Satish Churan Law v. H. K. Ganguly

Judgment

11. I (I) S.C.R. SUPREME OOURT REPORTS cases which would fall within the jurisdiction of the High Court under s. 35(1) of the Act but it is not to be narrowly interpreted nor to be so widely interpreted as to convert the revision into an appeal OD facts. Appeal allow~. SATISH CHURAN LAW H.K.GANGULY (B. P. SINHA, C.J., J. L. KAPUR, M. HIDAYATULLAH, J.C. SHAH and J. R. MuDHOT.KAR, JJ.) Company Law-Winding uir-Examinntion ~f •x-Director-Applicatian of Liquidator accompanied by •igned •tatement-Ex parte ordtr-Modijication or vacating of-Right to insptct statement filed by Liquidator-Whether statement confidtntial-(Jompaniea Act, 1956 (1 of 1956), •· 477-0ompani" (Oourt) Rules, 1959, "· 243, 244 and 249. A company was ordered by the High Court of Calcutta to be wound up. The Official Liquidator submitted an application accompanied by a signed statement for an order that the appellant, an ex-director of the company, be examined concerning the affairs of the company under s.

4 77 Companies Act, 1956, and that he be ordered to produce certain records. The application was granted ex-parte. The appellant applied for an order vacating or modifying of the order and for supplying copies of or facility for inspection of all documents including the signed statement of the Liquidator. The Company Judge rejected the application holding that the ex-parte order wa1 final and he had no power to review it and that the appellant was not entitled to a copy of or to in•pect the signed statement of the liquidator. On appeal Court held that the application to modify or vacate the order was maintainable, but in the circumstances of the case the Court held that the order was "desirable and necessary" and that the appellant was not entitled to an inspection of the signed statement of the liquidator.

Held, that the ex-parte order was not final and it was open to the Company Judge to modify or vacate. it on the ground that it had been obtained without placing all the requisite materials before the court or by ·mis-statement of Hari Shanlcat Rao Girdhari Uil Chowdhury Kapur J, Decemhtr 6 Salish Churan Law H, K. Ganguly 944 SUPRE¥E COU~T REPORTS fl962] SUP}'.. facts or on other adeq11ate groun~s~ The primary test for m1;tking the ordt"r was whe~her it' was just' and beneficial to th'e 'bu::.ineSs of the company ; • the power conferred on the court Was very ,vi de and the court had to gu'!:rd itself againat being made an instr~ur1ent of vexation OT oppres·don. IIf-the prc~rnt case none of the circumstances ju11tif)·ing interference w~th the ex-parte order were made out.

The order was not snltght f(ir a1iy coJlateral p1u-.pose, a purpose other than the rfft:"ctive proi[rcss of the winding up in th~ interest of the comp:iny. 'fhe appellant was primafacie a person who was likely to give inf'>rmation useful aboUt the ,affairs of the company jn winding up. In re North Australian• >rerritory • Oomf,any, (1890) •n Ch. D. In ••. Metrop>lit"n B"n,~, (1880) 15 Ch. D. 139, In rt. M•1vile Hose, lim:1&1., (1939) I Ch .. D. 32 and In re. Gold Co'!'J>'my Ltd., (1879) 12 Cir. D. 77, referred to. Held, further, fliat the. appellant .had no right to inspect the .•igned statzment made by the liq~idator -p_n w!'ic!> the order of the ~ourJ proceeded. The statement of the L1qu1- dator i:licl hot for~ part oftlie file of-\he p~ocee!lingsof liqu;dation. lt{ITH'Tely enabled the cour 1t to be satisfied that the appellant should be'examined in the in\erest of the compony. The rules permitted the making ot:_ such an orde't ex' parte.

