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Sinha Watches (India) P. Ltd. Vs. Gujarat State Financial Corporation - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtGujarat High Court
Decided On
Case NumberCompany Application No. 7 of 1982 in Company Petition No. 10 of 1981
Judge
Reported in[1985]58CompCas489(Guj); (1982)2GLR561
ActsCompanies Act, 1956 - Sections 2(30), 445, 445(3), 446 and 466
AppellantSinha Watches (India) P. Ltd.
RespondentGujarat State Financial Corporation
Appellant Advocate S.B. Vakil, Adv.
Respondent Advocate G.N. Shah, Adv.
Cases ReferredRaja Harish Chandra Raj Singh v. Deputy Acquisition
Excerpt:
company - winding up - sections 2 (30), 445, 445 (3) and 466 of companies act, 1956 - petition filed challenging orders by which winding up of petitioner-company directed - winding up directed on ground that petitioner-company was unable to pay debts of respondent-company - petitioner-company had no notice of winding up proceedings initiated against it as petitioner was in jail at time of publication of notice - no knowledge of pendency of proceedings - petitioner not able to avail enough opportunity to have his say in opposition to proposed order of winding up - violation of principle of natural justice - order of winding up set aside. - - it could appear through its officer well versed in the affairs of the company. 6. a few fact and events subsequent to the said order of june 30,.....majmudar, j. 1. the petitioners, m/s. sinha watches (india) (p.) ltd., and its managing directors, challenge by this application an order passed by me on june 30, 1981, in company petition no. 10 of 1981 which was filed by the present respondent nos. 1 and 2 to get appropriate orders as of this court for winding up petitioner no. 1 company on the ground that the said company was unable to pay its dues. the order which i passed on june 30, 1981, in the said company petition no. 10 of 1981 requires to be reproduced at this stage as under : 'the opponent company has shown no cause. it is ordered to be wound up. provisional liquidator to be appointed as official liquidator. costs to come out of the assets of the company.' 2. by way of the present application, it has been contended that.....
Judgment:

Majmudar, J.

1. The petitioners, M/s. Sinha Watches (India) (P.) Ltd., and its managing directors, challenge by this application an order passed by me on June 30, 1981, in Company Petition No. 10 of 1981 which was filed by the present respondent Nos. 1 and 2 to get appropriate orders as of this court for winding up petitioner No. 1 company on the ground that the said company was unable to pay its dues. The order which I passed on June 30, 1981, in the said Company Petition No. 10 of 1981 requires to be reproduced at this stage as under :

'The opponent company has shown no cause. It is ordered to be wound up. Provisional liquidator to be appointed as official liquidator. Costs to come out of the assets of the company.'

2. By way of the present application, it has been contended that petitioner No. 2, who is the managing director of the company, was at the relevant time in Tihar Jail and was not served on behalf of the company and was not in the know of winding-up proceedings which were taken up by the petitioning creditors against the company in this court. It has been mentioned in this application that from December 4, 1980, until November 17, 1981, petitioner No. 2, managing director of the company, Tihar Jail under judicial custody and his wife, the second director of the company, was in Switzerland. The case of the petitioners is that neither petitioner No. 2 nor his wife were ever served with any notice regarding the tendency of winding-up petition in this court and they were the persons who could have acted on behalf of the company. It is further contended that the aforesaid order passed by me is an ex parte order and it deserves to be set aside in the interest of justice in exercise of review jurisdiction and/or inherent powers of this court. After the passing of the said order, when petition No. 2 was released from Tihar Jail and when he came to know of the ex parte order of winding up, he filed the present petition wherein the original petitioning creditors have joined as opponents Nos. 1 and 2 and as opponent No. 3 is joined the official liquidator who was early appointed as provisional liquidator of the company. In order to appreciate the grievance of the petitioners, it is necessary to briefly refer to few relevant facts leading to the present company application.

