TMI Blog1969 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... h those terms. It may be stated that, under the said consent terms, an instalment of Rs. 25,000 became payable on or before the 30th of August, 1968. The actual amount due to the petitioners was, under the said consent terms, left to be decided either by agreement, or by reference to the arbitration of counsel Mr. A. B. Diwan. Clauses 4 and 5 of the consent terms were in the following terms: "4. In the event of there being a default in payment of any of the aforesaid instalments mentioned in clause ( i ) above on its due date irrespective of any dispute to be resolved under clause 2 the petition to stand admitted, with liberty to apply forthwith for consequential directions for advertisement and returnable date and the company will not oppose such application, and the said amount of Rs. 1,50,000 or the balance remaining due at the date of the default to become payable forthwith. 5. In the event of Rs. 1,50,000 (Rupees one lakh fifty thousand only) being paid as aforesaid petition to stand dismissed with no order as to costs, irrespective of the pendency of the arbitration or otherwise". The company duly paid to the petitioners the instalments provided for in the consent terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of September, 1968, by another pay-slip which they had with them ready in court and which would complete the payment of the entire amount of Rs. 1,50,000 provided for in the consent terms. That offer was also declined by Mr. Cooper on behalf of the petitioners. In support of the summons, Mr. Nariman, for the applicant-company, has relied on rule 7 of the Companies (Court) Rules, 1959, which is in the following terms : "7. Power of court to enlarge or abridge time. The court may in any case in which it shall deem lit, extend or abridge the time appointed by these rules or fixed by an order of the court for doing any act or taking any proceeding, upon such terms (if any) as the justice of the case may require, and any such enlargement may be ordered although the application for the same is not made until after the expiration of the time appointed or allowed". It may be mentioned that the said rule is the same in all material respects as rule 310 of the Bombay High Court Rules (O. S.), 1957, which in its turn is identical in terms with rule 288 of the Bombay High Court Rules (O.S.), 1930. It is the contention of Mr. Nariman that the said rule in terms gives jurisdiction to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bench of the High Court of Patna, whilst deciding an appeal, passed a peremptory order fixing time for payment of deficit court-fees, and providing that if the amount was not paid within the time so fixed, the appeal would "stand dismissed ". The time fixed was to expire on 8th July, 1954, but the appellant was not able to find the money and filed a petition on that very day applying for extension of time which was refused by another Division Bench on the ground that the appeal already stood dismissed by reason of the amount not having been paid within the time fixed. The appellant then made an application by way of a petition under section 151 which was rejected by still another Division Bench on 2nd September, 1954, the said Bench being of opinion that the proper remedy was by way of review. The appellant then filed a third application, this time by way of a petition under section 151 read with Order 47, rule 1, of the Code of Civil Procedure, setting out the reasons for his inability to find the money, and offering to pay the deficit court-fees within such further time as the High Court might fix. The Division Bench before which that application came up held that neither sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie view of the petition on the material before it and has to consider whether that material would justify the court in summarily dismissing the petition, or whether it would require further investigation. Though there was an apple from the said decision of my brother Mody (Appeal No. 86 of 1904), this view taken by my brother Mody has not been disturbed by the appellate bench in its unreported judgment dated 8/9th April, 1965. An order admitting a winding-up petition is, therefore, a procedural order made in the progress of the hearing of the petition and, therefore, whilst it cannot be called an interlocutory order, it is certainly not a final order and is not akin to a decree. The consent order in the present case, which is a self-operative order, was, therefore, in my opinion, not in the nature of a conditional decree, but was an order which would fall within the ratio of the decision of the Supreme Court in Mahant Ram Das's case ( supra ) cited above. Mr. Cooper has cited numerous decisions before me, but it is unnecessary for me to discuss them in view of the fact that they were all decisions of final orders or decrees, and indeed, Mr. Cooper has not been able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the 22nd of November, 1958. The respondents, however, did not deposit any amount in court on that day. The court took the view that the time which had been fixed by consent of parties could not be extended by the court arid it, therefore, rejected the application for extension of time, and thereafter confirmed the sale as required by Order 21, rule 92, Civil Procedure Code. After an appeal to the District Court and to a single judge of the High Court, and a Letters Patent Appeal to a Division Bench which set aside the order of confirmation of sale and held that