The examinarion was confidential.· j I'\_ In re Golif' Qompnny ltd.;\1B7?J l2 c.h. D. 77; r~ferrcd to. Crv1L APPELL4TE Ju~Ii=!DICTIO~,: Qivil Appet?-1 No.·521 ·of U.161. Appeal by spe,cial,.Jea~e· froJ?. th11 -~tl.dginent and order dated April 17,. 1!}6i of the Calcutta. High Cour,t in.Appeal from Original Order .No. 13~ of 11160. M .. G. Setalvad, Attorney-General of J.ndia, M. K .. Baner1i.~nd 8. N. Mt,tkherji,. fo-,; the ·appe1lt?-nt. 8. Mukkerjee and P. K .. Bose, for tlie respondent. 1961. December, 5. The Judgment of the Court ~·as. "deli V'ored b,Y SHAH. J.-,-Ballygunge Real :Property ,and B'uilding Society Ltd.~hcreina.fter called the Companywas on J a.nuary 8, ,1938, orqe~11.d by ,th~ High Court of J udieatu;e at Calcutta.,. to b!l wouµd up. OP, January 18, 1960, the Official Liquidator submittti.d· an application accompanied by a signed statement for an order that the appellant be examined under s. 477 of the Indian Companies Act, 1956.

This application was granted ex-parte by Mr. Justice G.K. Mitter on January 18, 1960, and the appell1tIJ.t was served with the order to attend the Court on March 22, 1960, for the purpose of being examined concerning the affairs of the Company, and to bring with him and produce at the said time and place the following books and papers, mentioned in Schedule B to the order, viz., (a) Ballygunge Estate (Private) Ltd.-Cash Books, General Ledger, Journal, Minutes Books from 1939 to 1948, Property Register. (b) Ballygunge Building Society Private Ltd.- Cash Books, GenerafLedger, Journal, Minute Books, Property Register. (c) Ballygunge Real Property & Building Society Ltd. (In liquidation)-General Ledger for 1949, and "all such other books, papers, deeds, writings and other documents in his custody or power in any way relating to the affairs of the Company". This order was published in public newspapers.

The solicitors of the appellant by letters dated February 29, 1960, and March 10, 1960, called upon the Official Liquidator to furnish them with copies of the petition and the report on the basis of which the order was made. The Official Liquidator having informed the solicitors of the appellant that the latter were not entitled to a copy of the report of the official liquidator, the appellant applied by a judge's summons for an "order recalling vacating, setting aside or modifying" the order dated January 18, 1960, and for a direction to the official liquidator requiring him to supply copies of the report of the official liquidator and of the other documents relat· ing to the application and alternatively for an order granting leave to inspect the court records and Salish Churan Law H. K Ganguly Shah J. J9fi1 Salish C""'"" Law /I. K. G"'lluly SM!oJ. 946 SUPRIDIE COURT REPORTS [I!l62] SUPP. proceedingR of the application and to take copies thereof.

ThP appellant contended that the order m11d~ by Mr. .Ju~tice Mitter on January 18, I !160, was obtained by suppression of mat~rial facts and that, in any event, the order made without notice to the appellant wa.~ vexatious and opprn88ive and amounted to an ahmm of the proooss of Court. He submitted that ho was a Director of the Company between the vcars 1939 to I 953 and hl\d attended meetings of the Board of Directors of the Company and without reference to the records of the meetings of the Board and particularly without reference to the Minute Books, it was not pOSBiblo for him to recollect any details as to transactions which might have taken place in the Board's meetings.

He stated that he was not oonoemed with the a<lminis· tration, management or tho day to day working of the Company, except to the extent of taking part in the Board'8 meetings, that he never had in his custody the books referred to in the order and that the official liquidator had never asked for or enquir· ed of him about any documents, that he was not aware of the matters on which information was required by the official Iir1uidator and unless those matters were made known to him, it was not posaible for him, to answer questions or to give information required of him, that to enable him to answer questions or supply information, it was necessary for him to know the nature of the enquiry and the charges and to inspect the records and documents of the Com· pany and without the assistance of such records and documents his proposed examination would be highly oppressive and harsh and was likely to prove futile.