3. Petitioner No. 1, M/s. Sinha Watches (India) P. Ltd. (hereinafter referred to as 'the company') is a company incorporated under the Companies Act, 1956. Petitioner No. 2 is the managing director-cum-chairman of the company. There is one of the more director who is the wife of petitioner No. 2. Petitioner No. 2 was allowed to hold 13,080 shares and Smt. Anna Elizabeth Sinha, wife of petitioner No. 2, was allowed to hold 8,720 shares of Rs. 100 each. The company was incorporated for the objects set forth in the memorandum of association, main object being to carry on the business of manufactures, assemblers, distributors, hirers, repairers, importers, exporters, stores and warehouse of and dealers in watches clocks and time pieces of all description including transistorised, electrically or mechanically driven, tower clocks, watches and time-pieces and spilit second stop watches, calculators, time indicating devices, etc. The case of the petitioners is that they imported into India machinery for manufactures of watches. Major part of the machinery has already arrived at the factory shed situated in Kandla Free Trade Zone. The Government of India, Ministry of Commerce, Civil Supplies and Co-operation (Department of Commerce), by it letter dated July 5, 1979, has given its approval to the terms of collaboration of the petitioners with M/s. Bric Enggist, Switzerland, for setting up a unit in the Kandla Free Trade Zone for the manufacture of ladies and gents watches on the conditions mentioned in the said letter. It appears that the for the purpose of establishing the aforesaid manufacturing units at Kandla Free Trade Zone in this State, the petitioners obtained a loan of Rs. 14.59 lakhs from respondent No. 1 and Rs. 1.5 lakh from respondent No. 2. Respondents Nos. 1 and 2 had also under taken to the Indian Overseas Bank to pay Rs. 43,51,138.44 against the letter of credit whip respondents Nos. 1 and 2 opened with the India Overseas Bank. It appears that the proposed project in its initial days and month had no smooth sailing. In the meantime, respondents Nos. 1 and 2 served statutory notices on petitioner No. 1 company demanding their dues. I am told that petitioner No. 2's wife, Mrs. Anna Elizabeth Sinha, who is also director of the company, was served with a statutory notice in January, 1981, issued on behalf of respondents Nos. 1and 2 who are the creditors of the company at her Switzerland address. As the said notices were not complied with, the concerned respondents Nos. 1 and 2 filed Company Petition No. 10 of 1981 for obtaining an order of winding up of petitioner No. 1 company. The said petition was filed on March 3, 1981.

4. It appears the petitioner No. 1 company was sought to be served at its registered office situated in this city pursuant to the order of the his court in Company Application No. 10 of 1981 but the notice could not be served as the registered office of the company could not be traced. That, thereafter, by an order March 20, 1982, N. H. Bhatt J. appointed the official liquidator as provisional liquidator for petitioner No. 1 company and directed notice of pendency of the petition to be served by way of public advertisement. Accordingly, a public advertisement was inserted regarding pendency of the petition in the Gujarat Samachar, a Gujarati daily, on May 12, 1981, and in local edition of the Times of India on May 18, 1981. It is pertinent to not that an even earlier notice of acceptance of this company Application No. 10 of 1981 was permitted to be published in a local newspaper and was in fact published in a local news-papers and was in fact published on April 3, 1981, in the Times of India. It is an admitted fact that petitioner No. 2, who is the managing director of petitioner No. 1 company, was detained in Tihar Jail, Delhi, between December 4, 1980, and November 17, 1981. Thus, at the relevant time, he could never have read the newspaper advertisements regarding pendency of the company petition which were published locally in this city in the aforesaid newspapers; while so far as the wife of Petitioner No. 2 is concerned, she was the other director and was a swiss national staying all the time in Switzerland. It is also an admitted position that notice of pendency of the company petition No. 10 of 1981 was never served on petitioner No. 2's wife in Switzerland. So far a petitioner No. 2 is concerned, he was also not served with any notice of pendency of the company petition at his address at Tihar Jail, Delhi, where he was detained at the relevant time. It appears that in the meanwhile, the official liquidator of this court who was appointed as provisional liquidator, by an order of N. H. Bhatt J. dated March 20, 1981, issued a notice dated March 26, 1981, to petitioner No. 1 at his Switzerland address presumably being under the impression that petitioner No. 2 was already residing in Switzerland at the relevant time. It is the case of the petitioners of this application that the aforesaid notice sent by the official liquidator acting as provisional liquidator as sent to petitioner No. 2 at his Switzerland address was redirected to Tihar Jail, Delhi, where petitioner No. 2 was detained. Petitioner No. 2 came to know about this redirected notice in Tihar Jail on or about May 5, 1981. Petitioner No. 2 thereupon instructed his Delhi advocate, Ranjan Dwivedi, when petitioner No. 2 was being taken to court in connection with the case or which he was detained in Tihar Jail, to send a telegram to the official liquidator of this court informing that petitioner No. 2 was detained in Tihar Jail at New Delhi. Petitioner No. 2's advocate, Ranjan Dwivedi, accordingly sent a telegram to the official liquidator pointing out the fact that the present petitioner No. 2 was confined in Tihar Jail. The said telegram was received by the official liquidator on May 5, 1981. Thereafter, it appears that the official liquidator wrote a letter dated May 27, 1981, to advocate, Ranjan Dwivedi, at Delhi informing him that his client was required to submit statements of affairs of the company within 21 days and that he was requested to make necessary arrangements to hand over possession of books, records and assets of the company (in provisional liquidation) and to submit statements of affairs forthwith. Thereafter, petitioner No. 2 appears to have been informed by the Delhi advocate about the said letter received from the official liquidator. In response to the same, petitioner No. 2 through his advocate addresses a letter, dated June 10, 1981, to the official liquidator pointing out that petitioner No. 2 was in Tihar jail in connection with a case and so, he could not attend the office of the provisional liquidator and that he was hoping that his trial at Delhi will be over July 15, 1981. Thereafter, he hoped to be free to attend the office of the provisional liquidator and provide him with all necessary details.

