Satish Churan Law vs H. K. Ganguly

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 521 of 1961

Decision Date: 05/12/1961

Coram: J.C. Shah, Bhuvneshwar P. Sinha, J.L. Kapur, M. Hidayatullah, J.R. Mudholkar

In this matter the petitioner, Satish Churan Law, filed an appeal against a decision of the Calcutta High Court dated 17 April 1961 which had ordered the winding up of a company. The Official Liquidator, acting under section 477 of the Companies Act 1956 and the Companies (Court) Rules 1959 (rules 243, 244 and 249), submitted an application accompanied by a signed statement requesting that the appellant, who had previously served as a director of the company, be examined about the company’s affairs and be directed to produce certain records. That application was granted ex parte, without the presence of the appellant. The appellant subsequently moved before the Company Judge for an order that the ex parte order be either vacated or modified, and that he be allowed either copies of, or the facility to inspect, all documents filed in the winding‑up proceedings, including the liquidator’s signed statement. The Company Judge rejected the petition, holding that the ex parte order was final, that he possessed no authority to review it, and that the appellant was not entitled to a copy of or inspection of the liquidator’s signed statement.

The appellate Court held that the petition to modify or vacate the ex parte order was maintainable. It clarified that such an order is not final and may be altered by the Company Judge when it was obtained without the complete material being placed before the court, when there has been a mis‑statement of facts, or on any other adequate ground. The primary test for any modification is whether the order is just and beneficial to the business of the company; the statutory power conferred on the court is very wide, but the court must guard against becoming an instrument of vexation or oppression. In the present case, none of the circumstances that would justify interference with the ex parte order were established. The order was sought solely for the effective progress of the winding up in the interest of the company, and the appellant was, prima facie, a person likely to provide useful information concerning the company’s affairs. The Court referred to precedents such as In re North Australian Territory Company (1890) 45 Ch. D., In re Metropolitan Bank (1880) 15 Ch. D. 139, In re Mavile House Limited (1939) 1 Ch. D. 32 and In re Gold Company Ltd (1879) 12 Ch. D. 77. It further held that the appellant had no right to inspect the liquidator’s signed statement, as that statement did not form part of the liquidation file but merely enabled the court to be satisfied that an examination of the appellant was necessary in the interest of the company. The rules permitted the making of such an order ex parte, and the examination was to remain confidential.

In the judgment the Court referred to the authorities in In re North Australian Territory Company, (1890) 45 Ch. D., In re Metropolitan Bank, (1880) 15 Ch. D. 139, In re Mavile House, Limited, (1939) 1 Ch. D. 32 and In re Gold Company Ltd., (1879) 12 Ch. D. 77. The Court held that the appellant did not possess any right to inspect the signed statement made by the liquidator on which the order of the court was based. The Court explained that the liquidator’s statement was not a part of the official file of the liquidation proceedings; rather, it served only to enable the court to be satisfied that the appellant should be examined in the interest of the company. The rules, the Court said, sanctioned the making of such an ex parte order and the examination was to be conducted on a confidential basis, as also noted in In re Gold Company Ltd., (1879) 12 Ch. D. 77. The judgment concerned Civil Appeal No. 521 of 1961, which was taken by special leave from the judgment and order dated 17 April 1961 of the Calcutta High Court in appeal from Original Order No. 132 of 1960. The Attorney‑General of India, assisted by counsel, represented the appellant, while counsel represented the respondent. The judgment was delivered on 5 December 1961 by Justice Shah. The case involved the Ballygunne Real Property and Building Society Ltd., hereinafter referred to as the Company, which had been ordered to be wound up by the High Court of Judicature at Calcutta on 8 January 1958. On 18 January 1960 the Official Liquidator filed an application together with a signed statement seeking an order that the appellant be examined under section 477 of the Indian Companies Act, 1956. This application was granted ex parte by Mr. Justice G.K. Mitter on the same day, and the appellant was served with an order to appear before the Court on 22 March 1960 for examination concerning the affairs of the Company. The order required the appellant to bring and produce, at the specified time and place, the books and papers listed in Schedule B, namely the cash books, general ledgers, journals, minute books from 1939 to 1948, and the property registers of Ballygunne Estate (Private) Ltd.; the similar documents of Ballygunne Building Society Private Ltd.; the general ledger for 1949 of Ballygunne Real Property & Building Society Ltd. (In liquidation); and all other books, papers, deeds, writings and documents in his custody or power relating to the Company’s affairs. The order was published in the public newspapers. The appellant’s solicitors wrote letters on 29 February 1960 and 10 March 1960 requesting the Official Liquidator to provide copies of the petition and the report on which the order was based. The Official Liquidator replied that the appellant was not entitled to a copy of the liquidator’s report. Consequently, the appellant issued a judge’s summons seeking an order to recall, vacate, set aside or modify the order of 18 January 1960 and also sought a direction compelling the Official Liquidator to supply copies of the liquidator’s report and the other documents relating to the application.