The official liquidator submitted that all the available papers in the books with the liquidator will be made available at the time of tho examina· tion of the appellant but he-the official liquidatorwas not bound to give information in advance about the nature of the enquiry; to do so, he contended, would defeat the purpose of the enquiry. He also submitted that tho appellant had no right 94 7 claim inspection or to obtain copies or the statement which accompanied the judge's summons dated January 18, 1960. Mr. Justice Law rejec1ed the application filed by the appellant, holding that the order dated January 18, 1960, was final and that he had no power to review, modify, alter or vary the same, that the order merely summoning for examination under s. 477 of the Companies Act did not affect a plirty's rights, there being no charge, no complaint and no allegation against him.

The learned Judge observed that it was not necessary for the Court in the first instance to determine that the person called upon to furnish information actually possessed that information : if the Court has reasons to think, or if even an allegation is made that a certain person is in possession of information which would be of use in the course of winding up, the Court can call upon him t.o appear in Court and examine him, and that rr. 243 (1) and 243 (2) of Companies (Court) Rules laid down the same procedure as was laid down in In re Gold Company (1879 12 Ch. D. 77 at page 82) and different from the procedure which was laid by r. 195 of the Indian Companies Act, 1913.

In the view of the learned Judge the statement of the official liquidator on which the order dated January 18, 1960, was made not being on oath or affirmation was not "legal evidence" and did not form part of the proceedings of the Court and the appellant could not demand facility for inspection of the statement or copy thereof. Against the order of Mr. Justice Law an appeal was preferred to a Division Bench of the High Court. The High Court held that the order having been initially pass ex parle an application for discharging or modifying the order was in law maintainable at the instance of the appellant but the order in so far as it directed the appellant who was a director of the Company to appear before the 19U Satish Churan l..UJ H.K. Gangu(1 Shah.>. tisk Outran Law H, K, Ganfl/l.1 S"411J, 948 SUPREME OOURT REPORTS [1962] SUPP.

Court to be examined touching upon the affairs of 1 the Company was, in the, circumstances of the case, , "desirable and noce388.ry ', and that the statEment of the official liquidator on which the order dated January 18, 1960, was issued not being an affidavit was not required by the Companies (Court) Rules 1959 to be kept on the file of the liquidation pro. ceedings: the statement was a confidential document and was-save by order of the Court-not open to inspection of any person other than the liquida- • tor. The learned judges modified the order in so far as it directed production of the books ·of account relating to the Ballygunge Estate (Private) Ltd. and the Ballygunge Building Society Private Ltd., because those companies were not parties to the liquidation proceedings. Against the order of the High Court this appeal with special leave has been preferred to this ,.. Court. Three questions fall to be determined : ( 1)

Whether an ex parte order directing the examination of a person under s. 477 of the Indian Companies Act, 1956 is liable to be modified, or vacated on the application of the persons affected thereby ; (2) Whether there is any ground for discharging or modifying the order dated January 18, 1960; and (3) Whether the appellant is entitled before hie examination to inspect the statement submitted by the official liquidator in support of the application for the order dated January 18, 1960, or to be furnished with a copy thereof. Section 477 of the Indian Companies Act, 1956, provides: "477 ( 1)

The Court may, at any time after the appointment of a provisional liquidator or the ma.king of a winding up order summon before it any officer of the company or person known or suspected to have in his possession any property or books or pr.pers of the company, or known or suspected to be indebted to the company, or any person whom the Court deems capable of giving information ooncerning the promotion, formation, trade, dealings, property, books or papers, or affairs of the company. (2) The Court may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories; and may, in the former case, reduce his answers to writing and require him to sign them. (3)

The Court may require any officer or person so summoned to produce any books and papers in his custody or power relating to the company; but, where he olaims any lien on books or papers, produced by him, the production shall be without prejudice to that lien, and the Court shall have jurisdiction in the winding up to determine all questions relating to that lien. ( 4) If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the Court at the time appointed, not having a lawf'ul impediment (made known to the Coan at the time of its sitting and allowed by it), the Court may cause him to be apprehended and brought before the Court for examination. (5)

