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2015 DIGILAW 1598 (KER)

Jain v. Sudarsan Chits (India) Ltd.

2015-11-21

C.K.ABDUL REHIM, MARY JOSEPH

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JUDGMENT : C.K. Abdul Rehim, J. 1. These Company Appeals are instituted against orders passed by the Single Bench in unnumbered Company Applications, filed by the common appellant, in C.P. No. 9 of 1981. The Registry had noted certain defects in both the Company Applications, which the counsel appearing for the applicant had disputed. Hence the Company Applications were posted before the Bench. After consideration of the matter, the learned Single Judge had upheld certain defects noted by the Registry. It is aggrieved by the said order, these appeals are filed. The defects noted in the Company Applications from which Appeal No. 18 of 2014 arises, are as follows; (i) Affidavit/statement by the appellant not produced. (ii) No index. (iii) Document produced to be marked as Annexure. (iv) Provisions of law seen incomplete. (v) Age and husband's name not seen in the affidavit. 2. The applicant had cured the Defect No. (iv). On the question of sustainability of defect Nos. (i), (ii), (iii) and (v), the matter was referred to the Single Bench. 3. In the Company Application from which Appeal No. 22 of 2014 arises, the defects noted by the Registry are as follows; (i) Statement/affidavit of Sri S.K. Jain not seen filed. (ii) Affidavit of proof of date to be marked as Annexure in the above affidavit. (iii) Assignment of company claim to be marked as Annexure and item 2 also to be included in the list of documents and index to be produced. (iv) Provision for Judge's Summons under Section 133 Rule 1 C.P.C. read with Rule 9 of Company Court Rules and Section 449 of Companies Act. 4. Out of the above defects, Defect No. (iv) was cured and regarding sustainability of the other defects, the unnumbered Company Application was posted before the Single Bench. 5. While considering the matter learned Single Judge had observed that, since the original claimant has filed a proof affidavit, the affidavit of the applicant is not necessary. Therefore Defect No. (iii) noted by the Registry was overruled. The other defects mentioned in No. (ii), (iii) & (iv) in Appeal No. 18 of 2014 were considered. The learned Judge observed that, Code of Civil Procedure and High Court Rules are applicable to the Company Court Case, unless the Company Court Rules provides otherwise. Hence it is found that the affidavit should be in accordance with Rr. The other defects mentioned in No. (ii), (iii) & (iv) in Appeal No. 18 of 2014 were considered. The learned Judge observed that, Code of Civil Procedure and High Court Rules are applicable to the Company Court Case, unless the Company Court Rules provides otherwise. Hence it is found that the affidavit should be in accordance with Rr. 43 and 44 of the Civil Rules of Practice and that the application shall be accompanied by an affidavit to prove the facts. It is also held that as per R. 50 of the Civil Rules of Practice, the documents referred into the affidavit shall be marked as Annexures and indexing is also necessary. It is aggrieved by those findings, these appeals are preferred. 6. Evidently, both the Company Applications are claims preferred before the Company Court, under R. 177 of the Companies (Court) Rules, 1959 (hereinafter referred to as the 'Company Court Rules'). The said Rule enables any creditor, who has failed to file proof of his debt before the liquidator within the time specified in the advertisement made, to apply to the Company Court for relief. The company court on receipt of such an application can adjudicate upon the claim or direct the Liquidator to do so. Presumably, such an application by a creditor before the company court should comply with all the requirements with respect to a claim to be instituted before the Liquidator. Rules 147 to 152 deals with the procedure. R. 150 of the Company Court Rules prescribe the mode of proof and verification thereof. It stipulates that debt may be proved by delivering and sending by post to the Liquidator. An affidavit verifying the debt may be by the creditor or by some person authorised by him. It stipulates that if the affidavit is made by a person authorised by the creditor, then it shall specifically state the authority under which the proof is submitted. The contents of the proof to be furnished is stipulated under R. 151. It provides that an affidavit proving a debt shall contain or refer to a statement of account showing the particulars of the debt and shall specify the vouchers if any, by which the same can be substantiated. The affidavit shall state whether the creditor is a secured creditor or a preferential creditor, and if so to set out the particulars of the security or of the preferential claims. The affidavit shall state whether the creditor is a secured creditor or a preferential creditor, and if so to set out the particulars of the security or of the preferential claims. It stipulates that such affidavit of proof regarding debt shall be in Form No. 66. Form No. 66 appended to the Company Court Rules would indicate that it is in the form of an affidavit titled as an "affidavit of proof of debt". The footnotes attached to Form No. 66 indicates that if the affidavit is not by the creditor but by some person authorised by him, the dependent should state in a separate paragraph his authority for making the affidavit and the means of his knowledge. In such case, suitable alteration should be made in Paragraphs 1 and 2 of the affidavit and the address and description of the creditor should be set out in Paragraph 1. 7. In the case on hand, the Company Applications were filed by one Sri S.K. Jain, Secretary, All India Subscriber's Association of Sudarsan Chits India Ltd. The said person is agitating the claim of another creditor in both these cases, based on an assignment of the Company Claim, executed by those creditors in favour of him. But it is pertinent to note that the 'affidavit of proof of debt' is not sworn to by the applicant, but only by the respective creditor. Hence, question arises as to whether the Company Applications filed by Sri S.K. Jain supported by affidavit of proof of debt executed by the respective creditors can be sustained, without an affidavit of the applicant himself. 