SINHA WATCHES (INDIA) PRIVATE LIMITED v. GUJARAT STATE FINANCIAL CORPORATION
1982-04-09
S.B.MAJMUDAR
body1982
DigiLaw.ai
S. B. MAJMUDAR, J. ( 1 ) THE petitioners M/s. Sinha Watches (India) Private Limited and its managing director challenge by this application an order passed by me on 30/06/1981 in Company Petition No. 19 of 1981 which was filed by present respondents nos. 1 and 2 to get appropriate orders of this Court for winding up petitioner no. 1 company on the ground that the said company was unable to pay its debts. The order which I passed on 30/06/1981 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". 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 4/12/1980 until 17/11/1981 petitioner No. 2 managing director of the company was in 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 pendency of winding up petition in this Court and they were the persons who could have acted on behalf of the company. It is therefore contended that the aforesaid order passed by me is an exparte 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 petitioner No. 2 was released from Tihar Jail and when he came to know of the exparte 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 earlier appointed as provisional liquidator of the company.
1 and 2 and as opponent No. 3 is joined the official liquidator who was earlier appointed as provisional liquidator of the company. In order to appreciate the grievance of the petitioners it is necessary to briefly refer to a few relevant facts leading to the present company application. ( 2 ) THE petitioner No. 1 M/s Sinha Watches (India) Private Limited (hereinafter referred to as the company) is a company incorporated under the Companies Act 1956 Petitioner No. 2 is the managing Director-cumchairman of the company. There is one more director who is the wife of petitioner No. 2. The petitioner No. 2 was allowed to hold 13080 shares and Smt. Anna Elizabeth Sinha wife of petitioner no. 2 was allowed to hold 8720 shares of Rs. 100 each. The company was incorporated for the objects set forth in the memorandum of association the main object being to carry on the business of manufacturers assemblers distributors hirers repairers importers exporters stores and warehouses of and dealers in watches clocks and time pieces of all descriptions including transistorized electrically or mechanically driven tower clocks watches and time pieces and split second stop watches calculators time indicating device sets. The case of the petitioners is that they imported into India machinery for manufacture of watches. Major part of the machinery has already come at the factory shed situated in Kandla Free Trade Zone. The Government of India Ministry of Commerce Civil Supplies and Cooperation (Department of Commerce) by its letter dated 5/07/1979 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 for the purpose of establishing the aforesaid manufacturing unit 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 1 and 2 had also undertaken to the Indian Overseas Bank to pay Rs. 43 51 138. 44 against the letter of credit which respondents 1 and 2 opened with the Indian Overseas Bank. It appears that the proposed project in its initial days and months had no smooth sailing.
1. 5 lakh from respondent no. 2 Respondents 1 and 2 had also undertaken to the Indian Overseas Bank to pay Rs. 43 51 138. 44 against the letter of credit which respondents 1 and 2 opened with the Indian Overseas Bank. It appears that the proposed project in its initial days and months had no smooth sailing. In the meantime respondents 1 and 2 served statutory notices to petitioner no. 1 company demanding their dues. 1 am told that petitioner no. 2s wife Mrs. Anna Elizabeth Sinha who is also a director of the company was served with statutory notices in January 1981 issued on behalf of respondents 1 and 2 who are the creditors of the company at her Switzerland address. As the said notices were not complied with the concerned respondents 1 and 2 filed Company petition No. 10 of 1981 for obtaining an order of winding up of the petitioner no. 1 company. The said petition was filed on 3/03/1981. ( 3 ) IT appears that the petitioner No. 1 company was sought to be served at its registered office situated in this city pursuant to the order of this 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 dated 20-3-1981 N. H. Bhatt J. appointed the Official Liquidator as provisional liquidator for petitioner No. I 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 Gujarat Samachar a Gujarati dally on 12-5-1981 and in local edition of Times of India on 18 It is pertinent to note that even earlier notice of acceptance of this company application No. 10 of 1981 was permitted to be published in local news paper and was in fact published on 3-4-1981 in 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 4-12-1980 and 17/11/1981 Thus at the relevant time he could never have lead 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. 2s wife in Switzerland. So far as 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 20-3-1981 issued a notice dated 26-3-1981 to petitioner No. 1 at his Switzerland address presumably being under the impression than 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 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 5-5-1981. Petitioner No. 2 thereupon instructed his Delhi advocate Mr. Ranjan Dwivedi while petitioner No. 2 was being taken to court in connection with the case for 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. 2s advocate Mr. 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 her Official Liquidator on 5-5-1981.