If, on his examination, auy officer or person so summoned admits that he is indebted to the company, the Court may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the Court may seem just the amount in which he is indebted, or any 11141 Satish Chur"" La., H. K. Ganzuly S/iahJ. SatUh Churan Law H.K.Ganvl! ShahJ. 950 SUPREl\IE COURT REPORTS (1962] SUPP. pa.rt thereof, either in full discharge of the whole amount orinot, as the Court thinks fit, with or without costs of the examination. (6) If, on his examination, any such officer or person admits that he has in his possession _ any property belonging to the company, the Court may order hiiµ to deliver to the pro· visional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as to the Court may s!'lem just. - (7)

Orders made under -sub-sections __ (5} and (6) shall be executed in the same manner as decrees for the payment of money or for delivery of property under the Code of Civil Procedure, 1908 respectively. (8) Any person making any payment or delivery in pursuance of an order made under subsection ( 5) or sub-section (6) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property.'' Clauses (5), (6), (7) and (8) it may ?e noted, were inserted by Act 65 of 1960. Section 463 of the Companies Act authorises this Court to make rules for all matters relating to winding up of companies which by the Act are to be prescribed and for other matters. This Court has framed Companies (Court) Rules, 1959, out of which rr. 243, 244 and 249, ·which are material, are as follows :- "243.

Application for examination under Section _ 477.-(1} An application for the examination of a person under Section 477 may be made ex parte provided that where the application is made by any person other than the Official Liquidator, notice of the application shall be given to the Official Liquidator. (~) The summons shall be in Form 109 aud, where the application is by the Official Liquidator, shall be accompanied by a statement signed by him setting forth the facts on which the application is based. Where the application is made by a person other than the Official Liquidator, the summons shall be supported hy an affidavit of the applicant setting forth the matters in respect of which the examination is sought and the grounds relied on in support of the summons." "244.

Directions at hearing of summons.-:..Upon the hearing of the summons the Judge may, if satisfied that there are grounds for making the orders, make an order directing the issue of summons against the person named in tl>e order for his examination and/or for the production of documents. Unless the Judge otherwise directs, the examination of such person shall be held in Chambers. The order shall be in }form No. 110." ".249. Order for public examination under section 478.-(I) where an order is made for the examination of any person or persons under Section 4 78, the examination shall be held before the Judge ; provided that in the case of High Court, the Judge may direct that the whole or any part of the examination of any such person or persons, be held before any of the officers mentioned in sub-section ( 10) of the said Section as may be mentioned in the order:

Where the date of the examination has not been fixed by the order, the Official Liquidator shall take an appointment from the Judge or officer before whom the examination is to be held as to the date of the examination. The 01·der dfrecting a public examination shall be in Form No. 112. Satis!i Churan Law H. K. Gangulj Shah J. Chu1an L"w H. K. Gtu1py ShohJ. 952 SUPREME OOURT REFOR TS [1962) SUPP. ··1 (2) The Judge may, if he things fit, either in the order for examination or by any subsequent ordr-r, give directions aa to the specific matters on which such person is to be examined." By s.

4 77 the Court iti authorised to summon before it (I) any officer of the Company, (2) any person known or suspected to have in hie po88easion any property or books or papers of the Company, and (3) any person known or suspected to be indebted to the company, or any person whom the Court deems capable of giving information concerning the promotion, formation, trade, dealings, property, books or pupers or affairs of the company. By r. 243 an application for an order for examination may be ma.de ex parle, and the Company Judge may, if he is satisfied that the interest of the company will be served by the examination of a person-be he an officer of the company or other person make the order. The primary test for ma.king the order is whether it is just and beneficial to the busineBB of the company, But the power conferred by the section is very wide and the Court must guard itself against being made an instrument of vexation or oppreBBion.