5. It is in the background of the aforesaid facts and events that the order passed by me on June 30, 1981, will have to be viewed. On that day, presumably, the office liquidator who was appointed provisional liquidator of petitioner No. 1 company was not present in court so that the actual where about of petitioner No. 2 could not be brought to my notice. If the official liquidator had remained present, he could have specifically pointed out the communication which he had received from the Delhi advocate of petitioner No. 2 and the information sent to him by petitioner No. 2 to the effect that he was in Tihar Jail, New Delhi, at the relevant time. Unfortunately, these facts were not placed before me by the official liquidator who was not present on the day on which company petition was called for further orders. So far as Mr. G. N. Shah, learned advocate for petitioning creditor No. 2, is concerned he stated that even he did not know the aforesaid facts, otherwise, he would have pointed out these facts to the court. The result was these relevant facts were not known to me when I was called upon to pass the order of winding up. Mr. G. N. Shah for the petitioning creditors being himself ignorant about theses facts was justified in mentioning to this court that the company could not be served of the notice regarding pendency of the company petitioned by the usual mode of the as the company's registered office was not traceable in Ahmedabad and that pursuant to the orders of N. H. Bhatt J. public notices were issued in local dailies on May 12, 1981, and May 18, 1981, and that mode of service could be treated as a valid mode of services to the company about the pendency of the company petition and it is on this basis that I passed the impugned order directing winding up of the company on the basis that no cause was shown by the company which was treated to have been duly served of the company petition pursuant to the aforesaid public notices published in the Gujarat Samachar and Times of India in May, 1981. It must, therefore, be held that the said order, which was passed by me, though not technically ex parte was in fact and in substance, an ex parte order against petitioner No. 2 who was in fact and in charge being the managing director and who would be the proper person to put forward his contentions on behalf of the company in opposition to the company petition. It is obvious that the company, though being a legal entity, could not have appeared by itself. It could appear through its officer well versed in the affairs of the company. Petitioner No. 1 being the managing director was the proper person who could have appeared before this court and could have pointed out all the relevant contentions and sub-missions in opposition to the petition. But he got no opportunity to represent his case on behalf of the company under the circumstances narrated above. The only other person who could have appeared was the other director, his wife, who was a Swiss national and who was away from India in Switzerland and who was not served on behalf of the company in Company Petition No. 10 of 1981. Therefore, practically, there was no appearance on behalf of the company as there was no one who could appear on behalf of the company on June 30, 1981. It is in the background of these facts and circumstances, that I find the order of winding up as passed by me on June 30, 1981, to be in substance an ex parte order.