The appellant asked the Court to set aside, vacate or modify the order dated 18 January 1960 and alternatively to grant him permission to inspect the court records and proceedings of that application and to obtain copies of them. He argued that the order issued by Mr Justice Mitter had been obtained through suppression of material facts and that, even ignoring that allegation, the order had been made without notice to him, was vexatious, oppressive and amounted to an abuse of the Court’s process. The appellant explained that he had served as a Director of the Company from 1939 to 1953 and had attended the Board of Directors’ meetings during that period. He said that, because he had no reference to the Board meeting records, especially the Minute Books, he could not recall any details of transactions that might have been discussed at those meetings. He further stated that his involvement with the Company was limited to participation in Board meetings; he did not manage the day‑to‑day affairs, nor did he ever possess the books cited in the order. The official liquidator, he claimed, had never asked him for any documents nor inquired about any information, and he was unaware of the specific matters on which the liquidator required information. Consequently, unless those matters were disclosed to him, he could not answer questions or supply the information sought. He added that, to enable him to respond meaningfully, he needed to know the nature of the enquiry and the charges, and to inspect the Company’s records and documents; without such assistance, any examination would be harsh, oppressive and likely futile. The official liquidator, for his part, submitted that all papers in the liquidator’s possession would be produced at the time of the appellant’s examination, but he was not obliged to disclose in advance the nature of the enquiry, because doing so would defeat its purpose. He also contended that the appellant had no right to inspect or obtain copies of the statement that accompanied the judge’s summons of 18 January 1960. Justice Law rejected the appellant’s application, holding that the 18 January 1960 order was final and that he possessed no authority to review, modify, alter or vary it. He observed that the order merely summoned the appellant for examination under section 477 of the Companies Act and that, in the absence of any charge, complaint or allegation against him, the order did not affect his rights. The learned judge further noted that the Court need not first determine whether the person called upon actually possesses the information; if the Court has reason to think, or even an allegation is made, that a person may have relevant information, it may summon that person for examination.

In this case, the Court noted that when it is satisfied that a particular individual is likely to possess information useful for the winding‑up of a company, it may order that person to appear in Court and be examined. The Court further observed that Rules 243(1) and 243(2) of the Companies (Court) Rules prescribe the same procedure that was laid down in In re Gold Company (1879 12 Ch. D. 77 at page 82), and that this procedure differs from the approach set out in rule 195 of the Indian Companies Act, 1913. The learned Judge held that the statement made by the official liquidator on which the order dated 18 January 1960 was based was not given on oath or affirmation; consequently, it did not constitute “legal evidence” and was not part of the Court’s proceedings. Because of this, the appellant could not claim the right to inspect the statement or obtain a copy of it. Dissatisfied with the decision of Mr Justice Law, the appellant appealed to a Division Bench of the High Court. The High Court held that, although the original order had been passed ex parte, an application by the appellant for discharge or modification of that order was legally maintainable. The Court further found that the direction requiring the appellant, who was a director of the company, to appear before the Court for examination concerning the affairs of the company was, in the circumstances of the case, “desirable and necessary”. Regarding the liquidator’s statement, the High Court observed that because it was not an affidavit, the Companies (Court) Rules 1959 did not obligate it to be kept in the liquidation file; the statement was a confidential document, saved by order of the Court, and could be inspected only by the liquidator. The learned judges therefore modified the order to the extent that it demanded production of the books of account of Ballygunge Estate (Private) Ltd. and Ballygunge Building Society Private Ltd., noting that those two companies were not parties to the winding‑up proceedings.