The order which is made ex parle is not final ; it is al ways open to a person summoned to apply for vacating or modifying the order on the ground that it has been obtained without placing a.11 the requisite materials before the Court or by mis-statement of facts or on other adequate grounds. Rule 9 of the Companies (Court) Rules preserves to the Court its inherent powers to give such directions or pa.as suoh orders as may be neceaaary for the ends of justice or to prevent abuse of the procees of Court, and a. direction to va.oatfi an order previously ma.de, is in a proper case within the Court's inherent jurisdiction. The relevant provisions of the English Companiea Aot, 186~ (25 & 26 Viet. c. 89), the J English Companies Act, 1929 (19 & 20 Geo V c.3} and the English Companies Act, 1948 (11 & 12 Geo VI c,88) on the question relating to examination of officers of the company or other persons are substantially the same as s.

4 77 of the Indians Companies Act, 1956, and the principles. laid down by the superior Courts in England, whioh have been assimilated in the practice of Company winding up by the Courts in India are useful in determining the nature of the proceeding. In re N<trth Australian Territory Company ('), Lord Justice Cotton vacated an order in appeal where the order for examination was not made in the interest of the Company in liquidation, but was made with a view to assist the interest of the company in prosecuting an action which has been brought up by the liquidator. In that case the liquidator filed with leave of the Court an action against another company for setting aside an agreement of purchase and obtained an order for affidavit of document, but the Court refused to order production of certain documents, or the examination of the defendant company's secretary on interrogatories, on the ground that discovery was premature. The liquidator then obtained an order under s.

115 of the Companies Act, 1862 for the examination of the secretary before an examiner. The Secretary refused to answer certain questions relating to the matters in issue in the action and the Court held that the liquidator had shown no reason for seeking discovery except to assist him in the action and so to evade the order of the Judge postponing discovery in the action and therefore the witness was justified in refusing to answer the question. Lord Justice Bowen in that case observed that the power conferred bys. 115 is an extra-ordinary power. "It is a power of an inquisitorial kind which enables the Court to direct to be examined-not; merely (I) (1890) 45 cb. D. 87. Satish Churan Law H.K. Gongu{ll Shah J, ~athh~Churan La_w H. K': Ganguly Shah J. before itself, but before the examiner appointed by the Court-some third persqn who is no part)' to -a. litigation.

That 1is. a.n inquisitorial power, which may work with g1:eat sev<;1·ity against third pernons, And it seems to me to be obvious that such a section ought to be used with the greatest care, so .as not· unnecessarily to put in motion the machinery of justice wheH it is not wanted or to put it in motion at a stage when it is not clear that it is wanted, and; certainly not to put it ·in motion if unnecessary mischief is going to be done or hardHhip inflicted upon the third person who is called upon to appear and give infmma.tion." in re JJ:letropolitan Bank (Heiron's case)(') a similar situation arose. The liquidator who had brought ru1 action on behalf of the company against an officer exhibited interrogatories which had been fully .answered by the defendant, and thereafter, the liquidator sought an order from the Court to examfne the defendant -under a. 115 of the Companies ~ct, 186~.

It was held that the liquidator must 'satisfy. the Court that it would be just and beneficial for the purposes of the winding up. The Court in that case held that the action of the liquidator was vexatious.• In In re M ai·ile Hose, Limited, (') an order which ·was regarded-as-premature ,and oppressive in the circumstances of the CASO was discharged by the Court. The Court baa therefore jmisdiction in•proper cases, i.e. where it is sa~isfied that thu order is vexatious, or oppressive, or where other adequate grounds exist to discharge the same. In our view, the High Court was.right in holding that in a proper case it would be open to the . Company Judge to vacate an ez.parte order obtained under r. 243 "Of the Companies (Court) Rules. The jurisdiction to va<Jfj1e or modify an exparte order under r. ·243 bein~granted, the question (I) (1860) 15 Ch. D, 139. (2) (1939) I Cb. D. 32 which falls to be determined is whether the order passed by Mr. Justice Mitter was oppressive or vexatious or otherwise liable to be vacated or modified for adequate grounds.

