procedure in the Code relating to surts has to apply. An application under Section 542 or 543 is an exceptional case, and because of the special procedure provided, is not to be tried under the Code of Civil Procedure, but under the procedure prescribed under Rules 260, 261 and 262. Consequently, no adverse order can be said to have been passed against the applicant at the hearing of this company application on 23rd July, 1975 when he was ex-parte, and, thereforee, there is no need to set aside the ex parte proceedings because the applicant can rejoin the proceedings from the stage at which they arc.

(7) As the procedure relating to company application is being discussed in this judgment in some detail, and there is a great deal of confusion in this Court as to the exact procedure to be followed in different types of cases it would not be out of place to mention that company applications which are to be tried in the form of petitions by reason of what is stated in Rule 11 are to be tried in a different form altogether. In the case of such company petitions, the notice of the petition 's to be in Form No. 6 which specifies the manner in which the reply to the petition has to be filed. Thus, the Companes (Court) Rules, 1959 have themselves specify the procedure to be followed in the case of petitions. There are other provisions in the rules relating to such petitions and, I find, that there is not much difficulty in applying those Rules in practice.

(8) As I have held above, the present proceedings before (.he court are under Section 543 of the Companies Act, 1956. and, thereforee, the first respondent was not required to file a written statement. As this is the position there is no necessity to set aside the ex parle pro and, hence, this application has to be rejected, but the appli cant is permitted io rejoin the proceedings at the stage at which they are now. There will be 'no order as to costs.


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