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PETITIONER: SMT. ARATI DUTTA

       Vs.

RESPONDENT: EASTERN TEA ESTATE (P) LTD.

DATE OF JUDGMENT13/11/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) OZA, G.L. (J)

CITATION:  1988 AIR  325            1988 SCR  (1)1070  1988 SCC  (2) 523        JT 1987 (4)   564  1987 SCALE  (2)1479

ACT:      Companies Act  1956: Sections  397, 398,  403 and  483- Appeal against  decision of  Single  Judge  of  High  Court- Whether lies  to Division Bench-Absence of procedural rules- Effect of.      Practice and  Procedure:  Appeal  against  decision  of Single Judge-Absence  of procedural  rules-Cannot take  away litigant’s right  to file  and jurisdiction of High Court to dispose of  such appeals-High Court to frame Rules under its Rule-making power.

HEADNOTE: %      The appellant  filed a  petition under Sections 397 and 398 read  with Section  403 of  the Companies  Act, 1956  in respect of  the affairs  of the  respondent firm  which  was disposed of  in terms  of the  compromise arrived at between the parties.  The parties  agreed that  no Auditor  need  be appointed for  the determination  of the liability, and that the determination  as per  the 1973  balance sheet should be left entirely  to the  Court. In  accordance with  the  said compromise, the parties filed their balance sheets regarding the payments made by them which related to liabilities as on 31st December, 1973.      Single Judge of the High Court computed the liabilities of the parties on that basis.      The appellant  preferred an  appeal before the Division Bench against  the aforesaid  decision. The  Division  Bench held that  as no  Letters Patent  was applicable to the High Court there  was no  provision for  an  appeal  against  the judgment of the Single Judge and dismissed the appeal.      On the question: whether an appeal lies to the Division Bench under  section 483  of the  Companies Act, against the orders of a Single Judge.      Disposing of the appeal, ^      HELD: Sections 397 and 398 read with section 483 of the 1071 Companies Act, 1956 indicate that an appeal would lie in the same manner  to the  same court.  Naturally  and  logically, therefore, an  appeal from  the decision of the Single Judge

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would lie to the Division Bench. [1076E-F]      Shankarlal Aggarwal & Ors. v. S.L. Poddar & Ors. A.I.R. 1965 S.C. 507 followed.      Shanta Genevienve Pommerat & Anr. v. Papers Pvt. Ltd. & Ors., A.I.R.  1983 S.C. 269; M/s. Golcha Investment (P) Ltd. v. Shanti  Chandra Bafna,  A.I.R. 1970  S.C. 1350  and  M/s. Tarapose &  Co. v.  Cochin Shipyard  Ltd., A.I.R.  1984 S.C. 1072 referred to.      Absence of  procedural  rules  does  not  take  away  a litigant’s right  to file  appeals against  the decision  of Single  Judge   when  the   statute  confers  such  a  right specifically, and  the jurisdiction  of the  High  Court  to dispose of  such an  appeal, if  so filed.  If there  are no Rules, they  should be  framed by  the  High  Court  in  its jurisdiction of Rule-making power for filing and disposal of such appeals. [1076G-H]      In the instant case, though the present application was relating to  sections 397  and 398,  and  as  it  arises  in respect of  the orders  passed  under  those  sections,  the provisions of  section 483  would be attracted and an appeal would lie to the Division Bench. [1073F-G]      [The High Court found that only a sum of Rs.6,81,299.67 was payable  by the  appellants to the respondent. The Court is of  the opinion  that the  High Court  was right  in  its determination, and  that is  the sum  which  should  be  the liability of  the appellant.  Appellant directed  to pay the aforesaid amount to the respondent in full settlement of the dues.] [1077E-G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1510 of 1987 etc.      From the  Judgment and  Order  dated  4.6.1987  of  the Gauhati High Court in F.A. No. 19 of 1984.      Dr.  Shankar   Ghosh,  Gobind   Das,  Ashok  Sen,  S.N. Mukharji,  N.R.   Choudhary  and  G.S.  Chatterjee  for  the appearing parties.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI, J. These appeals by special leave 1072 relate to the affairs of M/s. Eastern Tea Estate (P) Ltd. It was of two branches namely, the Dutta’s and the Choudhury’s. Due to  death and  lack of  cordiality between the erstwhile partners the  two branches  first drifted  and  then  parted company as  it unfortunately  is the  fate of so many Indian concerns and there were disputes and litigations in Court.      The Civil  Appeal  No.  1510  of  1987  arises  from  a judgment and  decision of  the Division  Bench of  the  High Court of  Gauhati dated 4th June, 1987. It appears that that a petition  was filed  originally  by  the  appellant  under sections 397  and 398 read with section 403 of the Companies Act,  1956  (hereinafter  called  ’the  Act’).  The  company petition came  to be  disposed of  on 4th  February, 1977 in accordance  with  the  compromise  arrived  at  between  the parties. The  said compromise  comprised of  inter alia, two relevant paragraphs,  for the present purpose, which read as follows:           "1.  Mrs. Arati Dutta will take over Chandana T.E.                and   Choudhury    group   will   take   over                Martycherra T.E. On 25th January, 1976.           2.   The Bank  liability of the Company in respect                to Martycherra  T.E. amounting to Rs.2,20,000                (Approx.) shall  be shared  equally of  which