In our view, there is no ground for holding that the order is liable to be vacated or modified. It was never even suggested in the High Court that the order for examination was per se oppressive or vexatious. This is not a case in which the order is sought to facilitate the prqgress of an action filed by the official liquidator agi,linst the appe!l&nt, nor is there reason to hold that the order is sought in aid of some collateral purpose-a purpose other than effective progress of the winding up in the interest of the company. The appellant was for many years a director of the company, and therefore concerned with guiding the affairs of the company. He was prim,a facie a person who would be able to give information likely to promote the" purpose of the winrli11g up. lt appears also that Mr. Justice Mitter was satisfied on the statement filed by the official liquidator that the appellant had the custody of certain important books of the company.

The plea of the appellant that compelling him to submit to examination with· out permitting him to have access to the books before answering questions put to him is oppressive has no substance. The affidavit filed on behalf of the liquidator clearly states that the relevant records of the company will be made available to the appellant at the time of the examination. The High Court, in appeal, expressed the t view that on the merits there was no ground for interference and it was satisfied that it wall' "desirable and necessary" that the appellant as a director should be examined. The appellant having been a director of the company during the period when it is alleged the affairs were mismanaged, is likely to be aware of the management and in possession · of information conducive to effective prosecution of the winding up and if the learned Satish Churnn Law H.K. Gartguly ShahJ Batis/, Churan La.w H, K. Ga11g11J, SAnJa,1.

Judge thought it fit to order that the appellant be examined the order cannot be regarded as either vexatious or oppressive or otherwise liable to be set aside. Counsel for tho appellant submitted that the order for examination must be made after considering all the fact11 and circumMtances of the case and that there was nothing on the record to show that the facts and circumstances were considered by Mr. Justice Mitter before he made the order for examination. Tho appellant has admitted in his affidavit that he was served with a copy of the order, but he has not chosen to produce it in tho Court of First Instance, nor is the order printed in th<J record prepared for the use of the Court in this appeal. It was nev<Jr suggested before the High Court that the order was made without .considering the material facts and circumstances.

The Court has ma :le the order in exercise of the jurisdiction vested in it and in the absence of any material to show that the order was made for a collateral purpose or by misleading the Court, the appellant is not entitled to have the order vacated. As pointed out by the Master of the Rolls in In re Gol.d Company Ltd., (') "It must be remembered that both the Chief Clerk and the Judge know a great deal more of the proceedings in the winding-up than the Court of Appeal oan know, and there may be various grounds for exercising the discretion, upon which the Court of Appeal cannot possibly form any opinion. We must recollect also thatitis. not necessary to make out a prima facie case-the probability of a case is enough. A fair SUS· pioion may be well worthy of further investigation, and it may well be worth the expense and trouble of examining witnesses to see whether it is well founded.

It is not necessary that the applicant should establish his case before he applies to the Judge: he may say to the Judge, "I have a strong ground for suspecting that a oertain transaction was (I) (1879) 12. Ch. D. 77. t fraudulent; if it is proved to be so we shall get a large some of money; will you let me lay out a small sum of money in order to examine a witness or two, so as to ascertain the facts? In that case the Court will exercise a discretion." Mr. Justice Mitter was the company Judge in charge of the liquidation proceedings of the Company. Before him a state- ; ment of the official liquidator was produced: and in the light of the materials placed before him, he passed the order which is now sought to be modified. This Court cannot promied upon an assumption that the order for examination of a person who has ceased to be a. director prior to the date of the winding up must necessarily be re~arded as oppressive or vexatious.

