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Manharlal Manilal Shah Vs. Official Liquidator - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtGujarat High Court
Decided On
Case NumberMisc. Civil Application No. 278 of 1968 in Appeal No. 2 of 1968
Judge
Reported in[1969]39CompCas641(Guj); (1969)GLR180; (1969)GLR218
ActsCompanies Act; Constitution of India - Article 133(1)
AppellantManharlal Manilal Shah
RespondentOfficial Liquidator
Cases ReferredChuni Lal Tulsiram v. Amin Chand
Excerpt:
.....,since the impugned order was made by us in an appeal preferred against the decision of the company judge. if it affirmed the decision of the company judge, a further condition would have to be satisfied before leave to appeal can be granted under article 133(1), clause (b), and that condition is that the appeal must involve some substantial question of law. but we are not at all satisfied that the appeal involved any substantial question of law. for, if it did, the condition that the appeal must involve some substantial question of law not being satisfied, leave to appeal cannot be granted. 9. since on the view aforesaid all the conditions requisite for the applicability of article 133(1), clause (b), are satisfied in the present case, we make the rule absolute and grant..........comparised in the textile mill. the official liquidator after obtaining the direction of the company judge advertised sale of the assets of the company and pursuant to the advertisement so given, several offers were received by the official liquidator before the time stipulated in the advertisement. the sealed envelopes containing the offers were opened by the company judge on 23rd april, 1968. the official liquidator thereafter made a report to the company judge and on the report the company judge made an order dated 25th april, 1968, directing that the offer of the second respondent be accepted, subject to the fulfillment of certain conditions with which we are not concerned in this application. the applicant thereupon preferred an appeal in this court challenging the order.....
Judgment:

P.N. Bhagwati, C.J.

1. This is an application for leave to appeal to the Supreme Court against a decision of this court given on 18th June, 1968, in O.J. Appeal No. 2 of 1968 ([1968] 38 Comp. Cas. 643). The applicant seeks leave to appeal under article 133(a), clauses (b) and (c) of the Constitution, and the question is whether he is entitled to leave under either of these two clauses. The applicant is a creditor of a company called Rajratna Naranbhai Mills Company Ltd. By an order dated 26th July, 1967, the company was ordered to be compulsorily would up and the official liquidator was appointed liquidator of the company. The company owned a textile mill and it, therefore, became necessary in the winding up, for realising the assets of the company, to sell the land, buildings, plant machinery, stores and other assets comparised in the textile mill. The official liquidator after obtaining the direction of the company judge advertised sale of the assets of the company and pursuant to the advertisement so given, several offers were received by the official liquidator before the time stipulated in the advertisement. The sealed envelopes containing the offers were opened by the company judge on 23rd April, 1968. The official liquidator thereafter made a report to the company judge and on the report the company judge made an order dated 25th April, 1968, directing that the offer of the second respondent be accepted, subject to the fulfillment of certain conditions with which we are not concerned in this application. The applicant thereupon preferred an appeal in this court challenging the order passed by the company judge sanctioning the sale in favour of the second respondent. When the appeal reached hearing before us, a preliminary objection was taken by the learned advocate appearing on behalf of the second respondent against the maintainability of the appeal by the applicant. The ground on which the preliminary objection was based was that the applicant was not entitled to maintain the appeal. A three fold answer was sought to be given to the preliminary objection on behalf of the applicant. It was urged in the first place that the applicant being a creditor of the company was aggrieved by the order sanctioning the sale at an inadequate price and as an aggrieved person he was entitled to challenge the order in appeal. It was contended in the alternative that, in any event, the applicant must be regarded as a party to the proceeding since he had appeared at the hearing of the winding up petition as a supporting creditor and he was, therefore, entitled to prefer the appeal as a party to the proceeding. Lastly, it was argued that, even if the applicant be not regarded as a party to the proceeding, he was still entitled to prefer an appeal with leave of the court and such leave should be granted to him. All the three answers made on behalf of the applicant were rejected by us and we held in a judgment delivered on 18th June, 1968, ([1968] 38 Comp. Cas. 643) that the applicant was not a party to the appeal as of right and, though he could certainly prefer the appeal with leave of the court, there was no reason why leave should be granted to him and we accordingly decided that the applicant was not entitled to maintain the appeal and the appeal was liable to be dismissed with costs. We did not go into the merits of the grounds raised by the applicant in support of the appeal since we thought it unnecessary to do so in the view taken by us that the appeal was not maintainable by the applicant. It is against this decision that the applicant seeks leave to appeal under article 133(1), clauses (b) and (c).