8. For the purpose of answering the above question it is necessary to look into the Form prescribed under the Company Court Rules for instituting the claims. R. 10 of the Company Court Rules provides that applications under the Act shall be made by a petition or by a Judge's Summons, as provided. R. 11(a) prescribes that the applications stipulated therein shall be made by way of petitions. It is pointed out that a claim under R. 177 is not included in sub-rules (i) to (xxiii) of R. 11(a). Therefore, it is clear that a claim under R. 177 need not be through a petition. R. 11(b) provides that all other applications under the Act or under the Rules shall be made by Judge's Summons. It is pointed out that a claim under R. 177 is not included in sub-rules (i) to (xxiii) of R. 11(a). Therefore, it is clear that a claim under R. 177 need not be through a petition. R. 11(b) provides that all other applications under the Act or under the Rules shall be made by Judge's Summons. Therefore it is evident that a claim under R. 177 of the Company Court Rules need to be filed in the form of Judge's Summons, and not in the form of a petition. What should be the form of Judge's Summons is also stipulated under the Company Court Rules. R. 19 Provides that "Judge's Summons" shall be in Form No. 2 and shall, unless otherwise provided by these rules or permitted by the Judge, be supported by an affidavit. Sub-rule (2) of R. 19 stipulates that such Judge's Summons together with copy of the affidavit should be served upon the opposite parties. Form No. 2 appended to the Company Court Rules prescribes the format under which the Judge's Summons need to be prepared. 9. Based on the above referred provisions of the Company Court Rules, it can be clearly found the manner in which a company application seeking a claim under R. 177 need to be filed. It is evident that the form of such company application shall be as prescribed under the Company Court Rules. Therefore there cannot be any doubt with respect to application of the relevant provisions of the Company Court Rules, rather than any provisions of C.P.C., Civil Rules of Practice or High Court Rules. Without any hesitation it can be held that a claim under R. 177 shall be in the form of a Judge's Summons, which should be accompanied by an affidavit. But, as far as the applicant has to submit an 'affidavit of proof of debt' in accordance with the mandate of R. 151, it is not necessary for the court to insist upon any separate affidavit along with the Judge's Summons, apart from the 'affidavit of proof of debt.' Therefore the insistence that the applicant should file an affidavit along with Judge's Summons, cannot be sustained, provided he has filed an 'affidavit of proof of debt' along with the Judge's Summons. But in the case at hand, the 'affidavit of proof of debt is executed by a person other than the applicant/claimant. But in the case at hand, the 'affidavit of proof of debt is executed by a person other than the applicant/claimant. As already observed, when the creditor is not filing the claim, but a person authorised by him is making such claim, then as stipulated under R. 151 as well as in the footnote of Form 66, such person shall mention, in the affidavit about his authority for making the claim and in executing the affidavit. Therefore when the claim under R. 177 is instituted by any person other than the creditor, the person instituting such claim himself should file an affidavit, specifically mentioning the authority under which he is instituting the claim on behalf of the creditor. In the case at hand, the applicant is empowered based on the assignment executed by the creditor. Therefore the applicant himself need to swear the 'affidavit of proof of debt' by specifically mentioning the authority under which he is executing the affidavit on behalf of the creditor. 10. Viewed on the above perspective of the matter, the defect noted by the Registry, that the applicant should file an affidavit and that the affidavit of the creditor should be marked in such affidavit, cannot be sustained. On the other hand, what is required is a Judge's Summons to be filed accompanied with an 'affidavit of proof of debt' executed by the applicant specifically mentioning the authority under which he is making the claim on behalf of the creditor. Of course, the deed of assignment or any other proof indicating such authority can also be produced along with the application. 11. Next question arises as to whether all the documents produced along with the affidavit need to be marked in the affidavit itself and indexed in the application. Learned counsel for the petitioner contended that the power vested on the company court is under an original jurisdiction, which is adjudicatory in nature. The court has to consider the relevance of the evidence which need to be adduced, either documentary or oral. With respect to adduction of such evidence, the document need only to be proved in evidence. Since such evidence is not adduced through pleadings, the documentary evidence need not be instituted by marking in the affidavit. The court has to consider the relevance of the evidence which need to be adduced, either documentary or oral. With respect to adduction of such evidence, the document need only to be proved in evidence. Since such evidence is not adduced through pleadings, the documentary evidence need not be instituted by marking in the affidavit. We find force in such a contention, because the jurisdiction exercised by the company court is totally distinct and different from the original jurisdiction which is exercised by this court under Articles 226 and 227 of the Constitution. Hence as long as the procedural rules of the company court, which is the Company Court Rules, does not insist marking of any documents in the affidavit, and it is not sustainable for the Registry to insist such a marking. Hence the defects noted in this respect is found as unsustainable. Therefore in a claim instituted under R. 177 in the form of 'Judge's Summons', it need not be insisted upon that all the documents produced should be marked in the affidavit filed in support. 12. Result of the above discussion is that, on the facts of the case at hand, the applicant Sri S.K. Jain has to execute an 'affidavit of proof of debt' along with the Judge's Summons, specifically indicating the authority under which he is making the claim on behalf of the creditor. Any supporting document to prove such authority or any further document in support of the claim of the creditor, can be produced separately along with a 'list of documents'. The Company Appeals are allowed by setting aside the impugned judgment of the learned Single Judge to the above extent. The Registry is directed to accept the Company Applications if the appellant rectify the defects in accordance with the observations contained hereinabove, within a period of two weeks from the date of receipt of a copy of this judgment.