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              Rs.1,10,000 shall be paid by Mrs. Arati Dutta                on 25th  January, 1976 at Silchar in presence                of Shri B.K. Das, Advocate and Shri S.K. Sen,                Advocate.           3.   The entire  liability of the Company would be                equally  shared   and  for  that  purpose  an                independent Auditor  shall  be  appointed  by                Shri S.K.  Sen, Advocate  who shall undertake                to start  the accounting from the 1st week of                February, 1976.           4.   The shares  owned by Mrs. Arati Dutta and her                sons  and  daughters  will  be  sold  to  the                Company on  25.1.76 and  necessary permission                shall be  taken from  Hon’ble High  Court  in                this regard.           5.   The  staff   salary  and   gratuity  of   the                employees of  the Head  Office of the Hon’ble                High Court is obtained shall be considered as                the Liability  of the  Company  and  will  be                borne by the two parties equally. 1073           6.   Mrs. Arati  Dutta shall  have to  pay another                sum of  Rs.12,500 to  the Company in addition                to  her   payment  of  5%  liability  of  the                Company."      Thereafter there  were differences  between the parties and it  could not be adjusted as the parties could not agree as to  audit. On  9th November, 1982 the parties agreed that no auditor  need be appointed in the matter of determination of liability and the matter of determination of liability as per the  1973 Balance-sheet  should be  left entirely to the Court. In  accordance with  the compromise  the parties were asked to  submit their Balance-sheets regarding the payments made by  them which  related to  liabilities in the Balance- sheet as  on 31st  December, 1973.  The parties  filed their Balance-sheets and  the learned  Single Judge  of  the  High Court computed the liabilities of the parties on that basis. Aggrieved, however,  by the  said  decision,  the  appellant preferred an  appeal before  the Division  Bench of the said High Court.  The first  question that  was raised before the Division Bench  was whether  the appeal  lay to the Division Bench under  section 483 of the Act which dealt with appeals from orders. The said section was as follows:           "483: Appeals  from orders-Appeals  from any order           made or decision given in the matter of winding up           of a  company by  the Court  shall lie to the same           Court to  which, in  the same manner in which, and           subject  to   the  same  conditions  under  which,           appeals lie  from any  other order  or decision of           the   Court   in   cases   within   its   ordinary           jurisdiction."      It was  submitted by  learned counsel  that though  the first application  by the  appellant was  under sections 397 and 398  read with  section 403 of the Act the same could be taken in  the matter of winding up of a company to which the reference has  been made  in section 483. On the other hand, it was  submitted that  no appeal lay. It appears to us that though this present application was relating to sections 397 and 398  and as  it arises  in respect  of the orders passed under sections  397 and  398 of  the Act,  the provisions of section 483  would be  attracted and  an appeal would lie to the Division  Bench. This conclusion seems to follow from an analysis of  the sections  as  interpreted  by  the  various decisions of this Court as well as one judgment of the Delhi High Court to which we will refer. However, it is sufficient