6. A few fact and events subsequent to the said order of June 30, 1981, also deserve to be noticed at this stage, so that the circumstances in which the present application came to be filed for cancellation of the earlier ex parte order can be better appreciated. On July 1, 1981, the official liquidator again wrote a letter to petitioner No. 2's advocate at Delhi pointing out that he was appointed as provisional liquidator of the company and that the registered office of the company cannot be traced at Ahmedabad address and no one could say whether such registered office was in existence at the said address. The aforesaid letter dated July 1, 1981, clearly shows that even the official liquidator was not in the know of the fact that on the earlier day, i.e., June 30, 1981, I had already passed an order directing the company to be wound up and appointing the official liquidator to be the liquidator of the company. Even on July 1, 1981, the official liquidator seemed to be under the impression that he had to act only as provisional liquidator presumably pursuant to the earlier order of N. H. Bhatt J. This also shows that the official liquidator was not present in the court on June 30, 1981, when I passed the aforesaid order. In the meanwhile, petitioner No. 2 went on corresponding with the official liquidator requesting him to get stay of operation of the High Court's earlier order as it was not possible for him to come down to Ahmedabad. Petitioner No. 2 also seems to have applied to the Legal Aid Committee of this court to take necessary steps on his behalf. In this connection, petitioner No. 2 also addressed a letter dated August 14, 1981, to the Additional Register of this court requesting him to move a petition for stay order against the order of this court dated March 20, 1981, appointing a provisional liquidator for the company. He pointed out that petitioner No. 2 was confined in another case at Delhi and it was difficult for him to engage lawyer at Ahmedabad. The said letter clearly shows that even in August, 1981, petitioner No. 2 was knowing that any order for winding-up was passed by this court on June 30, 1981, and he was labouring under an impression that only the earlier order dated March 20, 1981, was holding the field. Petitioner No. 2 also addressed a letter dated August 28, 1981, to the official liquidator pointing out that as his Delhi case was likely to be decided in the first week of September, 1981, he hoped to be free thereafter and he would personally visit him at Ahmedabad. Thereafter, the official liquidator wrote another letter in September, 1981, to petitioner No. 2 to the address of his Delhi advocate, Shri S. R. Nanda, calling upon him to hand over possession of the books, etc. Even in that letter, no intimation was sent to him that there was already a winding-up order passed by the court on June 30, 1981. Petitioner No. 2 again wrote a letter dated September 30, 1981 to the official liquidator retreating his request for stay of the proceedings in the company petition and pointing out that he was still in Custody in Central jail at Tihar. It was, thereafter, that the official liquidator wrote a letter dated December 29, 1981, to petitioner No. 2 at his Delhi address pointing out that the court had passed a winding-up order on June 30, 1981. When this letter reached petitioner No. 2, he was already out of Central Jail at Tihar as he was detained in the said jail up to November, 1981. The moment petitioner No. 2 came to know about the passing of the winding up order on June 30, 1981, he immediately came to Ahmedabad and filed the present application on January 25, 1982, requesting this court to review and/or revoke the winding-up order dated June 30, 1981, passed in Company Petition No. 10 of 1981 on various grounds stated in the application.

7. It has been submitted that the winding-up order dated June, 1981, is an ex parte order which was passed behind the back of petitioner No. 2. He could not remain present before this court as he was detained in Tihar jail at the relevant time. That there was nobody to represent his case When the said order was passed and, hence, the said order was passed and hence, the said order was required to be revoked in the interest of justice in exercise of the review powers and/or inherent powers of this court.

8. The said application was admitted by me to a final hearing. The Deputy Manager (Law) of the Gujarat Industrial Investment Corporation Ltd., respondent No. 2, has filed his affidavit-in-reply opposing the application; while petitioner No. 2 has filed his rejoinder. This application reached final hearing before me yesterday.

9. Mr. S. B. Vakil, learned advocate, appearing for the petitioners, submitted that in view of the peculiar facts and circumstances of this case, it is clear that the order dated June 30, 1981, was an ex parte order in the real sense of the term, though technically it can be said that the company was served through public advertisement. But the company being an inanimate legal entity, it was required to be represented before this court be any on its behalf being fully conversant with the facts and circumstances of the case. Petitioner No. 2, managing director of petitioner No. 1 company, could have remained present if he was in a position to do so. But as he was detained in Tihar jail at the relevant time, he could not come here to represent the cases of the company and, consequently, the order passed by me was required to be cancelled in the interest of justice and the petitioners deserved to be permitted to have their say on merits. Mr. Vakil further contended that petitioner No. 2 never came to know about the order of winding up till he received a letter from the official liquidator dated December 29, 1981, at Delhi which would obviously be at any time after December 29, 1981. That in the said letter, for the first time, the official liquidator informed petitioner No. 2 that there was an order of winding up dated June 30, 1981, in the present case and within 30 days thereof, the present application has been filed and consequently, there was no question of limitation involved in the present matter and in any case, delay, if any, deserved to be condoned in the interest of justice, and Company Petition No. 10 of 1981 deserved to be heard afresh on merits after hearing the petitioners.