2. So far as clause (c) of article 133(1) is concerned, we are clearly of the view that this is not a fit case for appeal to the Supreme Court within the meaning of that clause. But the applicant is on firmer ground when he invokes clause (b) of article 133(1) in support of his application for leave. Article 133(1), clause (b), provides that an appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding in the territory of India if the High Court certifies that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the amount or value of not less than Rs. 20,000 and where the judgment, decree or final order appealed from affirms the decision of the court immediately below, the High Court must also further certify that the appeal involves some substantial question of law. Now, admittedly, the appeal from the order of the company judge sanctioning the sale in favour of the second respondent was a civil proceeding and the decision of the appeal indirectly involved some claim or question respecting property of the amount or value of not less than Rs. 20,000. But the question is whether the decision of the appeal amounted to a judgment, decree or final order within the meaning of article 133(1), for it is only if the decision of the appeal could be said to be a judgment, decree or final order within the meaning of that article that an appeal could lie to the Supreme court under clause (b) of that article. Now it is well settled that the word 'judgment' in article 133(1) does not have the meaning given to it in the Code of Civil Procedure but it means a final judgment. The question which therefore arises for consideration is whether the decision of the appeal was a final judgment or order, the word 'decree' being clearly inapplicable. Now what is a final judgment or order is no longer a matter of doubt or controversy. There are several decisions of the Supreme court dealing with the question as to when a decision can be said to be a final judgment or order but it is not necessary to refer to all of them since the latest decision of the Supreme Court on the point, namely, Mohanlal v. State of Gujarat : 1968CriLJ876 , exhaustively discusses this question. The main judgment in that case was delivered by Shelat J. and he divided the cases where this question may arise into two classes : one class comprising cases where the impugned order were passed in appeals or revisions from orders in the original or main proceedings and the other class comprising cases where the impugned orders were made in proceedings independent of the original or main proceedings. So far as the first class of cases is concerned, the learned judge pointed out that the test applied in decided cases was whether the impugned order disposed of the original proceeding; if it did, the order would be final; if it did not and the proceeding was alive, yet to be tried, the order would not be final. The learned judge referred to the decision of the Privy council in Abdul Rahman v. D. K. Cassim & Sons and pointed out that the test applied in that case was that, 'the finality must be a finality in relation to the suit : if after the order, the suit is still a live suit in which the rights of the parties have still to be determined, no appeal lies against it,' and applying this test the Privy Council held that an order of remand was not a final order since it kept the entire case undecided. The learned judge also relied on the decision of the Supreme Court in Syedna Taher Saifuddin Saheb v. State of Bombay : AIR1958SC253 , and observed that the same test was applied by the Supreme Court in taking the view that 'the appeal before it was not maintainable as the impugned order disposed of a preliminary issue regarding the validity of the Bombay Prevention of Excommunication Act, 1949, but did not decide the rest of the issues in the suit.' The learned judge then proceeded to discuss the second class of cases and pointed out that a different test would have to be applied to orders made in proceedings independent of the original or main proceedings. The test formulated by the learned judge in regard to this class of cases was that where there is a proceeding independent of the original proceedings between the parties : 1968CriLJ876 :

'........ the finality of an order passed in such an independent proceeding is not to be judged from the fact that original proceedings are not disposed of by it but are still pending determination; that the test as to whether the impugned order determines the rights of the parties in controversy in the original proceedings instituted by one of them would not apply to a proceeding independent of such original proceedings; and that proceeding is disposed of, the order is final in so far as that controversy is concerned.'

3. The learned judge pointed out that the order in such an independent proceeding would be a final order so far as that proceeding is concerned and the finality of such order cannot be judged by co-relating it with the original controversy between the parties. Since the order finally disposes of the independent proceeding and nothing further remains to be done in respect of that proceeding, the order would be a final order.