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for the  present purpose for us to refer to the observations of this Court in Shanta Genevienve Pommerat & Anr. v. Papers Pvt. Ltd.  & Ors.  A.I.R. 1983  S.C. 269  where  this  Court observed that an appeal under sections 397 and 398 read with 403 of the Companies Act would lie to the same 1074 court to  which, in the same manner in which, and subject to the same  conditions under  which the  appeals lie  from any order or  decision of the court in cases within its ordinary jurisdiction. This  Court made the following observations at page 269 of the report:-           "Now an  order under  sections 397, 398 and 403 of           the Companies  Act, on  the face  of it, cannot be           said to be an order made or decision given, in the           matter of  the winding  up of  a company.  Relief,           undoubtedly under  section 397  and/or 398  is  in           fact an  alternative to winding up. No doubt order           under sections  397 or  398 could be an order made           or decision by the High Court. Having jurisdiction           under the Companies Act the appeal will lie to the           Division Bench of the same High Court. This is not           disputed.                Chapter XLII  of the  Bombay High Court Rules           provides for appeals to appellate Court. The Rules           make provision  for certain  type of appeals to be           placed in the first instance, for admission before           a Bench  of the  High Court to be appointed by the           Chief Justice.  It is  not  in  dispute  that  the           appeal preferred by the present appellants was not           one such  appeal which can be placed for admission           under Rule  966-A and  it follows  from this  Rule           that the  appeals other  than those  mentioned  in           that Rule are not to be placed for admission. This           point is  no more  res  integra  in  view  of  the           decision of  this Court  in M/s  Golcha Investment           (P) Ltd.  v. Shanti  Chandra Bafna.,  (A.I.R. 1970           S.C. 1350) wherein after considering the provision           contained in Rule 966-A, it was held that appeals,           other than those set out in the Rule are not to be           placed for  admission and they were entitled to be           admitted  as   a  matter  of  course.  This  Court           accordingly  quashed   the  order  dismissing  the           appeal in  limine  observing  that  the  appellate           court erred  in summarily  dismissing  the  appeal           because it  was bound  to entertain  the same  and           dispose it  of on  merits. This  observation  will           mutatis mutandis apply to the present appeal."      References may  also be  made to  the decisions of this Court in  Shankarlal Aggarwal  & Ors. v. S.L. Poddar & Ors., A.I.R. 1965  S.C. 507;  M/s. Golcha  Investments (P) Ltd. v. Shanti Chandra  Bafna (supra)  and M/s.  Tarapose &  Co.  v. Cochin Shipyard  Ltd., A.I.R. 1984 S.C. 1072. The Delhi High Court in  Gokulchand D.  Morarka and  another v. Company Law Board and others, 44 Company Cases 173 1075 correctly in  our opinion  explained the position. There the High Court found that pending the petition for winding up of the company filed by two of its creditors for failure to pay a debt  in spite  of statutory notice, the Company Law Board had filed  a petition  under sections  397 and  398  of  the Companies Act  and in  an application  applied  for  interim reliefs of  removal of the sole Director and Constitution of a Board  to manage the Company. The Company Judge passed ex- parte orders  restraining the  Company from disposing of its assets and  restraining debenture  trustees  from  enforcing