10. Mr. G. N. Shah for the contesting respondents, original petitioning creditors, on the other hand, submitted that the present application deserves to be dismissed. He raised the following contentions in opposition.

1. The present review application is not maintainable at the instance of the petitioners as petitioner No. 2, the erstwhile managing director, has no locus standi to prefer this application on behalf of the company which can now be represented before the court of law only by the official liquidator.

2. The petition is barred by limitation.

3. There was no sufficient cause for remaining absent on the day on which the impugned order of winding up was passed by me and, hence, even on this ground, the application should be dismissed.

11. It must be stated at the outset that r. 6 of the Companies (Court) Rules, 1959, provides that save as provided by the Act or by these rules, the practice and procedure of the court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and the Rules. Rule 9 provides that nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court. It is, therefore, obvious that sitting as a company court, I have ample jurisdiction both under the inherent powers of this court as well as under the relevant provisions of the CPC as applicable to the company proceedings to pass appropriate orders for settings aside an ex part order, if interest of justice requires me to do so. In fairness to Mr. Shah, it must be pointed out that it was not his contention that this court has no inherent powers or review powers for setting aside the order in question. But, in his submission, the present case did not call for the exercise of these powers.

12. It is in the background of the aforesaid legal position that I propose to deal with the main contentions raised on behalf of the contesting respondents opposing grant of the present application. So far as locus standi of the petitioners is concerned, Mr. Shah relied upon ss. 445 and 446 of the Companies Act, 1956, and submitted that once a winding-up order is passed, the erstwhile directors and officers of the company would automatically get displaced and, thereafter, it is the official liquidator who occupies the driver's seat. Therefore, according to him, it is only the official liquidator who can now act on behalf of the company. Mr. Shah invited my attention to s. 445(3) of the Act in particular to submit that the order of winding up shall be deemed to be notice of discharge to the officers and employees of the company, except when the business of the company is continued. He then invited my attention to the definition in s. 2(30) and submitted that the term 'officer' would include a director. In order to support his contention, Mr. Shah invited my attention to various passages from the standard works on company law, viz., Gover on Company Law, 4th edition, page 727, Pennington on Company Law, page 507 and Palmer's Company Law, 22nd edition, page 701, para 81.26. Placing reliance on the observations in the standard works on company law, Mr. Shah contended that the legal effect of a winding-up order is that the director is denuded of his power to act on behalf of the company. There cannot be any quarrel with this position of law. But it is trite to say that the very order by which such a result is brought about can, of course, be challenged by a person who is likely to be affected by the order. I asked Mr. Shah as to whether the impugned order of winding up can be challenged in appeal by the erstwhile director on behalf of the company or not. He fairly stated that he can file such an appeal, but hastened to add that in such a case, he should obtain stay of operation of the order of winding up as passed by the concerned company judge. In my view, whether a stay of operation of a winding-up order is obtained or not, an appeal can be legitimately filed by an aggrieved director challenging the winding-up order. If that is so, there is no rhyme or reason why an application to set aside an ex part winding-up orderly way of review cannot be filed by an aggrieved person. Various statutory provisions and the commentaries of the learned authors on which Mr. Shah heavily relied pertain to a situation where the winding-up order comes into operation of its own and is found to be legally operative and in that context a question arises as to whether an erstwhile director can thereafter act on behalf of the company or not. Such is not the situation in the present case. It is not as if petitioner No. 2 is trying to act as managing director de hors and independently of and bypassing the order of winding-up. In the present proceedings he seeks to challenge the very winding-up order which is the sole cause of deprivation of his powers as managing director and status as managing director. If he is aggrieved by such order and if he can go in appeal, there is no reason why he cannot file the present application for getting the said order cancelled on legally permissible grounds in the review proceedings and/or under inherent powers of this court. In fact, the preliminary objection regarding locus standi as raised by Mr. Shah stand answered against him by a decision of the Delhi High Court in Anil Kumar Sachdeva v. Four 'A' Asbestos (P) Ltd. [1980] 50 Comp Cas 122. S. Ranganathan J., in the aforesaid decision, placing reliance on s. 466 of the Companies Act, 1956, and the Companies (Court) Rules, 1959, rr. 6 and 9, as well as the Code of Civil Procedure, 1908, s. 151, O.IX. r. 13, has observed (headnote) :

'Although in law a company which is ordered by the court to be wound up is represented by the official liquidator for all purposes, that principle will not apply where the order appointing the official liquidator is itself under challenge. It is true that after winding-up order is passed, the powers of the directors cease but there are still certain residuary powers in the directors. The former directors would certainly be entitled to appeal against the order of winding-up. The same authority would be available to the directors to seek the setting aside of an ex parte order for winding-up.'