Petitioner No. 2s advocate Mr. 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 her Official Liquidator on 5-5-1981. Thereafter it appears that the Official Liquidator wrote a letter dated 27-5-1981 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 arrangement 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 addressed a letter dated 10-6-1981 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 by 15/07/1981. Thereafter he hoped to be free and to attend the office of the provisional Liquidator and provide him with all necessary details. ( 4 ) IT is in the background of the aforesaid facts and events that the order passed by me on 30-6-1981 will have to be viewed. On that day presumably the Official Liquidator who was appointed Provisional Liquidator of petitioner No. 1 company was not present in court so that actual whereabouts 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 Delhi advocate of petitioner No. 2 and the information which was 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 on for further orders. So far as Mr. G. N. Shah learned Advocate for petitioning creditor No. 2 is concerned he stated that even be did not know the aforesaid facis otherwise he would have pointed out these facts to the court.
So far as Mr. G. N. Shah learned Advocate for petitioning creditor No. 2 is concerned he stated that even be did not know the aforesaid facis otherwise he would have pointed out these facts to the court. The result was that 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 these facts was justified in mentioning to this court that the company could not be served of the notice regarding pendency of the company petition by the usual mode as the companys registered office was not traceable in Ahmedabad and that pursuant to the orders of N. H. Bhatt I. public notices were issued in local dailies on 12-5-1981 and 18-5-1981 and that mode of service could be treated as a valid mode of service 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 Gujarat Samachar and limes 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 the person in charge being the Managing Director and who would he 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 submissions in opposition to the petition. But he got no opportunity to represent his case on behalf of the company under the circumstances narrated above.
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 submissions 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. 1 (1) 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 30-6-1981. It is in the background of these facts and circumstances that I find the order of winding up as passed by me on 30-6-1981 to be in substance an ex-parte order. ( 5 ) A few facts and events subsequent to the said order of 30-6-1981 also deserve to be noted 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 1-7-1981 the official liquidator again wrote a letter to petitioner No. 2s advocate at Delhi pointing out that he was appointed as Provisional Liquidator of the company and that the registered office of the company could not 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 1-7-1981 clearly shows that even the Official Liquidator was not in know of the fact that on the earlier day i. e. 30-6-1981 I had already passed an order directing the company to be wound up and appointing Official Liquidator to be the Liquidator of the company. Even on 1-7-1981 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 30-6-1981 when I passed the aforesaid order.
Even on 1-7-1981 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 30-6-1981 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 courts 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 14-8-1981 to the Additional Registrar of this court requesting him to move a petition for stay order against the order of this court dated 20-3-1981 appointing provisional Liquidator for the company He pointed out that petitioner No. 2 was confined in another case at Delhi and it has difficult for him to engage a lawyer at Ahmedabad. The said letter clearly shows that even in August 1981 petitioner No. 2 was not knowing that any order for winding up was passed by this court on 30-6-1981 and he was labouring under an impression that only earlier order dated 20-3-1981 was holding the field. Petitioner No. 2 also addressed a letter dated 28 to the Official Liquidator pointing out that as his Delhi case was likely to be decided in the first week of September 1981 be 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 at 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 30-6-1981. The petitioner No. 2 again wrote a letter dated 30-9-1981 to the Official Liquidator reiterating 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.