Against the order of the High Court, the appellant obtained special leave and preferred an appeal to this Court. The appeal presented three specific questions for determination: first, whether an ex parte order directing the examination of a person under section 477 of the Indian Companies Act, 1956 may be modified or vacated on an application made by the persons affected; second, whether any ground exists for discharging or modifying the order dated 18 January 1960; and third, whether the appellant is entitled, before his examination, to inspect the statement submitted by the official liquidator in support of the application for the order dated 18 January 1960, or to be furnished with a copy of that statement. For reference, section 477 of the Indian Companies Act, 1956 provides that the Court may, after the appointment of a provisional liquidator or the making of a winding‑up order, summon before it any officer, company or person known or suspected to possess any property, books or papers of the company, or any person who may be indebted to the company, or any person the Court deems capable of giving information concerning the promotion, formation, trade, dealings, property, books, papers or affairs of the company.

Section 477 of the Indian Companies Act, 1956 states that the Court may, at any time after appointing a provisional liquidator or issuing a winding‑up order, summon before it any officer of a company or any individual who is known or suspected to possess any property, books, or papers of the company, or who is known or suspected to be indebted to the company, or any person whom the Court considers capable of providing information concerning the promotion, formation, trade, dealings, property, books, papers, or affairs of the company. (1) The provision further provides that the Court may examine any officer or person so summoned on oath concerning the matters mentioned, either orally or by written interrogatories; when the examination is oral, the Court may reduce the answers to writing and require the examinee to sign the written record. (2) Moreover, the Court may require any officer or person so summoned to produce any books and papers that are in his custody or power relating to the company; if the person claims a lien on the books or papers he produces, the production shall be without prejudice to that lien, and the Court shall have jurisdiction in the winding‑up proceeding to determine all questions relating to that lien. (3) If any officer or person summoned, after receiving a reasonable sum for his expenses, fails to appear before the Court at the appointed time without a lawful impediment that has been made known to the Court and allowed, the Court may cause that person to be apprehended and brought before the Court for examination. (4) In the event that, on his examination, any summoned officer or person 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, to the liquidator, the amount of the debt, or any part of it, at a time and in a manner that the Court deems just; this order may be made with or without the costs of the examination, and may require payment in full discharge of the whole amount or in part, as the Court thinks fit. (5) Likewise, if on his examination any such officer or person admits that he possesses any property belonging to the company, the Court may order him to deliver that property, or any part of it, to the provisional liquidator or the liquidator, at a time, in a manner, and on such terms as the Court considers just. (6) 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. (7) Any person who makes a payment or delivery in compliance with an order made under sub‑section (5) or sub‑section (6) shall, unless the order directs otherwise, be discharged from all liability whatsoever in respect of the debt or property concerned. (8) The clauses numbered (5), (6), (7) and (8) were inserted by Act 65 of 1960. Section 463 of the Companies Act authorises the Court to make rules for all matters relating to the winding up of companies that are to be prescribed by the Act and for other matters.