13. For arriving at the aforesaid conclusion, reliance was placed by S. Ranganathan J. on earlier judgment of the Delhi High Court as well as a decision of the English Chancery Division Court in Union Accident Insurance Co. Ltd., In re [1972] 1 ALL ER 1105; [1972] 1 WLR 640. In aforesaid English decision, Plowman J. made the following pertinent observations in the context of in pari materia provisions of the English Companies Act (at p. 1113 of [1972] 1 All ER and at pp. 641 and 642 of [1972] 1 WLR) :

'The respondents' submission was that the appointment of a provisional liquidator automatically put an end to the authority of the companies' directors to instruct solicitors and counsel to represent it and that the solicitors purporting to act on its behalf were, therefore, liable to pay the respondents' costs personally. It is of course well settled that on a winding-up, the board of directors of a company becomes functions officio and its powers are assumed by the liquidator, and my attention was drawn to In re Mawcon Ltd. [1969] 1 ALL ER 188; [1969] 1 WLR 78; 39 Comp Cas 926 (Ch D), where Pennycuick J. stated in effect that the appointment of a provisional liquidator had the same result. No doubt that is so, but it is common ground that notwithstanding the appointment of provisional liquidator, the board has some residuary powers, for example, it can unquestionably instruct solicitors and counsel to oppose the current petition and, if a winding-up order is made to appeal against that order.'

14. I fully concur with the aforesaid observation of S. Ranganathan J. in Anil Kumar's case [1980] 50 Comp Cas 122 (Delhi) based on the decision of Chancery Court in Union accident Insurance Co. Ltd., In re [1972] 1 All ER 1105. The preliminary objection about standi of the petitioners to prefer this application, therefore, has got to be overruled.

15. That takes me to the consideration of the second contention of Mr. Shah on behalf of the contesting respondents. He submitted that the present application for review of the earlier order of this court is presented long after the period of 30 days from the date of the order. In that connection, my attention was invited to s. 3 of the Indian Limitation Act, 1963, as well as art. 124 found in the Schedule. It is true that under s. 3 it has been the mandate by the Legislature that any application made after the prescribed period would get dismissed although limitation might not have been set up as a defence. It is equally true under art. 124, a period of 30 days is provided for review of the judgment of the court other that the Supreme Court and the time begins to run from the date of the decree or order. But in a case in which the order under challenge is not passed in the presence of the party aggrieved, the question as to when the impugned order came to the knowledge of the aggrieved party would assume importance. Mr. Vakil, learned advocate for the petitioners, invited my attention to a judgment of the Supreme Court in Madan Lal v. State of U.P., AIR 1975 SC 2085, wherein the Supreme Court had to consider the question regarding the starting point of limitation for preparing an appeal under s. 17 of the Indian Forest Act, 1927. Gupta J., speaking for the Supreme Court, made the following observations (headnote) :

'The Forest Act does not state what would happen if the Forest Settlement Officer made an order under section 11 without notice to the parties and in their absence. In such a case, if the aggrieved party came to know of the order after the expiry of the time prescribed for presenting an appeal from the order, would the remedy be lost for no fault of his It would be absurd to think so. It is fundamental principle of justice that a party whose rights are affected by an order must have notice of it. This principle is embodied in O. 20, r. 1 of the Code of Civil Procedure; though the Forest Settlement Officer adjudicating on the claims under the Act is not a court, yet the principle which is really a principle of fair play and is applicable to all tribunals performing judicial or quasi-judicial functions must also apply to him.'