The petitioner No. 2 again wrote a letter dated 30-9-1981 to the Official Liquidator reiterating 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 is thereafter that the Official Liquidator wrote a letter dated 29 to petitioner No. 2 at his Delhi address pointing out that the court bad passed a winding up order on 30-6-1981. When this letter reached petitioner No. 2 he was already out of Central Jail at Tihar as he was detained in the said Jail upto September1981. Moment petitioner No. 2 came to know about the passing of the winding up order on 30 he immediately came to Ahmedabad and filed the present application on 25-1-1982 requesting this court to review and/or revoke the winding up the order dated 30-6-1981 passed in company petition No. 10 of 1981 on various grounds stated in the application. ( 6 ) IT has been submitted that winding up order dated 30-6-1981 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 required to be revoked in the interest of justice in exercise of the review powers and/or inherent power of this court. ( 7 ) THE said application was admitted by me to final hearing. The Deputy Manager (Law) of the Gujarat Industrial Investment Corporation Limited 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 ( 8 ) 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 30-6-1981 was an exparte 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 by any one on its behalf being fully conversant with the facts and circumstances of the case.
But the company being an inanimate legal entity it was required to be represented before this court by any one on its behalf being fully conversant with the facts and circumstances of the case. That 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 defined in Tihar Jail at the relevant time he could not come here to represent the case 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 29-12-1981 at Delhi which would obviously be at any time after 29-12-1981. That in the said letter for the first lime the Official Liquidator informed petitioner No. 2 that there was an order of winding up dated 30-6-1981 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 be heard afresh oil merits after hearing the petitioners. ( 9 ) 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 opposition1 The present review application is not maintainable at the instance of the petitioners No. 2 the erstwhile Managing Director who has no locus standi to prefer this application on behalf of the company which can now be representated before the Court of law only -by the Official Liquidation. 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.
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. It must be stated at the outset that Rule 6 of the Company Court Rules 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 ands 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 Code of Civil Procedure as applicable to the company proceedings to pass appropriate orders for setting aside an ex-parte 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. ( 10 ) IT is in the background of the aforesaid legal position that I proceed 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 secs. 445 and 446 of the Indian 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 drivers 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 sec.
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 sec. 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 definition in sec. 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 standard works on Company Law viz. Gover on Company law 4 edition page 727; Pennington on Company Law page 507 and Palmer on Company Law 22 editing page 701 para 81. 26. Placing reliance on the observations in the standard works on Company law Mr. Shah contended the legal effect of the 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 ofcourse 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 stay of operation of the 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 application to set aside an ex-parte winding up order by way of review cannot be filed by an aggrieved person. Various statutory provisions and the commentaries of the learned authors on which Mr.
If that is so there is no rhyme or reason why application to set aside an ex-parte winding up order by 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 dehors and independently of and by passing the order of winding up. In the present proceedings be seeks to challenge the very winding up order which is the sole cause of deprivation of his powers and status Managing Director. If he is aggrieved by such order and if he can go in appeal there is no reason why be 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. The preliminary objection regarding locus standi as raised by Mr. Shah stands answered against him by a decision of the Delhi High court in Anil Kumar Sachdeva v. Four A Asbestos (P) Ltd. (1980) 50 Company Cases 122 S. Ranganathan J. in the aforesaid decision placing reliance on sec. 46th of the Companies Act 1956 and Company Court Rules 6 and 9 as well as Code of Civil Procedure 1908 sec. 151 O. IXR. 13 has observed. "although ill law a company which is ordered by the court to be wound up is represented by the official liquidator for all purposes that principles will not apply where the order appointing the official liquidator is itself under challenge. It is true that after the winding tip order is passed the powers of the directors cease but there are still certain residuary powers in the directors. The former director 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".