The Court noted that the Companies Act empowers it to prescribe rules relating to winding‑up matters, and that it has exercised this power by framing the Companies (Court) Rules, 1959. Among those rules, Rules 243, 244 and 249 are particularly relevant. Rule 243 governs applications for examination under Section 477. It provides that such an application may be filed ex parte, but where the applicant is anyone other than the Official Liquidator, notice of the application must be given to the Official Liquidator. The summons issued under this rule must be in Form 109. If the Official Liquidator makes the application, the summons must be accompanied by a statement signed by the Official Liquidator setting out the factual basis of the request. When a person other than the Official Liquidator applies, the summons must be supported by an affidavit of the applicant that details the matters for which examination is sought and the grounds relied upon in support of the summons. Rule 244 deals with the directions that may be given at the hearing of the summons. The Judge, if satisfied that sufficient grounds exist, may order the issue of a summons against the named person for his examination and/or for the production of documents. Unless the Judge directs otherwise, the examination shall be conducted in Chambers, and the order shall be recorded in Form No 110. Rule 249 pertains to orders for public examination under Section 478. It states that when an order is made for the public examination of any person or persons, the examination shall be held before the Judge, although in the High Court the Judge may direct that part or all of the examination be conducted before any officer named in sub‑section 10 of Section 478, as specified in the order. If the order does not fix a date for the examination, the Official Liquidator must obtain an appointment from the Judge or the officer before whom the examination is to be held to set the date. The order directing a public examination shall be in Form No 112. The Judge may also, at his discretion, include in the order specific matters on which the person is to be examined, either in the original order or by a subsequent one. By virtue of Section 477, the Court is authorized to summon before it any officer of the company, any person who is known or suspected to possess any property, books or papers of the company, any person who is known or suspected to be indebted to the company, or any person who is capable of providing information concerning the promotion, formation, trade, dealings, property, books, papers or affairs of the company. Rule 243 further allows an application for an order of examination to be made ex parte, and the Company Judge may…

In this case the Court explained that an order for examination may be made only when the Judge is satisfied that the interest of the company will be served by questioning the person, whether that person is an officer of the company or another individual. The primary test for issuing such an order is whether it is just and beneficial to the business of the company, although the statutory power is very wide and must not be used as a tool of vexation or oppression. The Court further noted that an ex‑parte order is not final; any person summoned under the order may apply to have it vacated or modified on the ground that it was obtained without placing all necessary material before the Court, on the basis of a misstatement of facts, or on any other adequate ground. Under Rule 9 of the Companies (Court) Rules the Court retains its inherent authority to give directions or pass orders that are necessary for the ends of justice or to prevent abuse of the Court’s process, and a direction to vacate a previously made order falls within this inherent jurisdiction when appropriate. The Court observed that the relevant provisions of the English Companies Act of 1862 (25 & 26 Vict. c. 89), the English Companies Act of 1929 (19 & 20 Geo V c. 3) and the English Companies Act of 1948 (11 & 12 Geo VI c. 88) concerning the examination of officers or other persons are substantially the same as section 477 of the Indian Companies Act, 1956, and that the principles laid down by the superior courts in England, which have been adopted in Indian winding‑up practice, are useful for determining the nature of such proceedings. The Court then referred to the decision in In re North Australian Territory Company, where Lord Justice Cotton set aside an order of examination on appeal because the order was not made in the interest of the company in liquidation but was intended to assist the liquidator’s prosecution of an action. In that case the liquidator, with the Court’s leave, had instituted proceedings against another company to set aside a purchase agreement and had obtained an order for an affidavit of documents; however, the Court refused to order production of certain documents or the examination of the defendant company’s secretary on interrogatories, holding that discovery was premature. Subsequently the liquidator obtained an order under section 115 of the Companies Act, 1862, to examine the secretary before an examiner. The secretary declined to answer questions relating to matters in issue in the liquidator’s action, and the Court held that the liquidator had shown no reason for seeking discovery other than to further his own action and to evade the trial judge’s order postponing discovery, thereby justifying the witness’s refusal to answer. Lord Justice Bowen, in the same decision, observed that the power conferred by the statutory provision is of an inquisitorial nature and must be exercised with great care to avoid unnecessary hardship or misuse of the judicial process.