A director of a company, past • or present, is ordinarily in a position to give useful information a.bout the affairs of the Company in winding up. In the circumstances, we think that the High"Court was"right in holding,.that no case was ma.de out for modification of the e;i: parte order. Two grounds were set up in support of the plea. that the appellant before he is examined is entitled to inspect the statement of the ofticial liquidator : (a) that it is contrary to rules of natural justice to disallow inspection of the statement on which a judicial order imposing an obligation upon a party is made, and (b) that the rules of procedure prescribed under the Companies (Court) Rules authorise the person summoned to inspect the statement of the official liquidator on which the order is made. Rule 243 expressly contemplates that an application for examination under ~· 477 may be made ex parte.

An application by an official liquidator is required to be supported by a statement signed by him, but the rule does not contemplate any notice to the parties likely to be affected by the issue of the summons. The proceedings are intended to be confidential. As observed in Satish Churan Law H. K. Gangu(J Shah J, Satish Churari Law H. K.G<mguly SlwhJ. In re Gold Oompanv (')by Sir George Jessel M.R .... in these matters ... the object being to kt>ep the proeee· dings Moret from the person sought to be affected, and the practice is, and as far as I know alwn.ys haR been, that the liquidator, instead of mn.king an affid11vit, simnlv mak<'s a written statement which ho leaves with the Chief Clerk, who thereupon issues an order, anrl the written statement. cannot be got at by anybody. whereas an affidavit ean." This pwctice in our juilgment is consonant wit.h right and justice. That proceedings for examination of officers and other persons are confid1mtial is empha.- sised by rr.

247 and 248. By cl. (21 of r. 247 no person is entitled to ta.ke part in thA examination under s. 477 except the official liquirlator and his advo~ate but the court may, ff it thinks fit, permit any creditor or contrihntorv to attend the exami· nation subject to surh conditions as it may imuose. Cla.use ( 3) provides that notes of the examination may be )l"rmitted to he ta.ken bv a witne~s or any person on his behalf on his giving an undertakiug that such notell shall he used onlv for the purpos<i of re.examination of the witness.' It is also provided that on the conclusion of the examination, the notes shall, unless otborwise directed, be handed over to the Ceurt for destruction. Rule 248 provides inter alia, that the notes shall not he open t-0 the inspection of any creditor, contributory or other person, exoopt the official liquidator, nor shall 11 copy thereof or extract there from he supplied to any person othl'r than the official liquidator, save upon orders of the Court.

The proceedings for examination under s. 477 being intended to be commenced only in the interest of the Company and for the purpose of collecting evidence for the a!frctive prosecution of the liquidation are by rules expreSllly to be commenced by order which may on the applicatfon of the official liquidator be made e.-i: parte. The order does not purport to deci<le any question in dispute between the Company and the persons sought to be (l)jl879) 12. Ch. D. 77. (I) s.c.R. SUPREME OOURT REPORTS examined. It only proceeds upon the satisfaction of the Court that the person should be examined in sa·f.h c,,.,,,, Law the interest of the Company, it appearing to the H. K.'G •• ,.11 Court just proper that he should be so examined. There is nothing in the schemil of the Act which indicates that an order passed for t.he exam in:ttion of a person under. s. 477 may be mad" only after serving a notice upon such person: the Rules expressly contemplate that the order may he made ex parte.

Rules of natural justice are therefore not violated merely by the issue of an order requirini:: a person or persons to appear before a Court for his examination under s. 477. N 0r do the rules of procedure framed by this Court for examination under s. 477 contemplate 11.ny right of inspection of the statement of the official liquidator. As we have already pointed out, r. 243 contemplates an order ex parte and the scheme of the Rule further emphasises the fact that all these enquiries are intended as already discussed to be confidential proceedings. The person whose examination is sought to be held, has therefore no right to inspect the statement· made by the liquidator on which the order of the Court proceeds. Rule 360 of the Companies (Court)