the court could extend time for depositing the amount of the decree, the matter was taken up in appeal to the Supreme Court. The Supreme Court proceeded to consider the question on the footing that Order 34, rule 5, of the Civil Procedure Code, applied and took the view (at. pages 116-117 [1968] 70 Bom. LR 114) that unlike Order 34, rule 4(2), Order 34, rule 5(1) did not contain any provision for extension of time and postponement of confirmation of sale, and that the provisions of Order 21, rule 92(1) made it absolutely clear that if an application under Order 21, rule 90 was disallowed, the court "has to make an order co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, there is no distinction between the provisions of section 148 and rule 7 of the Companies (Court) Rules which can be said to be material for the purpose on the point I am now considering. As, however, the question as to whether the time fixed by a consent order can be enlarged under the relevant statutory provisions or rules, is purely a question of law, the court is not bound to proceed on the basis of a concession by counsel on that point and be driven to misconstrue a decision of the Supreme Court. I have considered the judgment of the Supreme Court in Hukumchand's case ( supra ) very carefully and a close scrutiny of that judgment has made me come to the conclusion that it is no authority for the proposition that section 148, Civil Procedure Code, does not apply to a consent order. In view of the fact that on a harmonious interpretation of Order 34, rule 5, and Order 21, rule 92 there is no power in the court to extend time, and the sale "must" be confirmed, unless before the confirmation the mortgagor has deposited the amount as permitted by Order 34, rule 5, section 148, Civil Procedure Code, cannot apply and the only way in which time could be extended would be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 151, Civil Procedure Code, and the third petition which was made under section 151, Civil Procedure Code, read with order 47, rule 1, of that Code were both made after the time fixed under the self-operative order had expired, and yet the Supreme Court held (at page 884, paras. 5 and 6) that the court should have exercised its powers and extended the time even on those two petitions. I must, therefore, hold that the court has the jurisdiction to extend time under rule 7 of the Companies (Court) Rules, even though it is a self-operative order and the time fixed has already expired. In my opinion, as the court is still seized of the case, no question of its having become functus officio arises at all. As far as the third contention of Mr. Cooper relating to the estoppel is concerned, I hold that the facts of the present case do not attract the rule of estoppel. As laid down by the Supreme Court in the case of Gyarsi Bai v. Dkansukh Lal AIR 1965 SC 1055, 1061 , to invoke the doctrine of estoppel, three conditions must be satisfied: (1) a representation by a person to another, (2) the other should have acted upon that representation, and (3) such action should have been detri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which falls due on or before 30th September, 1968, in cash and well in time. Though the petitioners have adopted an attitude in respect of which I have indicated my disapproval in this judgment, since the company is being granted an indulgence under this order, it must pay the petitioners' costs of this summons. Order of Division Bench The judgment of the court was delivered by Kotval, CJ. This is an appeal against the order of Mr. Justice Vimadalal extending time in favour of the respondent company to pay the balance of the amount due under an order passed upon consent on the 24th April, 1968. The appellants, Marketing and Advertising Associates Private Ltd., were creditors of the respondent-company, Telerad Private Limited. On 18th March, 1968, the appellant company presented an application for winding up of the respondent-company upon the allegation that the respondent company owed the appellants Rs. 2,12,699'52. The application showed the appellant as the sole creditor. The application, it is not in depute, was made under the provisions of section 433( e ) read with section 434(l)( a ) of the Companies Act on the ground that the respondent company was unable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 968. We are concerned in this appeal with the payment or tender of the amount of the instalment due on the 30th August, 1968. The facts as stated in the affidavit supporting the application of the respondent-company were briefly as follows : The respondents alleged that, in payment of the instalment of Rs. 25,000 which was payable on or before the 30th August, 1968, they had forwarded a cheque for the said sum on that very day but it was due to some inadvertent error dishonoured on presentation. They came to know that the cheque was dishonoured on the 5th of September, 1968, and they alleged that this was due to inadvertence. It was the respondents' case that they had two accounts in the Central Bank of India, account No 1 and account No. 2, respectively, and that the cheque was drawn on account No. 1 but they intended on the next day, i.e. , 3 1st August, 1968, to transfer to this account No. 1 a sum of Rs. 20,000 from account No. 2 from which that amount was available to them. Both these accounts, it appears, were overdraft accounts and had a certain limit for the overdraft and it is not in dispute today that in account No. 2 there were more than sufficient accommodation wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own conduct in that the respondent-company had gained time and certain advantages and could not now turn round and overthrow the consent order. Lastly, it was urged that, in any event, assuming that the court had jurisdiction to condone the delay and extend the time, the court should not exercise its discretion in favour of the respondents having regard to their conduct and want of any adequate explanation. All those points were determined against the appellants by the learned single judge and they have been substantially re-argued in this court by Mr. Khambatta on behalf of the appellants. The principal provision of law upon which the respondents relied to show power or jurisdiction in the court to condone the delay or to grant them time is rule 7 of the Companies (Court) Rules, 1959. that rule provides: " Power of court to enlarge or abridge time. The court may, in any case in which it shall deem fit, extend or abridge the time appointed by these rules or fixed by an order of the court for doing any act or taking any proceeding upon such terms (if any) as the justice of the case may require and may such enlargement may be ordered although the application for the same is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h we have referred and which is in pari materia. In fact the point has been decided in the judgment of a single judge of this court in Yusuf Ismailbhai Abdullabhai Lalji v. Abdullabhai Lalji [1932] 34 Bom. L.R. 880 ; AIR 1932 Bom. 615, 616. C 57. This is what Wadia T. in that case said at page 883: "By applying to the court for enlargement of the time fixed by the order of October 9, 1930, the defendant No. 10 and the parties who support him do not in substance wish to have the order set aside or even to vary it except in respect of the time at which it is to be carried out. All the parties, as I have said except defendant No. 9, are agreed that the time for the sale of the salt works should be enlarged, and I have the power to enlarge the time fixed by the order under rule 288, provided I am satisfied that a good case has been made out for the enlargement upon the merits of the application. The words ' any order ' in rule 288 are wide enough to include an order by consent". In our opinion, and we say so with respect, that was a correct view to take of rule 288. It is a provision which is in pari materia with rule 7 of the Companies Court Rules with which we are concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se consequences lead to the conclusion that the court's power of extension of time is in any way curbed or taken away. None of these clauses refers to the question of extension of time or the condonation of delay in the payment of the instalments and we think that much more than is stated in clause 4 would be necessary before an ouster of the statutory power of the court conferred by rule 7 can be inferred. In a similar case the Supreme Court has negatived the contention that peremptory orders passed which are so to say self-operative orders necessarily indicate that the court's powers to interfere with the orders in the interests of justice are taken away. In Mahant Ram Das v. Ganga Das ALR 1961 SC 882 an order was passed in the following terms : "If the amount is not paid within the time given, the appeal will stand dismissed. If the court-fee is paid within the time given, the appeal will be allowed with costs and the suit brought by the plaintiff will stand decreed with costs and the plaintiff will be granted a decree declaring"... One of the contentions raised before the Supreme Court is stated in paragraph 5 of its judgment at page 883 . The Supreme Court comment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not granted by consent of parties and, therefore, the court had power under section 148 to extend time which had already been granted". It is this remark which has been strongly relied on to urge that time would not be granted without further consent of the parties. Now Hukumchand's case ( supra ) was a case where an award of the Registrar of Co-operative Societies which amounted to a decree was made ordering the respondents therein to pay a sum of Rs. 9,000 with 12% interest. That amount was not paid as directed in the order and a certain property of the judgment debtor had been sold on the 7th April, 1958, and was purchased by the appellant, Hukumchand. No application was made under Order 21, rule 90. An application was made on 3rd May, 1958, but that application appears to have been disposed of. The proceedings under Order 21, rule 90, terminated on 7th October, 1958. On that day the respondents requested for the grant of one month's time to deposit the decretal amount along with the auction purchaser's commission and the society (the decree-holder) as well as the auction purchaser had no objection to time being allowed. Therefore, the executing court granted time ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale: see article 166, Schedule I, Limitation Act, 1908 (as the Act then stood). That this is so is, in their Lordships' opinion, clear under the wording of rule 92, which provides that in such a case ( i.e. , where the sale has been duly carried out), if no application is made under rule 99, "the court shall make an order confirming the sale and thereupon the sale shall become absolute". Now it seems to us that this view of the Privy Council was directly before the Supreme Court in Hukumchand's case ( supra ) and the Supreme Court affirmed that principle. They observed at page 88, column 2 : "The observation