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their rights.  Thereupon, an  application  was  filed  under section 442 for stay of the petition and that petition under sections 397  and 398  was filed  by 125  shareholders and a Bank has  also filed  another winding-up petition claiming a large money.  Pending the  winding up  petitions the Company Judge heard  two applications  together and  passed a common order for removal of the sole director and constitution of a Board of  Directors with  a retired  Judge as  the Chairman. Appeals were taken to a Division Bench against another order of  the   Company  Judge.   It  was   held  over-ruling  the preliminary objections  that the order passed by the Company Judge was appealable under section 483 of the Companies Act, 1956 because  firstly, any order passed under section 397 or section 398  was one  which was passed in lieu of winding up and hence,  it was  "in  the  matter  of  winding  up"  and, secondly, the order passed in C.A. No. 323 of 1971 expressly fell within  the scope  of section 442 as the order had been passed after  at least  two applications  had been filed for the winding up of the Company.      The Court  further  held  that  there  was  nothing  in section 483  of the  Companies Act  1956, which took away or curtailed the  right of  appeal provided  by section 5(1) of the Delhi High Court Act, 1966, and clause 10 of the Letters Patent (Punjab)  as applicable  to the Delhi High Court; and that the  jurisdiction conferred  on the Bombay Judge of the High Court  under section  10 of  the Companies Act was none other than  its ordinary  civil jurisdiction  and appeal lay also under  clause 10  of the  Letters Patent  to a Division Bench from the order of the Company Judge.      In this  case in  the High  Court of  Gauhati, however, unlike the  Bombay High  Court or the Calcutta High Court or the Delhi  High Court,  no Letters  Patent was applicable to the Gauhati High Court. It was therefore held that there was no provision  for an  appeal to  the judgment of the learned Single Judge  of the High Court. In our opinion the decision in Shankar  Lal Aggarwal & Ors. v. Shankar Lal Poddar & Ors. (supra) of this Court indicated the true position where 1076 this Court  held that section 202 of the Companies Act, 1913 was in  parimateria with  the present  section.  This  Court preferred the view of the Chief Justice Chagla of the Bombay High Court  reported in  Bachharaj Factories  Ltd. v. Hirjee Mills Ltd.  A.I.R. 1955  Bombay 355 to the view expressed by the Calcutta  High Court  in Madan  Gopal Daga  v. Sachindra Nath Sen,  A.I.R. 1928 Calcutta 295 wherein it was held that an order  or the  decision made  or given  in the  matter of winding up  of a company to be appealable had to satisfy the requirements of  clause  15  of  the  Letters  Patent.  This interpretation was not accepted by other High Courts and the Bombay High  Court held  differently. The view of the Bombay High Court  was preferred  by this  Court in  the  aforesaid decision and it was observed as follows:           "We thus  agree with  Chagla C.J., that the second           part of  the section  which refers to ’the manner’           and ’the  conditions subject  to which appeals may           be had’  merely  regulates  the  procedure  to  be           followed in the presentation of the appeals and of           hearing them,  the  period  of  limitation  within           which the  appeal is to be presented and the forum           to which appeal would lie and does not restrict or           impair the  substantive right  of appeal which has           been  conferred  by  the  opening  words  of  that           section."      In  our   opinion  this  position  is  clear  from  the observation of  this Court in Shankar Lal Aggarwal & Ors. v.