16. Reliance has been placed in the above decision on an earlier decision in Raja Harish Chandra Raj Singh v. Deputy Acquisition officer, AIR 1961 SC 1500. It must, therefore, be held that for the purpose of computing limitation for filing a review application, the period of 30 days will start to rum from the date on which the petitioner got the knowledge of the impugned order. As I have already shown above, he came to know for the first time only after December 29, 1981, pursuant to the letter which he received from the official liquidator that a winding-up order was passed by this court on June 30, 1981. If the date of his knowledge at Delhi about the impugned order is taken to be the day following the date of the letters dated December 29, 1981, posted from Ahmedabad, even then, the present application is filed within 30 days thereof. Mr. Shah in this conception submitted that personal knowledge of petitioner No. 2 is irrelevant as he was not a party to the company petition and the only party was the company which is sought to be would up. Mr. Shah is right to that extent. But the fact remains that the company, though being a legal entity, is not a physical personality and it has got to act though its officers and agents. Petitioner No. 2 was the only person who could have made effective representation on behalf of petitioner No. 1 company as the director, viz., his wife, who was a Swiss national, was thousands of Kilometers away in Switzerland and never knew about the pendency of the company petition. Petitioner No. 2, who was the managing director of the company, was under a physical incapacity and he could not remain present in this court as, at the relevant time, he was behind the bars in Tihar Jail, New Delhi, and the further fact remains that so far as the registered office of the company is concerned, it was not traceable and no one was there to represent the company or to receive any communication addressed to the company at its Ahmedabad office. In the peculiar fact of this case, it must, therefore, be held that only petitioner No. 2 could have acted on behalf of the company and could have taken any effective steps to oppose the company petition for winding up. Under these circumstances, knowledge of petitioner No. 2 so far as the impugned order is concerned, cannot be said to be an irrelevant consideration. In fact, it is the only germane consideration. Hence, no question of limitation really revives for consideration. But even assuming that the proceeding were filed beyond the period of limitation, there is sufficient ground for condonation of delay under s. 5 of the Limitation petition was under a physical disability and could not remain present before this court, till he was released from detention in Tihar Jail in November, 1981, and till he got the knowledge and information about the passing of the impugned order. Hence, the second contention of Mr. Shah centering round the question of limitation also does not survive and has got to be rejected.

17. So far as the third contention of Mr. Shah is concerned, it must be rejected off-hand. The facts and circumstances narrated by me above leave no room for doubt that the petitioners have made out sufficient cause for getting the impugned order of wing up set aside. On the day on which the order was passed by me, neither was it known to me not to the learned advocate for the petitioners-creditors that the managing director of the company was under a physical disability and could not remain present before the court as he was in judicial custody at Delhi. If that fact was known to me, the impugned order would never have been passed by me. I would have directed a personal service to petitioner No. 2 through the jailor, Tihar Jail, New Delhi. It is trite to say that the public notice issued either in April, 1981, or in May, 1981, regarding pendency of the company petition could not have been read by petitioner No. 2 in Tihar Jail at Delhi as these notices were published in local dailies or in local editions of The Times of India. Therefore, in all probability, petitioner No. 2 could not have got any information regarding pendency of these proceedings. It is true that the correspondence which ensued between petitioner No. 2's advocate on the one hand and the official liquidator on the other did inform petitioner No. 2 about the pendency of the company petition. But petitioner No. 2 made it clear times without number that so long as he was detained in Delhi Jail, it was impossible for him to contest the proceedings in this court. He had also made a faint but abortive attempt to get proper stay proceedings filed through the legal aid committee of this court. In view of these facts, it must be held that on the day on which the impugned order was passed, petitioner No. 2 did not receive enough opportunity to have his say in opposition to the proposed order of winding up. The said order must be said to have suffered from violation of the principles of natural justice. Hence, this is a fit case for invocation of review powers and/or even inherent powers of this court for vacating the impugned order and I have not the least hesitation in doing so.

18. In the result, this company application is allowed. The order passed by me on June 30, 1981, in Company Petition No. 10 1981 is revoked and cancelled. The company petition shall now proceed in accordance with law from the stage at which it stood prior to the order dated June 30, 1981. At this stage, Mr. G. N. Shah for the contesting respondents-petitioning creditors requested me to stay the operation of my order for a fortnight to enable him to prefer an appeal against this order. The request, being reasonable, is granted. It is, however, made clear that in the meanwhile, the official liquidator shall maintain the status quo regarding the properties of the company in his possession as may be obtaining today. It is clarified that this order will not come in the way of the petitioners in complying with other directives issued by the official liquidator as provisional liquidator. Rule is accordingly made absolute. In the facts and circumstances of the case, there will be no order as to costs.


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