TMI Blog1989 (12) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... nder order dated December 2, 1983, after contest, Jaipur Spinning and Weaving Mills Ltd. (for short, "the company in liquidation") was ordered to be wound up by this court and the petitioner was appointed as the official liquidator with effect from the said date. It may be stated that the said company petition for winding up was moved in this court by Swadesh Poli Textiles Ltd., Ghaziabad (U.P.), on December 15, 1980, on which the winding up order of the company in liquidation was served on the petitioner, the official liquidator, on December 8, 1983, and as per the record, and it is no longer disputed that non-petitioners Nos. 1 to 5 were the directors of the company in liquidation and non-petitioner No. 6 was the secretary. As per the provisions contained in section 454 of the Act, non-petitioners Nos. 1 to 6 were liable to file statement of affairs of the company in liquidation. The official liquidator sent registered notices to all the non-petitioners as required under rule 124 of the Companies (Court) Rules, 1959 (for short, "the Rules"), and each of the non-petitioners was directed to file a statement of affairs of the company and they were also directed to appear before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, or ( d ) any person whom the court deems capable of giving information concerning promotion, formation, trade, dealings, property, books or papers or affairs of the company. It will be pertinent to note that, whereas in regard to the last three classes of persons, there are qualifying words, in regard to the first class of persons, viz., any officer of the company, there are no qualifying words used. In other words, if a person to be summoned for examination under section 477 belongs to the last three classes of persons, such person must be known or be suspected to have in his possession any property or books or papers of the company or known or suspected to be indebted to the company or must be one whom the court deems capable of giving information pertaining to the subjects mentioned therein, but an officer of the company could be summoned irrespective of whether he has in his possession any property, books or papers of the company or not, whether he is indebted to the company or not or whether or not the court deems him capable of giving information. Therefore, on a construction of section 477 of the Act, it can be straightaway said that, in the case of any officer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resented and the court should not issue summons for examination of the officers of the company in liquidation. Learned counsel referred to rules 243 to 258 of the Rules, those rules relating to the examination under sections 477 and 478 of the Act. In sub-rule (1) of rule 243, an examination under section 477 of the Act may be made exparte, 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 and summons shall be in Form No. 109. In rule 244, upon the hearing of the summons, the judge may, if satisfied that there are grounds for making the order, make an order directing the issue of a summons against the person named in the 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. Rule 245 permits examination on commission or by interrogatories and the summons issued to any person in pursuance of the order in Form No. 111. Learned counsel contends that it is in the discretion of the court to allow examination under section 477 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the examination of the non-petitioners, if allowed to take place, will relate to items which are the subject-matter of enquiry in the proceedings under sab-section (5) of section 454 of the Act. In support of the aforesaid contention, Mr. Bhandari, learned counsel for the non-petitioners, has placed reliance on the case of Official Liquidator, Nagpur Glass Works Ltd. v. D.P. Ogale [1971] 41 Comp. Cas. 524 (Bom). In that case, two applications for revocation of the ex parte order for the examination of the directors of Nagpur Glass Works Ltd., a company, liquidation, came up for consideration before the court. In that case, the revocation of the summons for the private examination of the directors of the company in liquidation was sought on the ground that the same had been obtained mala fide and with an ulterior motive, i.e. , with a view to elicit further information from the directors so as to prosecute a misfeasance summons previously taken out under the provisions of section 543 of the Act. A contention was raised that the order has been obtained for the sole purpose of eliciting information for the better prosecution of a misfeasance summons, and not for the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion launched against him for failure to file the statement. The case of Registrar of Restrictive Trade Agreements v. Incheck Tyres Ltd. [1976] 46 Comp. Cas. 146 (MRTPC), is a case under the Monopolies and Restrictive Trade Practices Act, 1969. In the course of an application under section 10( a )( iii ) of the Monopolies and Restrictive Trade Practices Act, 1969, the Registrar applied for leave to deliver interrogatories before filing his reply to the statement of case filed by the undertaking concerned, the respondent, and his application was granted ex parte. The Supreme Court said that the application should not have been granted as the proper stage for delivery of interrogatories was only after the completion of pleadings. That case, therefore, in my opinion, has no application in the present controversy. In the case of Palai Central Bank Ltd., In re [1962] 32 Comp. Cas. 1008 (Ker), the court considered the difference between the provisions of the Act and the Banking Companies Act, 1949, and said that the essential difference between the provisions of section 478 of the Companies Act and section 45 G of the Banking Companies Act is that while section 478 of the Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral purpose. It may be stated that even in the case of private examination of the directors under section 477(1) of the Act the director cannot be compelled to answer question which may be asked in relation to criminal prosecution. A similar question was examined by Tulza-purkar J., as he then was, in the case of Pravin Sankalchand Shah [1967] 37 Comp. Cas. 317 (Bom). In that case, the proceedings under section 543 of the Act were pending and a similar argument was advanced on behalf of the company in liquidation which has been advanced before this court by Mr. Bhandari, learned counsel for the non-petitioner and the learned judge said that it is a well-known proposition that in such private examination, it is open to the examinee to refuse to answer the questions put by the official liquidator in respect of the proceedings under section 543 of the Act, in respect of assessing damages against the delinquent directors. It is weil-known that the purpose of the proceedings against the officers of the company and proceedings under section 477(1) for private examination of the officers, etc., are different and, being different, it cannot be said that mere pendency of those proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that the company has fixed assets the value of which was given as rupees two crores. It had loans and advances to the tune of Rs. 2,76,53,703. The details of loans and advances have been given in schedules G and H attached to the balance-sheet. Schedule G which relates to the fixed deposit states that apart from land, plant, machinery and building, the company was also having vehicles the value of which was given as Rs. 1,70,650. The official liquidator was furnished only with the information regarding three vehicles which, according to non-petitioner No. 1, Ganesh Narain, have already been disposed of. From the value of the vehicles as given in Schedule G, it appears that the vehicles were more than five in number and should have been with the company in liquidation. It also appears from Schedule G which pertains to assets, loans and advances that the company was having sundry debtors (unsecured) and the outstanding amount shown as on December 31, 1980, is to the tune of Rs. 1,14,26,699. At item No. 4 of the schedule, the cash and bank balance has been shown as Rs. 4,57,904. In the balance-sheet, loans and advances have been shown to the tune of Rs. 2,76,53,703 but for want of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above facts, in my opinion, it cannot be said that private examination of the non-petitioners under sub-section (1) of section 477 of the Act is sought for any purpose other than the purpose mentioned therein. It cannot be said that the private examination is being sought solely for the purpose of prosecuting the application under section 454(5) of the Act. It may be stated that, while making the ex parte order on March 13, 1985, for issue of judges summons to the non-petitioners for private examination, the prescribed rules have not been followed but, as a result of the above order, it has been held that private examination is necessary to facilitate the winding up proceedings. The non-petitioners have already put in appearance. They will appear for their private examination under subsection (1) of section 477 of the Act. In a case of the present nature, private examination by interrogators will not serve the purpose. But, I am of the opinion that so far as non-petitioners Nos. 3 and 4, Chunnilal and Banshid-har Somani, are concerned, looking to their replies which they had filed to the official liquidator, I do not consider it necessary to examine them under sub-section (1) of ..... 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