4. Now, so far as the present case is concerned, it clearly and indubitably falls within the first class of case referred to by the Supreme Court in Mohanlals's case : 1968CriLJ876 , since the impugned order was made by us in an appeal preferred against the decision of the company judge. The test which has, therefore, to be applied is the test formulated in regard to the first class of cases, namely, whether the impugned order had the effect of keeping the original proceedings alive, 'yet to be tried' or whether it was final in so far as the original proceeding was concerned. Now there can be no doubt that the impugned order finally disposing of the appeal put an end to the proceeding for sanction of sale and after the impugned order, the proceeding for sanction of sale did not remain a live proceeding in which the rights of the parties had still to be determined : nothing further remained to be done in respect of that proceeding. It is no doubt true that the appeal was dismissed on a preliminary objection that the applicant was not entitled to maintain it and on that view we did not examine the merits but that makes no difference, for whatever be the ground on which the appeal was disposed of, the effect of the decision was to finally dispose of the proceeding. In order that an order disposing of a proceeding may be a final order, it is not necessary that it should determine the merits of the dispute between the parties. It is enough if it finally disposes of the proceeding whether on a preliminary objection or otherwise. The test is : what is the nature and effect of the order and not what is the ground on which the order is made. The question we have to ask ourselves is : does the order keep the original proceeding alive, 'yet to be tried' or does it put an end to that proceeding. This in fact was the test applied by the Supreme Court even in regard to the second class of cases. Referring to the decision of the Supreme Court in State of Orissa v. Madan Gopal : [1952]1SCR28 Shelat J. pointed out in Mohanlal's cease : 1968CriLJ876 that, though the order disposing of the writ petition did not determine the rights of the parties and was ex facie interlocutory in character, it was yet a final order 'in view of the fact that with these orders the petition was disposed of finally and nothing further remained to be done in respect of the petition.' The order made on the writ petition was held to be a final order because it had the effect of finally disposing of the writ petition.

5. Considerable reliance was placed on behalf of the second respondent on a decision of the Calcutta High Court in Mukunda Das v. Bidhan Chandra Roy : AIR1960Cal77 , in support of his contention that an order which does not decide questions arising in the appeal on merits but rejects the appeal on a preliminary ground cannot be said to be a final order. What happened in that case was that an appeal against a decision of the subordinate court was filed in the High Court and on a preliminary objection raised on behalf of the respondent that the appeal lay to the District Court and not to the High Court, an order was passed by the High Court holding that it had no jurisdiction to entertain the appeal and that the appeal must be returned for presentation to the District Court which was the proper court having jurisdiction to entertain it. The question arose whether the decision of the High Court as to its jurisdiction to entertain the appeal without any decision on the merits of the controversy between the parties was final order within the meaning of article 133(1). A Division Bench of the High Court took the view that the order was not a final order since it did not finally dispose of the rights of the parties but left them open for determination by the court of the District Judge in the appeal which was returned for presentation to the District Court. Lahiri C.J., delivering the judgment of the Division Bench, pointed out :

'...... as in the present case this court expressly refused to decide any question on merits and left it open for determination by the court of the District Judge the order passed by this court cannot, in my opinion, be said to be a final order.'

6. The point emphasized by the learned Chief Justice was that the appeal was not finally disposed of but was returned for presentation to the District Court and therefore the rights of the parties were left open for determination by the District Court. An argument was advanced before the learned Chief Justice that the order of the High Court really and in substance amounted to an order of dismissal of the appeal and was therefore a final order. But this argument was rejected by the learned Chief Justice saying that on its plain terms the order did not dismiss the appeal but returned it for presentation to the proper court and it could not, therefore, be regarded as an order dismissing the appeal. It is implicit in this discussion that if the order had been an order dismissing the appeal, it would have been undoubtedly held to be a final order. This decision, therefore, far from advancing the contention of the second respondent, actually supports the view that an order finally disposing of an appeal without deciding on merits the controversy between the parties is a final order.