The Court observed that section 115 conferred an extraordinary power upon the Court. It described the power as “an inquisitorial kind which enables the Court to direct to be examined‑not merely before itself, but before the examiner appointed by the Court‑some third person who is no party to a litigation. That is an inquisitorial power, which may work with great severity against third persons, and it seems to me to be obvious that such a section ought to be used with the greatest care, so as not unnecessarily put in motion the machinery of justice when 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 hardship inflicted upon the third person who is called upon to appear and give information.” The Court emphasized that the power must be exercised sparingly and only when it is clearly required for the purposes of the winding‑up.

In the earlier decision of In re Metropolitan Bank (Heiron’s case) (1), a similar factual situation arose. The liquidator, who had instituted an action on behalf of the company against an officer, had already served interrogatories that were fully answered by the defendant. After receiving those answers, the liquidator applied to the Court for an order under section 115 of the Companies Act, 1862, seeking to examine the defendant. The Court held that the liquidator was required to demonstrate that such an examination would be just and beneficial for the winding‑up. On the facts of that case, the Court concluded that the liquidator’s action was vexatious and therefore disallowed.

In another precedent, In re Mavile Hose, Limited (2), the Court dealt with an order that it regarded as premature and oppressive in the circumstances. The Court discharged the order on the ground that it was not justified to compel an examination at that stage. From these authorities, the Court derived that it possesses jurisdiction to set aside or modify an order under rule 243 of the Companies (Court) Rules, but only where the order is found to be vexatious, oppressive, or otherwise lacking adequate basis.

Applying that principle, the Court noted that the High Court was correct in holding that, in a proper case, a Company Judge could vacate an ex‑parte order issued under rule 243. The issue that now required determination was whether the order passed by Mr Justice Mitter was oppressive, vexatious, or otherwise liable to be vacated or modified for adequate reasons. After careful review, the Court found no basis for setting aside the order. The High Court had never characterised the order for examination as per se oppressive or vexatious, and the present matter did not fall within any category that would justify interference.

The Court further observed that the order was not issued to advance a separate action by the official liquidator against the appellant, nor was it intended to serve any collateral purpose unrelated to the effective progress of the winding‑up. The appellant had been a director of the company for many years and therefore possessed knowledge pertinent to the affairs of the company. Consequently, the Court concluded that the order was neither oppressive nor vexatious and that it was proper for the Company Judge to permit the examination in order to further the winding‑up in the interest of the company.

In this case, the Court observed that the appellant was a person who could potentially furnish information that would assist the objective of the winding‑up. The record showed that Mr Justice Mitter had been persuaded by the statement submitted by the official liquidator that the appellant retained custody of certain important books of the company. The appellant argued that it was oppressive to compel him to appear for examination without first allowing him access to those books; the Court found that this allegation lacked any substance. The affidavit filed on behalf of the liquidator expressly declared that the pertinent company records would be made available to the appellant at the time of his examination, thereby negating any claim of denial of access. The High Court, on appeal, held that there was no merit for interference on the substantive issues and concluded that it was “desirable and necessary” for a director such as the appellant to be examined. Because the appellant had served as a director during the period when the alleged mismanagement occurred, the Court reasoned that he was likely to possess knowledge of the management and to hold information that could further the effective prosecution of the winding‑up; consequently, an order directing his examination could not be characterized as vexatious, oppressive, or otherwise voidable. Counsel for the appellant submitted that an order for examination should be issued only after a thorough consideration of all facts and circumstances, contending that the record contained no evidence that Mr Justice Mitter had undertaken such a consideration before making his order. The appellant admitted in his affidavit that he had been served with a copy of the order, yet he neither produced that order in the Court of First Instance nor included it in the record prepared for the appellate Court. No suggestion was made before the High Court that the order had been made without regard to the material facts and circumstances. The Court emphasized that the order had been made exercising the jurisdiction vested in it and, in the absence of any material indicating that the order was issued for a collateral purpose or that the Court had been misled, the appellant was not entitled to have the order set aside. Referring to the observations of the Master of the Rolls in In re Gold Company Ltd., the Court reiterated that both the Chief Clerk and the Judge possess considerably more insight into the winding‑up proceedings than the Court of Appeal, and that there may exist various discretionary grounds that the appellate Court cannot fully appreciate. Moreover, it was noted that it is unnecessary to establish a prima facie case; a reasonable suspicion may justify further investigation, and such investigation may be worthwhile despite the associated expense and effort.