of the District Judge that the court has always the power to postpone passing orders confirming sale of immovable property is in our view incorrect, in the face of the provisions contained in Order XXI, rule 92(1). That provision makes it absolutely clear that if no application is made under rule 89, rule 90 or rule 91 or where such application is made and disallowed, the court has to make an order confirming the sale and thereupon the sale becomes absolute. It is not open to the court to go on fixing date after date and postponing confirmation of sale merely to accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the special facts in that case. If one turns to paragraph 2 of that judgment one finds that the preliminary mortgage decree which was passed on a compromise between the parties on 2nd August, 1933, and by that preliminary decree the sum due was to be paid in two instalments and on default of both the instalments a final decree was to be passed, but the express term of the compromise was that no further time was to be granted and the last date of payment was thus 31st January, 1935. It was in view of this express agreement between the parties that no further time was to be granted, that the learned judge held that the power of the court to grant time was taken away by the agreement of the parties which by being incorporated in the decree became also an act of the court. The position, therefore, is clear. The mere fact that an order is passed by consent or the mere fact that the order contains terms which are to come into effect automatically or, in other words, that the order is self-operative, does not necessarily imply that the court's power to extend time is taken away, but there may be cases where the parties by express terms can shut out the power of the court by showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner was at liberty to apply for consequential directions for advertisement and returnable date ; ( 3 ) that the respondent-company would not oppose that application and ( 4 ) that the amount of Rs. 1,50,000 or the balance remaining unpaid would become exigible forthwith. Now the very fact that the parties contemplated that the orders of the court will be solicited shows that as between the parties the' had not put an end to the matter and had left it open to the decree-holder to obtain further orders from the court. Clause No. 2 also indicates the same. There is no indication therefore in clause 4 to suggest that it was the intention of the parties that the order upon consent should be, so to say, a Code in itself taking effect automatically without any further reference to the court. So far we have discussed the question upon the terms of clause 4 alone, but it seems to us that, when we turn to consider the concluding clause of the order (clause 5 of the consent terms), it becomes clear beyond doubt that the order did not put an end to the matter between the parties and the order was not a self-operative order. The concluding clause of the order says: "In the event of Rs. 1,50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply for extension of time. Therefore, there was no estoppel against them in so applying. The view the learned judge took was, with respect, quite correct. We are also in agreement with the findings of the learned judge that the debtor-company had done all it could to remedy the inadvertent mistake as a result of which the payment was delayed only by five days and that after the delay they offered to pay the last instalment remaining to be paid under the consent order, though it had not still fallen due but that offer had been rejected by the appellant. The facts on this question are clear and stated in the judgment of the learned judge himself. On 5th September. 1968, the debtor-company offered to pay Rs. 25,000 which was the amount of the instalment till then defaulted, but objection was taken that the full amount alone could then be offered and that objection was upheld by the learned judge. Then what happened is noted in the judgment under appeal which is dated 23rd September, 1968 : "In lact, the applicant-company has, in the course of the hearing of this summons, offered to hand over to the petitioners not only the said pay-slip for Rs. 25,000 but also the balance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the balance is concerned, nothing turns upon it in this appeal. As regards the amount of Rs, 1,50,000 it is clear that the debtor-company was able to pay and made a valid offer to pay the balance out of it. Although it was not a payment as provided in the consent terms, the fact remains that they did offer to pay up the full amount and could have paid it. The question then is, should this court in appeal lend its assistance to a petition for winding up the company when, although the petitioner is being paid the full amount which he bargained for, he deliberately does not accept it and insists on the company being wound up. We do not think that we can lend the aid of the court to such a party. Although in the foregoing discussion we have dealt with the arguments as if it were a question of execution of a decree and order we must stress here that what the learned single judge was exercising was jurisdiction under the Companies Act and that under the Companies Act many more circumstances than the mere debt payable by the debtor-company and receivable by the creditor have to be considered. There is, for instance, the interest of the whole body of shareholders and the court lips t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