7. We must therefore hold, on an application of this test, that the decision of the appeal in the present case was a final judgment or order within the meaning of article 133(1), since it finally disposed of the appeal and with it the proceeding for sanction of sale. The question then is : did the appellate order affirm the decision of the company judge. If it affirmed the decision of the company judge, a further condition would have to be satisfied before leave to appeal can be granted under article 133(1), clause (b), and that condition is that the appeal must involve some substantial question of law. The applicant contended that the appeal involved a substantial question of law and it was therefore unnecessary to consider whether the appellate order affirmed the decision of the company judge. But we are not at all satisfied that the appeal involved any substantial question of law. It therefore becomes material to consider whether the appellate order affirmed the decision of the company judge. For, if it did, the condition that the appeal must involve some substantial question of law not being satisfied, leave to appeal cannot be granted. Now the appeal was dismissed by this court on the ground that the applicant was not entitled to maintain the appeal. We did not consider the merits of the appeal but rejected it on the ground that no appeal lay at the instance of the applicant. The order passed by us dismissing there appeal on this ground can in no sense be regarded as an order adopting or affirming the decision appealed from. When we took the view that the appeal did not lie at the instance of the applicant, it is difficult to see how it can be said that in rejecting the appeal we adopted or affirmed the decision of the company judge. This view which we rate taking is supported by a Full Bench decision of the Madhya Bharat High court in Gulabchand v. Kudilal Govindram (A.I.R. 1952 M.B. 149, 150 (F.B.)). The appeal in that case was dismissed by the court on the ground that no appeal lay under section 25 of the High court of Judicature Act, 1949, and the question arose whether the order dismissing the appeal on that ground was a final order affirming the decision of the court immediately below. Dixit J., delivering the main judgment, held that the order could not be regarded as an order affirming the decision of the court immediately below and the reasons he gave were :

'In my opinion, there is considerable force in the contention of the learned counsel for the petitioner that the order of this court dismissing the special appeal on the ground, that no appeal lay under section 25 of the Act, is not an order which affirms the decision dated December 2, 1948, of the Division Bench. It seems to me that the expression 'affirms the decision of the court immediately below' implies that the High Court has dealt judicial with the decision of the court below and upheld it. Where, as in the present case, the court holds that it has no jurisdiction to entertain an appeal from the decision of the court below and rejects the appeal, it seems to be difficult to say that the decision of the court below is affirmed by the rejection of the incompetent appeal. This view receives some support from the decision of the Privy Council in Abdul Majid v. Jawahir Lal. ([1914] I.L.R. 36 All. 350; A.I.R. 1914 P.C. 66; 23 I.C. 649). In that case, their Lordships of the privy Council considered the question of the effect of the dismissal of an appeal in the Board for want of prosecution. Lord Moulton, in delivering the judgment of the Board, observed :

'The order dismissing the appeal for want of prosecution did not deal judicially with the matter of the suit, and could, in no sense, be regarded as an order adopting or confirming the decision appealed from. It merely recognised authoritatively that the appellant had not complied with the conditions under which the appeal was open to him and that, therefore, he was in the same position as if he had not appealed at all.' It follows, a fortiori, from these observations that when an appeal is dismissed on the ground that no appeal lay, it cannot be said that the order dismissing the appeal is an order adopting or confirming the decision appealed from. This Privy council decision has not been referred to in the judgment of the Allahabad High Court in Mahadeo Sahai v. Secretary of State : AIR1932All312 and Beni Rai v. Ram Lakhan Rai ([1898] I.L.R. 20 All. 367), and of the Lahore High Court in Chuni Lal Tulsiram v. Amin Chand (A.I.R. 1933 Lah. 356(2)) are distinguishable on the ground that in those cases the appeals were competent and the High Court had jurisdiction to entertain them, and the order dismissing there appeal could be regarded as one passed dealing judicially with the matter and holding that the appeal was not supported. I am, therefore, inclined to think that in the present case, the petitioner is entitled to the leave asked for without showing that the proposed appeal involves some substantial question of law.'

8. We find ourselves so wholly in agreement with these observations that we do not think we can usefully add anything more. We are, therefore, of the view that the order passed by us dismissing the appeal, though a final order, did not affirm the decision of the company judge and it was therefore not necessary that the appeal must involve some substantial question of law.

9. Since on the view aforesaid all the conditions requisite for the applicability of article 133(1), clause (b), are satisfied in the present case, we make the rule absolute and grant certificate under article 133(1), clause (b). The costs of this application will be costs in the appeal before the Supreme Court. On the petitioner's undertaking recorded in paragraph 3 of the application, the order sanctioning the sale in favour of the second respondent is stayed for a period of two weeks from the date when the certificate is ready for delivery.


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