In this case, the Court noted that a party seeking examination of witnesses need not first prove the entire case before approaching the Judge; he may simply request permission by stating a strong suspicion that a particular transaction was fraudulent, explaining that if the suspicion were confirmed a substantial sum of money would be recovered, and asking whether a modest amount could be advanced to enable the examination of one or two witnesses to determine the facts, a request that would invoke the Court’s discretionary power. The Court observed that Mr. Justice Mitter served as the company Judge overseeing the liquidation proceedings of the subject company, and that before him a statement prepared by the official liquidator had been produced; based on the material contained in that statement, Mr. Justice Mitter had issued the order that the present application now sought to modify. The Court further held that it could not base its decision on a presumption that an order directing the examination of an individual who had ceased to be a director before the winding‑up commenced must necessarily be oppressive or vexatious, because a former or current director is ordinarily in a position to provide valuable information concerning the affairs of the company under liquidation. Accordingly, the Court affirmed that the High Court was correct in concluding that no sufficient ground existed for modifying the ex parte order. The appellant had raised two principal arguments to support his claim that, prior to being examined, he should be allowed to inspect the official liquidator’s statement: first, that denying inspection would contravene the rules of natural justice because the statement formed the basis of a judicial order imposing an obligation on a party; and second, that the Companies (Court) Rules expressly authorize a person summoned for examination to inspect the liquidator’s statement on which the order is founded. The Court pointed out that Rule 243 specifically provides for an ex parte application for examination under section 477, requiring that an application by the official liquidator be supported by a statement signed by the liquidator, yet the rule does not envisage giving notice to any parties who might be affected by the summons. The proceedings, therefore, are intended to remain confidential. The Court cited the observation in In re Gold Company by Sir George Jessel, M.R., that the purpose of such proceedings is to keep them secret from the person to be affected, noting the long‑standing practice whereby the liquidator, instead of preparing an affidavit, drafts a written statement and leaves it with the Chief Clerk, who then issues the order; that written statement is not accessible to anyone, unlike an affidavit which could be obtained. The Court declared that this practice aligns with principles of right and justice. Finally, the Court emphasized that the confidentiality of examinations of officers and other persons is reinforced by Rules 247 and 248 of the Companies (Court) Rules, and that clause (2) of Rule 247 expressly provides that no person other than the official liquidator and his advocate is entitled to participate in the examination unless the Court, at its discretion, permits a creditor or contributory to attend under conditions it may impose.

In this matter the Court explained that, under section 477, only the official liquidator and the liquidator’s counsel are entitled to take part in the examination, but the Court may, if it deems appropriate, allow any creditor or contributory to attend the examination provided that the Court imposes such conditions as it considers necessary. Clause (3) of the relevant rule further provides that the notes of the examination may be taken either by the witness himself or by any other person on the witness’s behalf, provided that the person taking the notes gives an undertaking that the notes will be used solely for the purpose of re‑examining the witness. The clause also stipulates that, when the examination comes to an end, the notes must be handed over to the Court for destruction unless the Court directs otherwise. Rule 248, inter alia, states that the notes taken during the examination are not to be opened for inspection by any creditor, contributory or any other person except the official liquidator, and that no copy or extract of those notes may be supplied to any person other than the official liquidator unless the Court specifically orders it. The Court further observed that proceedings for examination under section 477 are intended to be commenced only in the interest of the company and for the purpose of gathering evidence that will enable an effective prosecution of the liquidation. Accordingly, the Rules expressly require that such proceedings be started by an order which may, on the application of the official liquidator, be made ex parte. The order that authorises the examination does not aim to decide any dispute that may exist between the company and the persons sought to be examined; it is issued solely on the basis that the Court is satisfied that the examination is necessary for the company’s interest and that it appears proper to the Court to require the examination. The Court noted that the scheme of the Companies Act contains no provision indicating that an order for examination under section 477 must be preceded by a notice served on the person to be examined, and the Rules expressly contemplate that the order may be made ex parte. Consequently, the Court held that the principles of natural justice are not infringed merely by the issuance of an order requiring a person or persons to appear before the Court for examination under section 477. Moreover, the procedural rules framed by this Court for examinations under section 477 do not contemplate any right of inspection of the statement made by the official liquidator. As previously pointed out, Rule 243 envisages an ex parte order and emphasises that all such inquiries are intended to be confidential. Therefore, the person whose examination is sought does not have any right to inspect the liquidator’s statement on which the Court’s order is based. Finally, Rule 360 of the Companies (Court) Rules provides that every duly authorised officer of the Central Government, and, unless the Rules otherwise provide, every person who has been a director or officer of a company that is being wound up, shall be entitled, free of charge and at all reasonable times, to inspect the file of the liquidation proceedings.