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Shankar Lal  Poddar &  Ors., (supra) that the appeal lies to the same  High Court  irrespective of  the powers  under the Letters Patent.  Sections 397  and 398 read with section 483 indicate that the appeal would lie in the same manner to the same court  and naturally  and logically  an appeal from the decision of  the Single  Judge would  lie  to  the  Division Bench. This  in our opinion follows logically from the ratio of decision  of this  Court in Shankarlal Aggarwal & Ors. v. Shankarlal Poddar  & Ors. (supra) as well as other decisions referred hereinbefore.  It is  true that there is perhaps no procedure to file an appeal from the decision of the learned Single Judge  of the Gauhati High Court. If that is so rules should be  framed by  the High  Court in its jurisdiction of Rule-making power  for filing  and disposal of such appeals. But absence  of the  procedural rules  do not  take  away  a litigant’s right  to file  such  appeals  when  the  statute confers such  a right  specifically and  the jurisdiction of the High Court to dispose of such an appeal if so filed.      We, therefore, propose to deal with the decision of the High Court.  Here, we  are further  helped by  the fact that there is an appeal 1077 from the  decision of  the learned single judge being Appeal No. 1511/87.  In either view of the matter the view taken by the High  Court is  before us.  As noted, the learned single judge was  asked by  parties by  agreement  to  compute  the liabilities in  view of  the failure of the parties to agree to another  auditor.  We  have  heard  Sree  Ghosh,  learned counsel for  the appellant  and we have also heard Sree A.K. Sen,  learned   counsel  for   the  respondent.  Sree  Sen’s contention was that the current liabilities came to a sum of Rs.6,65,841.63. He further submitted that the parties having agreed to  divide the  liabilities equally, the liability to the share  of the  appellant came  to a sum of about Rs.3.32 lacs. As  the appellant  had paid  a sum of Rs.1.36 lacs the contention of  the appellant  was that  the appellant has to pay a  further sum  of Rs.2 lacs. In the alternative, it was urged by  the appellant that what could be demanded from the appellant was the liabilities which were outstanding and not paid off  by the  time the  settlement had  been arrived  at between the  parties in  January 1976.  But having regard to all the  events and  terms of settlement we are in agreement with the Division Bench of the High Court that so far as the Bank liability  of Martycherra  T.E. was concerned, the same had to  be taken  at the  figure of Rs.2,20,000 as stated in clause (2)  of the  Agreement and not at Rs.6,28,000 and odd as given  in the  Balance-sheet of  31st December, 1973. The Division Bench  computed the liability which came to a total of Rs.16,34,675.46  which has computed after deducting a sum of Rs.2,20,000  which was  governed by  clause  (1)  and  it comprised of  Bank Liability.  The Division  Bench took into consideration  that   the  appellant   had  paid  a  sum  of Rs.1,36,038.06  after  the  compromise.  She  had  not  paid anything more  than this.  Therefore it  follows that only a sum of  Rs.6,81,299.67 was  payable by  the appellant to the respondent. The  Division Bench,  in our  opinion, correctly modified the  determination on  that figure  and that is the sum which  should be  the liability  of the  appellant. Sree Ghosh, learned  counsel for  the appellant  tried to  submit before us  that a  sum of  Rs.1,36,038.06  should  be  given credit in  computing the  liability  of  the  appellant  and according to  him the  Division Bench  fell into an error in not deducting this liability of his client. We are unable to agree with this view. In the aforesaid view of the matter we uphold the direction of the Division Bench in so far as they

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computed the  liability and  direct that the appellant would pay that  sum to  the respondent  in settlement  of the dues referred hereinbefore.      sum of  Rs.1,36,038.06 was  directed to  be paid at the time of the admission of the appeal by the Division Bench of the High  Court. If  that money has been paid or realised by the respondent the appel- 1078 lant would  pay the  balance amount of Rs.6,81,299.67 and if the money  is paid  the respondent  will by  virtue of  this order be  entitled to  withdraw the  same and give credit to the appellant  for the same. The balance sum will be paid by 15th March,  1988. In  default of  payment by  that date the amount will carry 18% interest.      The appeal is disposed of accordingly by so holding. In view of the aforesaid position, decision in C.A. No. 1511/87 which is  from the  decision of  the learned Single Judge no longer survives and is disposed of accordingly.      SLP (C)  No. 8152  of 1987  which is  a  cross-petition filed against  the decision  of the  Division Bench  of  the Gauhati High  Court no  longer survives  and is  disposed of accordingly.      Parties will pay and bear their own costs. N.P.V.                                   Appeal disposed of. 1079