The former director 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". For arriving at the aforesaid conclusion reliance is placed by S. Ranganathan J. on an earlier judgment of the Delhi High Court as well as a decision of the English Chancery Division court In re Union Accident Insurance Co. Ltd. ( 1972) 1 All. E. R. 1105. In the aforesaid English decision Plowman J. made the following pertinent observations in the context of parimateria provisions of the English Companies Act :"the respondents submission was that the appointment of a provisional liquidator automatically put an end to the authority of the companys 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 functus officio and its powers are assumed by the liquidator and my attention was drawn to In Re Mawcon Ltd. (196)) All ER 188 kg (1969) I WIR 78 Comp. Case. 96 (On 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 the 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". I fully concur with the aforesaid observation of S. Ranganathans J. in Anil Kumars case (supra) based on the decision of Chancery court in (1972) 1 All E. R. 1105 (supra ). The preliminary objection about locus standi of the petitioners to prefer this application therefore has got to be over-ruled. ( 11 ) 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 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 sec.
( 11 ) 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 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 sec. 3 of the Indian Limitation Act 1963 as well as Article 124 found in the Schedule. It is true that under sec. 3 it has been mandated by the legislature that any application made after the prescribed period would get dismissed although limitation might not have been set up as defence. It is equally true that under Article 124 period of 30 days is provided for review of the judgment of the court other than 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 Madanlal v. State of U. P. A. I. R. 1975 S. C. 2085 wherein the Supreme Court had to consider the question regarding starting point of limitation for preferring an appeal under sec. 17 of the Indian Forest Act 1927 Gupta J. speaking for the Supreme Court made the following observations. "the Forest Act does not state what would happen if the Forest Settlement Officer made an order under sec. 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 a fundamental principle of justice that a party whose rights are affected by an order must have notice of it. This principle is embodied in 0.
It would be absurd to think so. It is a fundamental principle of justice that a party whose rights are affected by an order must have notice of it. This principle is embodied in 0. 20 R. I 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". Reliance has been placed in the above decision on an earlier decision in Harishchandra v. Deputy Land Acquisition Officer A. 1. R. 1961 S. C. 1500 It must therefore be held that for the purpose of computing limitation for filing a review application period of 30 days will start to run from the date on which the petitioner Rot the knowledge of the impugned order. As I have already shown above he came to know for the first time after 29-12-1981 pursuant to the letter which he received from the Official Liquidator that a winding up order was passed by this court on 30 If the date of his knowledge at Delhi about the impugned order is taken to be the next day of the letter dated 29-12-1981 posted from Ahmedabad even then the present application is filed within 30 days thereof. Mr. Shah in this connection submitted that personal knowledge of the 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 wound 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 get to act through 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 other 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 was the only person who could have made effective representation on behalf of petitioner No. 1 company as the other 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 facts of this case it must therefore be held than only petitioner No. 2 could have acted on behalf of the company and could have taken 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 survives for consideration. But even assuming that the proceedings were filed beyond the period of limitation there is sufficient ground for condonation of delay under sec. 5 of the Limitation Act as the only person who could have taken effective steps to oppose the petition was under 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 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. ( 12 ) 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 enough sufficient cause for getting the impugned order of winding up set aside.
( 12 ) 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 enough sufficient cause for getting the impugned order of winding up set aside. On the day on which the order was passed by me neither it was known to me nor 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. But instead I would have directed a personal service to petitioner No. 2 through the jailor Tihar Jail New Delhi. It is trite to say that 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 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. 2s advocate on 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 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 principles of natural justice. Hence this is a fit case for invocation of review and/or even inherent powers of this court for vacating the impugned order and I have not the least hesitation in doing so.
The said order must be said to have suffered from violation of principles of natural justice. Hence this is a fit case for invocation of review and/or even inherent powers of this court for vacating the impugned order and I have not the least hesitation in doing so. ( 13 ) IN the result this company application is allowed. The order passed by me on 30-6-1981 in company petition No. 10 of 1981 is revoked and cancelled. The company petitioning shall now proceed in accordance with law from the stage at which it stood prior to the order dated 30 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. Rule made absolute. .