Rule 360 of the Companies (Court) Rules provides that any duly authorised officer of the Central Government, and, unless a different provision applies, any person who has been a director or officer of a company that is being wound up, shall be entitled, without charge, at reasonable times to inspect the file of the liquidation proceedings and to obtain copies or extracts from any document contained therein, subject only to the payment of the prescribed charges for such copies or extracts. The right of inspection therefore extends only to the file of the liquidation proceedings.

The Court observed that the statement made by the official liquidator under Rule 243 does not constitute part of the file of the liquidation proceedings. That statement is not required to be made on oath; it is submitted to the Company Judge, who must consider its contents, but, as noted by Mr. Justice Law, it does not form part of the liquidation proceedings. The Companies (Court) Rules contain no provision that lists the documents that must be included in the liquidation file. While the order passed by the Court and any summons issued thereon may be regarded as forming part of the liquidation file, the nature of the liquidator’s statement on which the Judge’s order is based means that the statement itself is excluded from the file. Consequently, a person summoned, even if he is an officer or director of the company, is not entitled to inspect that statement on the basis of Rule 360.

Counsel for the appellant argued that a petition for an order under section 477 is inseparably linked with the official liquidator’s statement, and that any party affected by the order should be permitted to inspect the petition and, by extension, the statement incorporated in the petition. The Court rejected this argument, holding that there is no basis for treating the petition and the statement as a single document. Although a petition must be supported by a statement, the statement remains a separate document from the petition.

The Court further noted that the practice of the Calcutta High Court before the enactment of the Companies (Court) Rules differed from the current procedure. Under rule 195, an application for examination of a person under section 195 of the Indian Companies Act 1913 could be made ex parte to the Judge, but it had to be filed by a petition verified by the official liquidator stating the facts on which the application was based. At the hearing, the Judge could, if satisfied that a prima facie case for examination existed, direct the issuance of summons or summonses against the named persons for examination and/or for production of documents. Thus, the order could be obtained only after a verified petition and a formal hearing demonstrating a prima facie case. The Companies (Court) Rules, however, have introduced a different practice that aligns more closely with the approach followed in the English Courts.

In the judgment the Court noted that the mere existence of a provision in rule 195 of the Calcutta High Court Rules, which governed proceedings under the Indian Companies Act of 1913, and which might have given the appellant a theoretical right to inspect the statement on which the challenged order was based, could not on its own constitute a sufficient reason for the Court to maintain the earlier procedural practice. The Court explained that the logical consequence of such a view was that, if the appellant were not permitted to inspect the original statement, then for the same reason the appellant could not be allowed to obtain a copy of that statement. The Court therefore held that the appellant’s submission did not demonstrate any necessity to depart from the established practice, and that no other ground was shown to justify a different result. Consequently, the Court concluded that the appeal could not succeed. On the basis of this reasoning the Court ordered that the appeal be dismissed and directed that the appellant bear the costs of the proceedings. The dismissal of the appeal was thus affirmed, and the costs were awarded against the appellant.