Rules provides that every duly authorised officer of the Central Government, and, save as otherwise provided by these Rules, every person who has been a director or offic1>r of a company which is being wound up, ~hall be entitled, free of charge, at all reasonable times to inspect the file of proceedings of the liquidation and to take copies or extracts from any document therein, and, on payment of the prescribed charges, to be furnished with such copies or extracts. The right to inspection is given in respect of the file of the proce,edings of the liquidation. But the statement made by the officia 1 liquidator under Rule 243 does not form part of the file of the proceedings of the liquidation. The statement is not to he made on oath : it has to be shown to the Company Sha\ J. Satish Ohuran Law H. Ii. Gangu/y Shah J. 960 SUPREME OOURT REPORTS (1962] SUPP. i._... Judge and the Judge has to apply his mind to the contents thereof, but it does not, as pointed out by Mr. Justice Law, form part of the liquidation proceedings.

In the Company (Court) Rules, there is no rule specifying the documents which are to be included in the file of the liquidation proceedings. The order passed by the Court and the summons issued thereon may be regarded as forming part of the f ik of the proceedings of liquidati<m, but having regard Go the nature of the statement made by the official liquidator on which this Judge's order is passed, it is not part of the file of the proce.edings of liquidation. The person summoned even if he is an officer or director of the company, is therefore not entitled to inspection thereof relying upon Rule 360. It was urged by counsel for the appellant that the petition for an order under s. 4 77 was inextricably connected with the statement of the official liquidateor, and if the party affected by the order was entitled to inspect the petition, he was entitled to inspect the statement which formed part of the petition.

There is however, no warrant for the view that the petition and the statement form part of tha same document. The petition has, it is true, to be supported by a statement, but the statement is independent of the petition. It appears that the practice of the Calcutta High Court, prior to the promulgation of the Companies (Court) Rules, was different. Under r. 195 an application for examination of a person under s. 195 of the Indian Companies Act 1913, could be made ex parte to the Judge but it had to be by petition verified by the official liquidator stat in I? the facts upon which the application was based. It was also provided that at the hearing, the Judge m<ty, if sa. tisfied that a prima. facie case for examination had been ma.de out, direct the issue of a summons or summonses against the person or persons named (1) S.C.R. SUPREME OOURT REPORTS in the order for examination and/or for the production of the documents.

Manifestly, the order oould be obtained on a petition which was required to be verified by the official liquidator and there had to be a formal hearing and only if a prima facie case for hearing had been made out the order could be made. U11der the Companies (Court) Rules a different praetice, which approaches the practice prevailing in the English Courts baa been set up. The mere fact that under r. 195 of the Calcutta High Court Rules under Act of 1913 the appellaut might have had a right of access to the statement on which the order was founded will not be an adequate ground for holding that the earlier practice must continue to prevail. If the appellant is not entitled to inspection of the statement he would certainly, for the si;tme reason, not be entitled to a copy of that statement. On the view taken, this appeal must fa.ii and is dismia8ed with cOBts. Appwl dismissed. JETHA NAND THE BON'BLE JUDGES OF 'l'HE PUN.JAB IDGH COURT (P. B. GAJENDRA.GADKAR, A. K. SARUR, K.N. WANCHOO, K.C. DAB GUI'TA and N. RAJAGCPA.LA AYYANGAR, JJ.)

AdlJOCIJU on tke R"ll of Bind High Oourt-Sind cta.ie& to form part of India--If right w pra-Otiee in court. of India continue-India (Adaptation of Existing Indian Law•) Order, 1947, •· 5--Phe Indian Bar 0ouMil8 Act, 1926 [38 of 1926], •· 14. The appellant J who was enrolled as an advocate in the Chief Court of Sind in May 1947 came to India at the end of the year 1948 and practiced in the Courts at Delhi. The Chief Justice of Punjab High Cour~ prohibited the ap~ellant from practiciny u an advocate m the Courts of Delhi. At JHI. Satish Churan law H. K. Gang11fy Shah J. 1P61 Dtcnntn 6 .